Income Tax for Moroccans Residing Abroad (MRA) in Morocco: Property Income, Dividends, and Capital Gains

Understanding Income Tax for Moroccans Residing Abroad (MRA) in Morocco

Moroccans Residing Abroad (MRAs) are generally considered non-tax residents in Morocco. This means they are only subject to income tax on their Moroccan-sourced income, such as rental income, dividends, interest, property gains, and capital gains from securities. They can also benefit from specific exemptions, notably on the sale of their primary residence and on transferred foreign retirement pensions (a 70%/40% abatement on the pension, plus an 80% tax reduction on amounts definitively transferred in non-convertible dirhams). The tax treaties signed by Morocco play a crucial role in eliminating double taxation through tax credit mechanisms.

Tax Domicile and MRA Status (Article 23 of the General Tax Code)

Article 23 of the Moroccan General Tax Code (CGI) defines the criteria for tax residency in Morocco. An individual is considered a Moroccan tax resident if they meet any of the following conditions:

• They have a permanent home in Morocco.
• The center of their economic interests is in Morocco.
• They stay in Morocco, continuously or discontinuously, for more than 183 days within a calendar year.

An MRA who does not meet any of these conditions is classified as a non-tax resident. As such, they are only taxable in Morocco on their Moroccan-sourced income, meaning income generated from or related to assets, activities, or investments located within Morocco.

Principle of Territoriality for Non-Residents

The principle is clear: an MRA non-tax resident does not declare professional or employment income earned abroad in Morocco. Only income originating from Moroccan territory falls within the scope of Moroccan income tax.

Taxable Moroccan-Sourced Income Categories

The main categories of Moroccan-sourced income that may concern MRAs include:

Property Income (Rental Income)

Rental income from real estate located in Morocco is subject to income tax. Following recent tax reforms, property income for non-residents is subject to a final withholding tax at the following rates:

• Annual Gross Rent less than MAD 120,000: 10% final withholding tax
• Annual Gross Rent equal to or greater than MAD 120,000: 15% final withholding tax

This withholding is final, exempting the MRA from the obligation to file an annual declaration for this income. The tenant or authorized intermediary is responsible for withholding the tax and remitting it to the DGI, simplifying your accounting management in Morocco.

Dividends from Moroccan Companies

Dividends distributed by Moroccan companies to non-resident MRAs are subject to a withholding tax of 11.25% in 2026 (10% from 2027), which is the standard rate. This rate may be reduced under a bilateral tax treaty (often brought down to 10% or 15% depending on the applicable treaty). The distributing company performs the withholding and remits it to the Treasury. The MRA receives a net dividend after this withholding.

Interest from Investments in Morocco

Interest from term deposits, bonds, and other fixed-income investments is generally subject to a final withholding tax of 30% (for non-professional individuals) or an imputable withholding tax of 20% (for legal entities and professional individuals). For interest paid to non-residents, the withholding tax on gross products is 10% (Art. 15 CGI), subject to tax treaties which may reduce this rate. Interest from savings accounts opened with Moroccan banks remains subject to the specific rate provided by the CGI.

Property Gains (Real Estate Capital Gains)

The capital gain realized from 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.

Capital Gains from Securities

Capital gains from the sale of securities (shares, social parts of Moroccan companies) are taxable at a rate of 20% on the net gain. An exemption threshold of MAD 30,000 in annual sales applies.

Specific Exemptions for MRAs

Exemption for Primary Residence (Article 63 CGI)

MRAs benefit from an exemption on the capital gain realized from 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 of 6 consecutive years at the date of sale.
• The sale price must not exceed MAD 4,000,000.
• Beyond MAD 4,000,000, only the fraction of the gain corresponding to the excess is taxable.

For an MRA, the primary residence in Morocco refers to the property they occupy during their stays in Morocco and which is exclusively at their disposal (not rented to third parties).

Reduction for Foreign Retirement Pensions (Article 76 CGI)

Retired MRAs receiving a foreign retirement pension first benefit from the abatement applicable to pensions: 70% on the gross taxable amount not exceeding MAD 168,000 per year and 40% on the surplus (Art. 60 CGI). In addition to this abatement, an 80% reduction in the tax due on the pension is granted, corresponding to amounts definitively transferred in non-convertible dirhams (Art. 76 CGI). These two combined advantages result in a very low tax burden.

Conditions for this benefit:

• Definitive and irrevocable transfer in dirhams.
• Proof of transfer (bank conversion slip).
• Annual income tax declaration in Morocco.

Tax Treaties: Eliminating Double Taxation

Morocco has signed over 60 bilateral tax treaties aimed at avoiding double taxation. For MRAs, these treaties are essential as they determine:

• The taxing rights of each state over different categories of income.
• Reduced withholding tax rates applicable to dividends, interest, and royalties.
• The mechanism for eliminating double taxation (tax credit or exemption).

For an in-depth understanding and to navigate the specifics of each agreement, our legal advisory experts are at your disposal.

Tax Credit Mechanism (Article 77 CGI)

When Moroccan-sourced income is taxed in Morocco through withholding, the MRA can, 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

The specific rates vary by country; always refer to the relevant treaty.

These rates apply provided a tax residency certificate from the MRA's country of residence is furnished.

MRA Declarative Obligations

Annual Declaration of Property Income

If the MRA receives property income subject to final withholding tax, they are exempt from filing an annual declaration for this income. However, if they opt for taxation under the progressive scale (in cases of low income), they must file an annual declaration before April 1st of the following year.

Property Gain Declaration

In the event of the sale of real estate, the MRA must file a property gain declaration within 60 days following the date of sale (Art. 83 CGI) and pay the corresponding tax.

Declaration of Capital Gains from Securities

The sale of shares or social parts requires a declaration within 30 days following the month of sale (Art. 84 CGI).

Tax Representative

Non-residents can appoint a tax representative in Morocco to complete declarative formalities on their behalf. This option is particularly recommended for MRAs holding significant real estate or movable assets in Morocco. We can assist you with these procedures, particularly through our accounting services and tax representation.

Frequently Asked Questions (FAQ)

Do I need to declare my foreign income in Morocco?

No. As an MRA non-tax resident in Morocco, you are only taxable on your Moroccan-sourced income. Your employment, professional, or investment income earned abroad is not declarable in Morocco. Only your country of tax residence can tax it.

I own an apartment in Morocco that I use for holidays. Do I have to pay income tax?

If the apartment is not rented and is for your personal use only, it does not generate taxable property income. However, you remain liable for housing tax and communal services tax. If you rent it out, the rental income is subject to withholding tax.

How can I benefit from reduced tax treaty rates?

You must provide the paying company or institution with a tax residency certificate issued by the tax administration 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 overpaid income tax 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 providing the tax residency certificate and proof of the tax withheld.