In brief: Moroccans residing abroad (MRE) are considered non-resident taxpayers in Morocco and are only taxable on their Moroccan-source income (Art. 23 GTC): rental income, dividends, interest, property gains and securities capital gains. They benefit from specific exemptions — notably on the sale of their primary residence and on foreign retirement pensions transferred to Morocco (80% allowance). Tax treaties concluded by Morocco eliminate double taxation through a tax credit mechanism.
Tax Domicile and MRE Status (Art. 23 GTC)
Article 23 of the General Tax Code defines the criteria for tax domicile in Morocco. Any person who meets any of the following conditions is considered a Moroccan tax resident:
- Has a permanent home in Morocco
- Has the center of their economic interests in Morocco
- Stays in Morocco continuously or intermittently for a period exceeding 183 days per calendar year
An MRE who does not meet any of these conditions is classified as a non-resident taxpayer. As such, they are only taxable in Morocco on their Moroccan-source income, meaning income generated by or connected to assets, activities or investments located in Morocco.
Territoriality Principle for Non-Residents
The principle is clear: a non-resident MRE does not declare their professional or salary income earned abroad in Morocco. Only income having its source within Moroccan territory falls within the scope of Moroccan income tax.
Taxable Moroccan-Source Income
The main categories of Moroccan-source income that may concern MREs are the following:
Property Income (Rental Income)
Property income derived from the rental of real estate located in Morocco is subject to income tax. Following the GTC reform, property income of non-residents is subject to a withholding tax at the following final rates:
| Annual Gross Rental Amount | Final Rate |
|---|---|
| Up to 120,000 MAD | 10% |
| From 120,001 to 600,000 MAD | 15% |
| Above 600,000 MAD | 20% |
This withholding is final, which exempts the MRE from the obligation to file an annual return for this income. The tenant or appointed intermediary is required to withhold the tax and remit it to the DGI.
Dividends from Moroccan Companies
Dividends distributed by Moroccan companies to non-resident MREs are subject to a 15% withholding tax (standard rate). This rate may be reduced under a bilateral tax treaty (often reduced to 10% or 15% depending on the applicable treaty).
The distributing company withholds the tax and remits it to the Treasury. The MRE receives a dividend net of withholding tax.
Interest on Investments in Morocco
Interest on term deposits, bonds and other fixed-income investments is subject to a withholding tax of 30% (standard rate) or 15% for bonds and debt securities. Tax treaties may reduce these rates.
Interest on savings passbook accounts held with Moroccan banks remains subject to the specific rate provided by the GTC.
Property Gains (Real Estate Capital Gains)
The property gain realized upon the sale of real estate located in Morocco is subject to income tax, whether the seller is a resident or not. The applicable rate is 20% on the net gain, with a minimum of 3% of the sale price.
Securities Capital Gains
Capital gains on the sale of securities (shares, partnership interests in Moroccan companies) are taxable at the rate of 20% on the net gain. An exemption threshold of 30,000 MAD in annual sales applies.
Specific Exemptions for MREs
Primary Residence Exemption (Art. 63 GTC)
MREs benefit from the exemption of the property gain realized upon the sale of their primary residence in Morocco, under the same conditions as residents:
- The property must have been occupied as a primary residence for a minimum period of 6 consecutive years at the date of sale
- The sale price must not exceed 4,000,000 MAD
- Above 4,000,000 MAD, only the portion of the gain corresponding to the excess is taxable
For an MRE, the primary residence in Morocco refers to the property they occupy during their stays in Morocco and which is exclusively available to them (not rented to third parties).
Reduction for Foreign Retirement Pensions (Art. 76 GTC)
Retired MREs who permanently transfer their foreign-source retirement pension to a dirham account in Morocco benefit from an 80% allowance on the gross pension amount. In practice, only 20% of the transferred pension is subject to the IR tax scale.
Furthermore, if the taxpayer opts for voluntary payment of the IR within the legal deadlines, they benefit from an additional 80% reduction on the tax resulting from the calculation after the allowance. These two combined advantages make the tax burden very low.
Conditions:
- Permanent and irrevocable transfer in dirhams
- Transfer proof (bank conversion slip)
- Annual IR return filed in Morocco
Tax Treaties: Eliminating Double Taxation
Morocco has concluded more than 60 bilateral tax treaties designed to avoid double taxation. For MREs, these treaties are essential as they determine:
- The right to tax of each state on different categories of income
- The reduced withholding tax rates applicable to dividends, interest and royalties
- The mechanism for eliminating double taxation (tax credit or exemption)
Tax Credit Mechanism (Art. 77 GTC)
When Moroccan-source income is taxed in Morocco through withholding at source, the MRE may, in their country of residence, offset the Moroccan tax paid against the tax due locally (tax credit method). This prevents the same income from being taxed twice.
Examples of Reduced Treaty Rates
| Treaty | Dividends | Interest | Royalties |
|---|---|---|---|
| Morocco – France | 15% | 10% | 10% |
| Morocco – Belgium | 15% | 10% | 10% |
| Morocco – Canada | 15% | 15% | 10% |
| Morocco – Netherlands | 10% | 10% | 10% |
| Morocco – Spain | 10% | 10% | 5% – 10% |
These rates apply subject to providing a tax residence certificate from the MRE’s country of residence.
Filing Obligations for MREs
Annual Property Income Return
If the MRE receives property income subject to final withholding tax, they are exempt from filing an annual return for this income. However, if they opt for taxation under the progressive scale (in the case of low income), they must file an annual return before April 1 of the following year.
Property Gain Return
In the event of a real estate sale, the MRE must file a property gain return within 60 days following the date of sale (Art. 83 GTC) and pay the corresponding tax.
Securities Capital Gain Return
The sale of shares or partnership interests requires a return within 30 days following the month of the sale (Art. 84 GTC).
Tax Representative
Non-residents may appoint a tax representative in Morocco to carry out filing formalities on their behalf. This option is particularly recommended for MREs holding significant real estate or financial assets in Morocco.
Frequently Asked Questions (FAQ)
Do I have to declare my foreign income in Morocco?
No. As a non-resident MRE in Morocco, you are only taxable on your Moroccan-source income. Your salary, professional or investment income earned abroad is not declarable in Morocco. Only your country of tax residence can tax that income.
I own an apartment in Morocco that I use during vacations. Do I have to pay IR?
If the apartment is not rented and is solely for your personal use, it does not generate taxable property income for IR purposes. However, you remain liable for the housing tax and the communal services tax. If you rent it out, the rental income is subject to withholding tax.
How do I benefit from reduced tax treaty rates?
You must provide the paying company or institution with a tax residence certificate issued by the tax authority of your country of residence. This certificate must be presented before the income payment for the reduced treaty rate to be applied directly.
Can I recover an IR overpayment in Morocco?
Yes. If withholding tax was applied at the standard rate when a reduced treaty rate applies, you can request a refund from the DGI by producing the tax residence certificate and proof of the withholding suffered.
READ ALSO:
- Property Income and IR in Morocco
- Withholding Tax on Dividends in Morocco
- Property Gain on Real Estate Sale in Morocco
- Securities Income in Morocco
- Morocco’s Tax Treaties
- Tax Law Advisory — Upsilon Consulting
This article is written by the team of chartered accountants at Upsilon Consulting, a firm registered with the Order of Chartered Accountants (OEC) of Morocco.
Are you an MRE with questions about your tax obligations in Morocco? Contact Upsilon Consulting for tailored guidance.
