Key takeaway: Capital gains on fixed asset disposals by companies subject to IS are taxable but qualify for holding period allowances: 25% (2–4 years), 50% (4–8 years), and 70% (over 8 years). Full exemption is available when the proceeds are reinvested within 3 years. Capital gains on listed securities realised by non-residents (excluding real estate holding companies) are exempt.
Definition and calculation of capital gains
A capital gain on disposal arises when a company sells a fixed asset (land, buildings, equipment, goodwill, equity interests) for more than its net book value (NBV). It is defined by Article 9-I-C-1° of the CGI as:
Capital gain = Disposal price − Net book value (NBV)
The NBV equals the acquisition cost less cumulative depreciation recorded since the asset entered the balance sheet. For non-depreciable assets (land, securities), the NBV equals the acquisition cost.
Overall net capital gain
The tax regime does not apply to each disposal individually but to the overall net capital gain (or loss) for the fiscal year — the aggregate of all capital gains minus all capital losses on disposals during the year.
Holding period allowances apply to this overall net capital gain.
Holding period allowances
Article 161 of the CGI provides allowances on the overall net capital gain based on how long the asset was held:
| Holding period | Allowance |
|---|---|
| Less than 2 years | 0% (fully taxable) |
| 2 to 4 years | 25% |
| 4 to 8 years | 50% |
| Over 8 years | 70% |
Key points:
- The allowance applies to the overall net capital gain, not to each individual disposal
- The holding period runs from the date of acquisition to the date of disposal
- Only the non-exempt portion is included in taxable income
Worked example
A company disposes of commercial premises held for 10 years in 2026:
| Item | Amount (MAD) |
|---|---|
| Disposal price | 2,500,000 |
| Acquisition cost | 1,200,000 |
| Cumulative depreciation | 800,000 |
| NBV | 400,000 |
| Gross capital gain | 2,100,000 |
| 70% allowance (held > 8 years) | − 1,470,000 |
| Taxable capital gain | 630,000 |
The taxable amount of MAD 630,000 is included in the fiscal result and subject to the applicable IS rate.
Reinvestment exemption
Article 162 of the CGI grants a full exemption from the overall net capital gain provided the company:
- Commits to reinvesting the total disposal proceeds within 3 years of the end of the fiscal year in which the disposal occurred
- Reinvests in capital equipment or fixed assets used in the company’s operations
- Retains the replacement assets for a minimum of 5 years
Conditions and exclusions
- Land is excluded from eligible replacement assets, unless necessary for installing capital equipment
- The reinvestment commitment must be stated in the annual tax return for the disposal year
- If the commitment is breached, the originally exempted gain is added back to the taxable income of the year in which the 3-year deadline expires, plus a 15% penalty
Professional tax advisory is recommended to structure reinvestment transactions properly and secure the exemption.
Non-resident capital gains regime
Article 6-I-A of the CGI sets specific rules for gains realised by non-resident companies:
Listed securities (excluding real estate holding companies)
Capital gains on listed securities traded on Moroccan stock exchanges realised by non-residents are exempt from IS, provided the selling entity is not a real estate holding company (SPI).
An SPI is a company whose assets consist of more than 50% real estate or real property rights.
Other disposals
Capital gains on real estate or interests in SPIs remain taxable in Morocco through withholding tax or direct filing, subject to applicable tax treaties.
Capital gains and depreciation provisions
Article 163 of the CGI clarifies the interaction between disposal gains and previously recorded provisions:
- If a provision for impairment had been recorded on a disposed asset, the provision reversal is taxable income
- The capital gain is calculated against the NBV before provision, so the reversed provision and the capital gain are cumulative in the fiscal result
- Allowances apply only to the capital gain, not to the provision reversal
Impact of non-deductible expenses
Certain non-deductible expenses can affect the capital gain calculation:
- Excess depreciation (passenger vehicles beyond the MAD 400,000 incl. VAT cap) is not reflected in the tax NBV
- Non-deductible provisions do not alter the NBV for capital gain purposes
Legal references: General Tax Code 2026 — Art. 9, 161, 162, 163 (PDF) — Circular Note No. 717 — IS (Volume 1)
Frequently asked questions
How is the allowance on capital gains calculated?
The allowance applies to the overall net capital gain for the fiscal year (total gains minus total losses). Rates are: 25% for a holding period of 2–4 years, 50% for 4–8 years, and 70% beyond 8 years. The non-exempt portion is included in taxable income and subject to IS.
What are the conditions for the reinvestment exemption?
The company must commit to reinvesting the total disposal proceeds within 3 years in capital equipment or fixed assets used in operations (excluding land). The commitment must appear in the annual tax return. Failure to comply results in the gain being added back to taxable income with a 15% penalty.
Are capital gains by non-residents taxable in Morocco?
Gains on listed securities realised by non-residents are exempt, unless the selling entity is a real estate holding company (SPI). Gains on real estate and SPI interests remain taxable in Morocco, subject to bilateral tax treaties.
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Planning an asset disposal and want to optimise the tax treatment of capital gains? Contact our experts for personalised advisory.
