The tax convention between Morocco and Spain, signed on 10 July 1978 and supplemented by an additional protocol, provides the legal framework for eliminating double taxation between the two kingdoms. This guide details the applicable rates, allocation rules and relief mechanisms in force in 2026.
Historical context and scope
The convention of 10 July 1978 between the Kingdom of Morocco and the Kingdom of Spain for the avoidance of double taxation with respect to taxes on income and on capital remains one of the oldest bilateral tax treaties in Morocco’s treaty network. Its additional protocol clarifies certain provisions relating to permanent establishments and passive income.
The convention applies to persons who are residents of one or both contracting states. On the Moroccan side, it covers corporate income tax (IS), personal income tax (IR) and the social solidarity contribution. On the Spanish side, it covers the impuesto sobre la renta de las personas físicas (IRPF), the impuesto sobre sociedades and the impuesto sobre el patrimonio.
Dividends: article 10 and protocol
Dividends paid by a company resident in one state to a resident of the other state are taxable in the recipient’s state of residence. However, the source state retains a limited withholding right:
- 10% of the gross amount if the beneficial owner directly holds at least 25% of the capital of the distributing company;
- 15% in all other cases.
This distinction encourages substantial direct investment between the two countries. In practice, a Spanish holding company owning 30% of a Moroccan subsidiary will face a 10% withholding tax (WHT) in Morocco, which can then be credited against its Spanish tax liability.
Interest: article 11
Interest arising in one contracting state and paid to a resident of the other state is taxable in both states, but the withholding tax in the source state is capped at 10% of the gross amount. This rule applies to bank loans, bonds and receivables of any kind.
Interest paid between a state and the other state (or one of its political subdivisions or local authorities) is exempt from WHT under the additional protocol.
Royalties: article 12
Royalties are subject to shared taxation with differentiated rates depending on their nature:
- 5% of the gross amount for royalties relating to copyright of literary, artistic or scientific works;
- 10% for royalties of an industrial nature (patents, trademarks, technical processes, know-how).
This distinction is particularly relevant for Spanish technology companies licensing intellectual property to Moroccan entities.
Salaries and employment income: article 15
Salaries and similar remuneration are taxable only in the employee’s state of residence, unless the employment is exercised in the other state. In the latter case, the state of exercise may tax, subject to the 183-day rule:
The employee remains taxable only in their state of residence if all three of the following conditions are met simultaneously:
- The stay in the state of exercise does not exceed 183 days during the fiscal year;
- The remuneration is paid by, or on behalf of, an employer who is not a resident of the state of exercise;
- The cost of the remuneration is not borne by a permanent establishment located in the state of exercise.
A Spanish employee seconded to Morocco for a five-month assignment, paid by the parent company in Spain with no Moroccan permanent establishment, therefore remains taxable only in Spain.
Permanent establishment: article 5
The convention defines permanent establishment (PE) according to the standard OECD model criteria: place of management, branch, office, factory, workshop, mine or place of extraction. A construction site only constitutes a PE if its duration exceeds 12 months.
A dependent agent with the authority to conclude contracts on behalf of the enterprise also creates a PE, unless they are an independent agent acting in the ordinary course of their business.
Pensions: article 18
Pensions and other similar remuneration paid in respect of former employment are taxable only in the state of residence of the recipient. A Spanish retiree living in Morocco will therefore be taxed in Morocco on their private pension.
Pensions paid by a state in respect of services rendered to that state (government service) remain taxable in the paying state, in accordance with article 19.
Elimination of double taxation: ordinary credit method
The method adopted by the convention is the ordinary credit method (tax credit). The state of residence grants a tax credit equal to the amount of tax paid in the source state, limited to the fraction of its own tax corresponding to the relevant income.
In practical terms, if a Spanish company receives Moroccan dividends subject to a 10% WHT, it will credit that amount against its Spanish tax, up to the theoretical Spanish tax on those same dividends.
Summary table by income type
| Income type | Maximum WHT rate | Article |
|---|---|---|
| Dividends (holding ≥ 25%) | 10% | Art. 10 |
| Dividends (other) | 15% | Art. 10 |
| Interest | 10% | Art. 11 |
| Royalties (copyright) | 5% | Art. 12 |
| Royalties (industrial) | 10% | Art. 12 |
| Salaries | State of exercise / 183 d | Art. 15 |
| Private pensions | State of residence | Art. 18 |
| Permanent establishment | Profits taxed at source | Art. 7 |
Practical cases
Spanish company investing in Morocco
A Barcelona-based company holds 40% of a Moroccan SARL. Distributed dividends are subject to a 10% WHT in Morocco (holding exceeding 25%). The Spanish company credits this amount against its corporate income tax in Spain. If it simultaneously licenses a trademark to the SARL, the royalty is subject to a 10% WHT (industrial royalty).
Spanish employee seconded to Morocco
An engineer from Madrid is sent to Casablanca for an eight-month project. Since their presence exceeds 183 days, Morocco has the right to tax their remuneration. Spain will grant a tax credit corresponding to the Moroccan income tax paid, thereby eliminating double taxation.
Read also
- Morocco-France tax convention
- Morocco’s tax treaties
- International dividend taxation
- Expatriate salary taxation
Upsilon Consulting supports businesses and individuals in applying Morocco’s international tax treaties. Our team of chartered accountants in Casablanca helps you optimise your cross-border tax position and secure your operations with Spain.
