Taxation applicable on retirement pensions collected by French citizens living in Morocco.

The taxation layout in Morocco for foreign retirees made in agreement with France and Morocco prevents double taxation which makes Moroccan taxation quite attractive.

In order for the taxation legislation to be applied the foreigner needs to have his fiscal address in Morocco.
The definition of a fiscal address is specified in article 23 of the general taxation code:

A fiscal address is obtained if the person has a permanent home in Morocco or holds economic interests or lives in Morocco for more than 183 days a year.

The main principles:

According to article 60 of the general taxation code 2008 : A 40% fixed fiscal tax allowance is applied to the gross amount of the retirement pension to obtain the taxable net income.

According to article 76 of the general taxation code 2008 : taxpayers who have their fiscal address in Morocco and receive a retirement pension from a foreign country benefit of a 80% tax reduction from the amount of the tax. The 80% tax reduction is applicable on the portion of the pension that is transfered.

Tax bracket on income (General taxation code 2008)

Annual income from 0 to 24 000 Dh: tax exemption on the income

From 24 001 to 30 000 DH: taxation at 15 % with an abatement of 3 600 DH
From 30 001 to 45 000 DH: taxation at 25% with an abatement of 6 600 DH
From 45 001 to 60 000 DH: taxation at 35% with an abatement of 11 100 DH
From 60 001 to 120 000 DH: taxation at 40% with an abatement of 14 100 DH
Any amount above 120 000 DH: taxation at 42% with an abatement of 16 500 DH

A French retiree who lives in Morocco and receives a retirement pension of 24 000 euros gross annually which is equal to 269 232 dirhams, exchange rate fixed by the Direction Générale des Impôts du Maroc is 11,218 dirhams for 1 euro, has a choice amongst three options :

Option 1: The total retirement pension is not transfered to a non convertible dirhams account.

1) Calculating the taxable income by applying an abatement of 40% to the gross amount of pension received (1 euro = 11.218 dh
269 232 – (269 232 x 40%) = 161 539, 2 dh

2) The amount of the tax due on the basis of the tax bracket:
(161 539, 2 x 42 %) – 16 500 = 51 346, 5 dh

The tax to be paid is 51 346, 5 dh
For this option the taxable income is 161 539, 2 dh and the taxation rate corresponds to 42% with an abatement of 16 500 dh therefore the tax due will be 51 346, 5 dh.

Option 2: The total retirement pension is transfered to a non convertible dirhams account.

Annual retirement pension: 24 000 euros = 269 232 dirhams

1) Calculating the taxable income by applying an abatement of 40% to the gross amount of pension received (1 euro = 11.218 dirhams):
269 232 – (269 232 x 40%) = 161 539, 2 dirhams

This option enables a tax reduction of 80% applied directly on the tax theoretically due on the total of the retirement pension received: 51 346,5 x 80% = 41 077,2 dirhams

2) The tax due will be: 51 346, 5 – 41 077,2 = 10 269,3 dirhams

Option 3: Only a portion of the retirement pension is transfered to a non convertible dirhams account.

Transfer 16 000 Euros of the 24 000 Euros which is 179 488 dirhams

1) Calculating the taxable income by applying an abatement of 40% to the gross amount of the total retirement pension received 1 euro = 11.218 dirhams) :

269 232 – (269 232 x 40%) = 161 539,2 dirhams

2) Calculating the tax amount theoretically due on the retirement pension:
(161 539, 2 x 42 %) – 16 500 = 51 346, 5 dirhams

3) Calculating the 80% tax reduction on the portion of the retirement pension that has been transfered to a non convertible dirhams account.
51 346,5 x 179 488* x 80% = 27 384,8 dirhams
269 232

* 179 488 = is the amount of the pension that has been transfered in dirhams.

Calculating the definite amount of tax due:
The tax theoretically due for the total retirement pension perceived – reduction of 80% on the portion of the pension transfered in dirhams:
51 346, 5 – 27 384,8 = 23 961,7 dirhams

The income tax to pay will be 23 961, 7 dirhams

(Source general taxation code 2008)