In brief: Investment income from movable capital in Morocco encompasses dividends, interest and other returns on financial investments. It is subject to a withholding tax (RAS): 10% final for dividends (Art. 73-II-B-7°), 30% final for interest received by individuals outside a professional activity, and 15% for foreign-source income. This income is distinct from capital gains (gains on disposal), which are subject to a separate tax regime.
What is investment income from movable capital?
Investment income from movable capital is an income tax category that encompasses the recurring flows generated by holding financial securities. It is distinct from capital gains (profits realised on the sale of securities), which are subject to a specific tax regime.
The Tax Code distinguishes two main sub-categories:
Income from shares and partnership interests (Art. 13 of the Tax Code)
Article 13 of the Tax Code defines income from shares, partnership interests and similar income:
- Dividends distributed by companies subject to corporate tax (IS) or IR
- Liquidation bonuses upon the winding up of a company
- Deemed distributions reclassified by the tax authorities
- Directors’ fees paid to board members
- Distributed reserves and amounts made available to shareholders
Fixed-income investment products (Art. 66-I-B of the Tax Code)
Article 66-I-B covers income from fixed-income investments:
- Interest on term deposits, savings accounts and sight deposits
- Coupons on bonds and treasury bills
- Interest on cash vouchers and certificates of deposit
- Income from bond and money market UCITS
- Interest on loans between individuals or granted by companies
Taxation of dividends: 10% withholding tax
Since the 2023 Finance Act, dividends and other income from shares and partnership interests are subject to a withholding tax at the rate of 10% (Art. 73-II-B-7° of the Tax Code).
Final nature
This withholding tax is final: the recipient of the dividends does not need to include them in their annual global income return. The tax is definitively settled by the withholding made by the distributing company.
Who carries out the withholding?
The distributing company is required to:
- Withhold 10% on the gross amount of dividends
- Remit the amount withheld to the DGI in the month following the distribution
- Report the amounts distributed and the beneficiaries
For a full treatment of the withholding tax on dividends, see our detailed guide on withholding tax on dividends in Morocco.
Case of holding companies
Dividends received by a holding company from its subsidiaries benefit from a 100% exemption for IS purposes (parent-subsidiary regime), but the 10% withholding tax applies upon redistribution to individuals.
Taxation of interest and fixed-income investment products
The tax regime for interest varies according to the status of the beneficiary:
Individuals outside a professional activity
Interest received by individuals not acting within the framework of a professional activity is subject to a 30% final withholding tax (Art. 73-II-G-3° of the Tax Code).
This rate applies notably to:
- Interest on savings accounts (3.45% regulated rate)
- Interest on term deposits at banks
- Coupons on listed or unlisted bonds
- Yields on Treasury bills held by individuals
Individuals engaged in a professional activity (RNR/RNS)
Interest received by individuals carrying out a professional activity subject to IR under the net real profit (RNR) or simplified net profit (RNS) regime is subject to a 20% creditable withholding tax (Art. 73-II-F-1° of the Tax Code).
This 20% withholding constitutes an advance payment against the IR due on global income. It is creditable against the annual IR and, where applicable, any surplus gives rise to a refund.
For a deeper analysis of this topic, see our article on withholding tax on interest in Morocco.
Summary of withholding tax rates on interest
| Beneficiary | Withholding rate | Nature |
|---|---|---|
| Individuals outside professional activity | 30% | Final |
| Individuals under RNR or RNS | 20% | Creditable |
| Legal entities subject to IS | 20% | Creditable against IS |
Foreign-source investment income
Moroccan tax residents receiving foreign-source investment income (dividends from foreign companies, interest on overseas investments) are taxed at the rate of 15% (Art. 73-II-C-2° of the Tax Code).
Tax mechanism
Unlike Moroccan-source income, there is no prior withholding tax. The taxpayer must:
- Declare this income in their annual global income return
- Pay IR at the rate of 15% on the gross amount of income received
- Credit where applicable the tax paid abroad (if a tax treaty so provides)
Distinction between income and gains from foreign sources
| Type | IR rate | Example |
|---|---|---|
| Foreign-source income | 15% | Dividends, interest on foreign investments |
| Foreign-source gains | 20% | Capital gains on the sale of foreign shares |
Capital gains on the sale of foreign-source securities are covered in our article on securities capital gains tax.
Key distinction: investment income vs capital gains
It is essential to clearly distinguish these two concepts as they are subject to different tax regimes:
| Criterion | Income | Gains |
|---|---|---|
| Nature | Recurring flows (dividends, interest) | Capital gains on disposal |
| Triggering event | Distribution or maturity | Sale of the security |
| Mode of taxation | Withholding (final or creditable) | Filing within 30 days |
| Exemption | No threshold | Sales ≤ MAD 30,000/year |
| Rates | 10%, 15%, 20% or 30% | 15% or 20% |
For a comprehensive analysis of products subject to withholding tax, see our dedicated guide.
Filing obligations
For income subject to final withholding tax
If all your investment income is subject to a final withholding tax (dividends at 10%, interest at 30%), you have no additional filing obligation. The tax is definitively settled.
For income subject to creditable withholding tax
Interest subject to the 20% creditable withholding tax must be included in the annual global income return. The amount of the withholding tax is deducted from the IR calculated on global income, with any excess being refundable.
For foreign-source income
Foreign-source income must be included in the annual global income return, together with proof of any tax paid abroad in order to benefit from the tax credit.
Frequently asked questions (FAQ)
Are dividends received from a SARL subject to the 10% withholding tax?
Yes. All dividends distributed by companies subject to IS — whether a SA, SARL or SAS — are subject to the 10% final withholding tax. The distributing company withholds the tax and remits it to the DGI. The beneficiary receives a net amount and has no additional filing obligation for this income.
Can I opt for the progressive scale rather than the final withholding tax?
No. When the law provides for a final withholding tax, the taxpayer cannot opt for taxation under the progressive IR scale. The final nature is mandatory. However, for income subject to the creditable withholding tax (20% interest for professionals), inclusion in global income is mandatory.
How is interest on a savings account taxed?
Interest on a savings account is subject to the 30% final withholding tax for individuals not engaged in a professional activity. The bank carries out the withholding directly before crediting the net interest to the account. The account holder has no further steps to take.
What is the difference between the 20% and 30% withholding tax on interest?
The 30% withholding tax is final and applies to individuals who are not professionals (individual savers). The 20% withholding tax is creditable and applies to individuals carrying out a professional activity subject to the RNR or RNS: these taxpayers declare the interest in their professional income and credit the withholding tax against their annual IR.
READ ALSO:
- Securities capital gains tax in Morocco
- Withholding tax on dividends in Morocco
- Withholding tax on interest in Morocco
- Withholding tax: which products are subject?
- Holding company in Morocco: complete tax guide
- Tax law advisory — Upsilon Consulting
This article is written by the chartered accountants team at Upsilon Consulting, a firm registered with the Order of Chartered Accountants (OEC) of Morocco.
Need guidance on the taxation of investment income? Contact Upsilon Consulting for personalised tax advisory services.
