A Moroccan company pays fees to a foreign provider for a software licence, technical assistance or strategic consulting. Should it withhold 10 %? Does a treaty rate apply? Everything hinges on how the payment is classified: royalty or service. This guide covers Art. 15 of the Moroccan Tax Code (CGI), the OECD Art. 12 definition, treaty rates and practical examples to secure your tax treatment in 2026.
Art. 15 CGI: Morocco’s broad withholding tax scope
The Moroccan General Tax Code takes an expansive approach. Article 15 imposes a 10 % withholding tax (WHT) on all remuneration paid to non-resident persons who have no permanent establishment (PE) in Morocco, when the payments relate to services used in Morocco or rendered for the benefit of persons domiciled or established in Morocco.
This scope is broader than the OECD royalty concept. In practice, the Moroccan tax authorities subject to the 10 % WHT not only traditional royalties (licences, patents, trademarks) but also technical service fees, consulting fees, management fees and any remuneration for services rendered by a non-resident.
Key points of Art. 15
- Standard rate: 10 % of the gross amount paid.
- Trigger event: payment, making funds available, or recording the liability in the accounts.
- Filing: within the month following payment (electronic SIMPL platform).
- Compliance obligation: the Moroccan payer is the legal withholding agent.
The challenge for companies is twofold: correctly apply domestic WHT, then check whether a bilateral tax treaty allows a reduction or elimination.
OECD Art. 12 qualification: royalty vs service
The OECD Model Convention, in Article 12, defines royalties as payments received for the use of, or the right to use:
- copyrights of literary, artistic or scientific works;
- patents, trademarks, designs, models, plans;
- secret formulas or processes (know-how);
- information concerning industrial, commercial or scientific experience.
Conversely, an ordinary service — even a technical or specialised one — does not constitute a royalty if it does not involve a transfer of intellectual property rights or the communication of secret know-how.
Practical distinction criteria
The boundary between royalty and service rests on several factors:
- Transfer of rights: if the payment remunerates access to an intellectual property right (licence, patent), it is a royalty. If the provider delivers work without transferring rights, it is a service.
- Know-how vs technical assistance: know-how involves the communication of confidential, unpatented information that enables the recipient to reproduce the process independently. Technical assistance, on the other hand, consists of applying expertise on behalf of the client without transferring knowledge.
- Software licence vs SaaS: purchasing a software licence (right to use the source code or a copy) is a royalty. A SaaS subscription (online access without any transfer of rights over the software) is a service.
Qualification table: 6 practical cases
| Situation | OECD qualification | Applicable treaty article | Moroccan WHT (domestic law) |
|---|---|---|---|
| Software licence (right of use) | Royalty | Art. 12 (reduced rate) | 10 % |
| SaaS subscription (online access) | Service | Art. 7 (PE required) | 10 % |
| Industrial know-how transfer | Royalty | Art. 12 (reduced rate) | 10 % |
| One-off legal or tax consulting | Service | Art. 7 (PE required) | 10 % |
| Recurring technical assistance without knowledge transfer | Service | Art. 7 (PE required) | 10 % |
| Management fees (group charges) | Service | Art. 7 (PE required) | 10 % |
Key observation: under Moroccan domestic law, the 10 % WHT applies in every case. Only when a tax treaty is in force does the qualification become decisive for the effective rate.
Treaty rates by partner country
Bilateral tax treaties signed by Morocco cap the royalty withholding rate (Art. 12), often below the domestic rate:
| Country | Royalty rate (Art. 12) | Observation |
|---|---|---|
| France | 5 – 10 % | 5 % for industrial royalties, 10 % for copyrights |
| Spain | 5 – 10 % | Depends on the nature of the royalty |
| Belgium | 5 – 10 % | Variable rate per protocol |
| United Arab Emirates | 10 % | Aligned with domestic law |
| China | 10 % | No effective reduction |
| United Kingdom | 10 % | Aligned with domestic law |
The strategic stakes of qualification
If the payment qualifies as a royalty, Article 12 of the treaty applies and the capped treaty rate (5 % or 10 %) prevails. The non-resident can then credit the Moroccan WHT against its home-country tax (foreign tax credit).
If the payment qualifies as a service, Article 7 (business profits) governs. In that case, the profit is taxable in Morocco only if the provider has a permanent establishment there. Without a PE, the treaty prohibits Morocco from levying WHT. The non-resident may then request a refund or an exemption.
Practical procedure to secure the treatment
- Analyse the contract: identify the exact nature of the service (rights transfer, know-how, pure service).
- Check the treaty: consult the applicable bilateral convention and identify the relevant article (Art. 12 or Art. 7).
- Obtain the tax residency certificate: the non-resident must provide a certificate of fiscal residence in their home country.
- Apply the correct rate: treaty rate if royalty, exemption if service without PE.
- Document the file: retain the contract, invoice, certificate and proof of filing for any future tax audit.
Conclusion
The distinction between royalty and service is a critical issue for Moroccan companies operating internationally. While domestic law (Art. 15 CGI) applies a uniform 10 % rate, tax treaties offer significant reduction opportunities — provided the payment is correctly classified according to OECD criteria. Expert guidance ensures tax optimisation while maintaining full compliance.
Read also
- Withholding tax on foreign service providers in Morocco
- Corporate tax for foreign companies in Morocco
- Foreign tax credit and double taxation
Upsilon Consulting — Accounting firm in Casablanca. We support Moroccan and international companies in managing their cross-border tax obligations, qualifying international payments and optimising treaty benefits.
