Withholding tax on Foreign services (Hotels case study)


This article provides a general overview of the withholding tax on foreign services in Morocco. Upsilon Consulting offers tax & legal counselling for your specific case. Request a quotation online.

Withholding tax on foreign services in Morocco

The issue of withholding tax on foreign services in Morocco is more and more raised. The 2019 amendments to the regulations on foreign exchange has brought this topic back to the forefront.

Moroccan companies are more frequently using foreign services which they pay in foreign currency.

We will focus on the hotels case study that use the services of online reservation centers. In fact, in return for a commission, these centers advertise the hotel’s information online. They also allow customers to book directly on their website.

Hotels pay for this service, usually in the form of a percentage of sales. Since reservation centers are located abroad, payment is mostly made in foreign currency.

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Even though the analysis presented in this article focuses on hotels, it can be generalized to other types of service provisions.

The main concern is whether these services  are subject to a withholding tax as gross income received by non-resident legal persons, or not.

Provisions of the Moroccan General Tax Code

The General Tax Code states, in Article 15, that  services paid by a Moroccan company to a non-resident (natural or legal person) are gross income subject to withholding tax.

Article 15 of the General Tax Code states that:

“Revenues subject to the withholding tax provided for in Article 4 above, are those paid, made available or recorded in the account of non-resident natural or legal persons in the form of: (…)

IX.- Commissions and fees

X.- Payment for services of any kind used in Morocco or provided by non-resident persons.”

Under the provisions of the General Tax Code, payments received by reservation centers are subject to withholding tax. This is true whether the revenue received is a commission or a payment for provision of services,

In the absence of a double taxation treaty, such commissions are subject to withholding tax. However, where a treaty exists, its provisions should be thoroughly examined.

Analysis of the double taxation treaty between the Netherlands and Morocco

First of all, this memo does not cover the different tax treaties that Morocco has signed. It only focuses on the treaty between the Netherlands and Morocco. We give, as an illustration, the case of BOOKING.COM. The company’s head office is in the Netherlands. Moreover, it is one of the most important reservation centers on the market.

The tax treaty between Morocco and the Netherlands limits the application of the withholding tax to “Royalties” to which it gives a restrictive definition. Thus, under the provisions of Article 12.4 of the treaty between the two countries, the term “Royalty” is defined as:

“payments of any kind received as a consideration for the use of, or the right to use of:

  • any copyright of literary, artistic or scientific work including cinematograph and television films,
  • any patent, trademark, design or model, plan, secret formula, or process,
  • agricultural, industrial, commercial, or scientific equipment,
  • information concerning agricultural, industrial, commercial, or scientific experience,
  • As well as any payment for economic, or technical studies.

Our Position

According to this definition, commissions received by reservation centers should not be subject to withholding tax. They are outside the scope of this definition.

Position of Moroccan tax authorities on withholding tax

On April 23rd, 2015, the tax administration provided a written answer to a question raised by a taxpayer. This answer covers the payment of commissions by Moroccan guest houses to BOOKING.COM.


The communiqué of the Moroccan tax administration states:

“As a reply, I have the honor to inform you that the gross income received by non-resident natural or legal persons is subject to a 10% withholding tax (…)”


However, (…), “the Dutch company BOOKING.COM is not taxable in Morocco for the above-mentioned services. Thus, the commissions paid to BOOKING.COM in return for the said services are not subject to withholding tax. (…)”


This response corroborates our position. Services provided by reservation centers are not subject to withholding tax.

Withholding tax on foreign services in Morocco – What about other reservation centers?

Finally, the treatment of commissions paid to reservation centers located outside of Netherlands should follow the following pattern:

  • In the absence of a double taxation treaty with the provider’s country of residence, tax is due in Morocco ;
  • In case of a treaty, its provisions must be examined before taking a position. Indeed, to know if the withholding tax is due, the same reasoning applies. Therefore, it is necessary to analyze each of the tax treaties signed by Morocco.

One last note

The exemption from withholding tax does not exempt from VAT reverse charge obligations.

Upsilon Consulting offers tax counseling for your specific situation.


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