Morocco’s Tax Maze: How Expat Landlords Navigate Rental Income Obligations

This system implies that the tenant, when it is a legal entity or a liable company, deducts a portion of the rent to pay it directly to the tax administration. The scope of this withholding tax is therefore not universal and depends on the status of the tenant. The objective for the State is to ensure the collection of the tax, particularly from non-resident taxpayers.

For the owner, this deduction constitutes a tax credit. As stated in the Tax Guide, the amount withheld is "deductible" from the total income tax due for the year the rents were received. This deduction avoids double taxation for the landlord and functions as a prepayment. It is therefore recommended to obtain from the tenant a proof of the amount paid to the Treasury, as this document is evidence in case of verification.

However, it is essential to note that this withholding mechanism does not exempt the owner from their reporting obligation. The filing of an annual declaration of rental income remains mandatory, even if no tax balance is to be paid after deducting the withholding tax. This declaration must be made electronically before March 1st of year N+1.

The calculation of the tax due follows a proportional scale. The rate is 10% for an annual taxable gross income of less than or equal to 120,000 dirhams, and 15% beyond this amount. There is an exemption on the income tranche up to 30,000 dirhams, but this is not cumulative with other exemptions of the same nature. The proper application of these rules is necessary for an accurate declaration.