The Morocco-France tax treaty is an agreement signed between Morocco and France. The purpose of this convention is to eliminate double taxation and facilitate the exchange of information on tax matters.
Analysis of the Morocco-France tax treaty
This convention establishes rules for:
- Firstly, determining the tax residence of taxpayers;
- Secondly, setting certain applicable tax rates;
- Thirdly, the types of taxable income and properties.
In this article, we will focus on morocco-France tax treaty in particular. We will describe in detail:
- First, the rules established by this treaty;
- Secondly, the tax benefits it offers;
- And finally, how it can help you manage your tax obligations.
Read the text of the convention.
Analysis of the tax residence rules of the Morocco-France tax treaty
Tax Residence
“Tax residence” is a term used to describe the place where a person or a company has their main residence. This can determine:
- where a person must pay taxes
- which tax laws apply to them.
Regarding individuals, the convention takes into consideration the following criteria:
- Permanent home: A permanent home is the place where a person lives permanently and considers as their main residence. This can be a house, an apartment, or any other place that is inhabited in a stable and regular manner.
- Centre of professional activities: If the person has permanent homes in both states, their tax residence is considered to be where the centre of their professional activities is located.
- Length of stay: As a last resort, a person’s tax residence is in the state where they have stayed the longest. (i.e. in the state where they spend more than 183 days per year).
For companies, their tax residence is located at the place of their statutory headquarters.
In summary, tax residence is the place where a person or company is considered to have their main residence for tax purposes. For individuals, this can be their permanent home, while for companies and groups of individuals, this can be their effective headquarters or their statutory headquarters.
Common Provisions
The Morocco-France tax convention ensures tax fairness for citizens, companies, and groups.
Therefore, they will not be subject to higher taxes than those applied to similar citizens and companies from the other country.
Individuals working in a country benefit from the same tax advantages as local citizens.
Morocco-France Tax Convention – Income and Property Profit Taxes:
Morocco-France Tax Treaty provides for the exclusive taxation of property income in the state where the real estate is located.
Definition of real estate includes land ownership and usufruct rights, except for claims secured by a mortgage.
Real estate can be a property or right. This is determined in accordance with the laws of the country where it is located.
Regarding property profits, gains from the sale of real estate are taxable in the state where the property is located.
Dividend Taxes:
According to the convention, dividends are taxable in the state where the recipient is located.
However, each state has the right to tax them if its tax legislation provides for it.
If dividends are paid by a French company to a person in Morocco, they will be exempt from withholding tax in France if they are taxable in Morocco.
In addition, if the recipient has a permanent establishment in the other state, and the income is related to that establishment, the tax will be levied in that state.
It is useful to recall that the convention defines a permanent establishment as a fixed place of business where a person (legal or physical) carries out part or all of their activity.
A permanent establishment can take various forms: headquarters, branch, office, factory, workshop, site for extracting natural resources, construction site, or sales store.
If a person acts on behalf of a company in another country and has the power to conclude contracts on behalf of the company, they may also be considered a permanent establishment. However, if a company is limited to storing goods, performing advertising or scientific research activities, or acting through an independent broker or general agent, it cannot be considered to have a permanent establishment.
Taxes on Salary and Similar Income:
If a person domiciled in one of the two contracting states receives wages, salaries, or similar remuneration for an employment, these incomes are taxable only in that state, unless the employment is exercised in the other contracting state.
However, if a person domiciled in one contracting State receives remuneration for an employment exercised in the other contracting State, such remuneration shall be taxable only in the first State if the following three conditions are fulfilled:
- recipient does not stay in the other State for more than 183 days in total during the relevant fiscal year,
- remuneration is paid by an employer who is not resident in the other State,
- remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.
The Income from independent personal services or similar activities is taxable only in the State where the person is domiciled, unless such person regularly exercises his or her activity in the other contracting State from a fixed base.
In this case, the portion of the income attributable to that fixed base shall be taxable in the other State.
Provisions related to corporate tax:
Industrial, mining, commercial, or financial companies are required to pay taxes on their income in the state where their permanent establishment is located.
However, if a company has permanent establishments in two states, each state may only impose taxes on the income of the establishment located within its territory.
In addition, the taxable profit should not exceed the profits made by the permanent establishment, including indirect benefits and a portion of the general expenses of the company’s headquarters.
If the taxpayer cannot separate the profits of the permanent establishments, these can be determined by apportioning the overall results based on the turnover.
Provisions aimed at avoiding double taxation.
The morocco-France tax treaty has introduced measures aimed at avoiding double taxation of income.
The table below presents the types of income concerned, the state of taxation, the tax rate, and the reduction granted in case of taxes paid in the other state.
| Income | State of taxation | Tax rate | Reduction granted |
| Income exclusively taxable in a State | Competent State | ||
| -Dividends | State of tax residence of the beneficiary | Tax rate of the state of tax residence | Reduction corresponding to the amount of taxes levied by the other State on the same income |
| – Income from public funds | |||
| – Income from bond interest | |||
| -Dividends | Morocco | 25% | |
| Interests | Morocco | 10% | |
| Royalties | Morocco | 10% |