Rental taxes in Morocco
If you are a property owner and you rent out your property or plan to do so, here is what you need to know about the taxation in this matter and the changes introduced by the 2023 Finance Law:
Rental Income - What Are We Talking About ?
Rental income refers to the income generated from the leasing of real estate properties. This includes houses, apartments, offices, and even land.
These income sources include the rent received, as well as incidental income such as tenant charges or insurance compensation received in case of a loss.
In Morocco, rental income is subject to income tax.
How Is Rental Income Tax Calculated ?
Income tax on rental income is calculated based on the taxable gross income. It is calculated as follows:
Amount of rent received + expenses borne by the owner charged to the tenant – expenses paid by the owner
Two tax rates apply to this taxable gross income:
- 10% for annual income less than 120,000 dirhams
- 15% for annual income exceeding 120,000 dirhams
Declaration and Payment of Tax
If you plan to rent out a property you own, the declaration and payment procedures may vary depending on the specific situation.
Case #1 : You Rent to Individuals
The income received must be declared annually online, and the tax must be paid before March 1 of year n+1.
Case #2 : You Rent to Professionals*
In this case, the tenant is responsible for withholding and remitting the tax through an annual declaration. This is known as a withholding tax.
*Professionals refer to "legal entities of public or private law and natural persons whose professional income is determined according to the regime of net real or simplified income, which pay rent to natural persons."
2023 Finance Law : What Are the Changes ?
The 2023 Finance Law introduces adjustments to the taxation of rental income. Here are the main changes:
- Rental Income Less Than 30,000 dirhams
Rental income less than 30,000 dirhams is no longer exempt from tax. It will be subject to taxation.
However, professional tenants renting from individuals for annual amounts below 30,000 dirhams are exempt from withholding tax.
- Withholding Tax
Except for annual amounts below 30,000 dirhams, this regime remains in place (exclusively for professional tenants as defined above). However, the applied rates are no longer liberating. This means that the property owner is now obligated to declare their rental income.
- Return of the Deduction
It was abolished in 2019 but is now reinstated. Gross rental income benefits from a 40% deduction. Agricultural properties are excluded from this provision.
Please Note
If you received rental income in 2022, you were required to submit an annual declaration of this income and pay the corresponding tax by March 1, 2023, in accordance with the previous tax regime of Article 82 ter of the Tax Code. However, if you receive rental income starting from January 1, 2023, you are subject to the new tax rules of the 2023 Finance Law.
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