A $5,000 lump-sum tax costs a Moroccan company €107,130 in France
A holding company based in Morocco asked the French tax authorities to refund €107,130 withheld from its dividends. The courts refused: its Moroccan lump-sum tax does not qualify it for the exemption provided for under the agreement between the two countries.
For three years, Sauret Consultants Holding Offshore SARL received dividends paid by a French company. France withheld €38,513 in 2019, €43,754 in 2020 and €24,863 in 2021, for a total of €107,130.
The Moroccan company considered that these withholdings should be refunded to it. It invoked Article 13 of the French-Moroccan tax treaty, which allows dividends paid to their beneficial owner in Morocco to be exempted in France when they are taxable there.
After two refusals from the French tax authorities, the holding company took the matter to court. The Montreuil Administrative Court rejected its claims in October 2024. It then appealed, again without success.
In its ruling of April 30, 2026, recently discussed by the specialist legal press, the Paris Administrative Court of Appeal upheld the withholding taxes. The dispute does not concern the company’s registered office in Morocco, but rather the exact nature of its taxation in the Kingdom.
On Bladi.net : Moroccan company receives €38,530, French tax authorities tax IT specialist
The holding company was covered by the regime provided for under the former Moroccan legislation on offshore financial centers. During its first fifteen years, it was subject to an annual lump-sum tax equivalent to $5,000, discharging it from other taxes and levies on its profits or income.
A lump-sum tax unrelated to profits
In the court’s view, this lump-sum tax cannot be treated as corporate income tax covered by the French-Moroccan treaty. Its fixed amount, then equivalent to approximately €4,300, was not calculated according to the profits generated by the holding company.
The dividends received from France therefore could not be considered taxable in Morocco within the meaning of the treaty. The condition granting entitlement to an exemption from French withholding tax was consequently not met.
The company had nevertheless submitted the 5000-FR tax form. But the judges considered that this document merely attested to its tax residence in Morocco. It did not demonstrate that the dividends concerned actually fell within the tax base of a Moroccan tax covered by the treaty.
The fact that these revenues had been declared to the Moroccan authorities does not alter the decision either. In the court’s view, only the applicable tax legislation can determine whether the dividends were genuinely taxable in the Kingdom.
This decision thus illustrates an important limitation of the tax treaty between France and Morocco: being tax-resident in Morocco is not always sufficient to avoid French withholding tax. The income concerned must also be subject in Morocco to a tax falling within the scope of the bilateral agreement.
On Bladi.net : MRE Morocco Income France Tax Declaration Guide
The court therefore dismissed the application in its entirety, including the claim for €4,000 submitted for procedural costs. The €107,130 withheld from the dividends remains with the French tax authorities.
