France-Morocco tax treaty: pensions, property and estates

The rules that come up in our files

• Domicile (Article 2). An individual is domiciled where they have their permanent home. If they have one in each country, they are deemed domiciled where the centre of their professional activities lies and, failing that, where they stay longest. The French tax authorities state that these criteria apply on their own, without reference to domestic tax domicile, and that any dwelling a person has at their disposal on a lasting basis is a permanent home (BOI-INT-CVB-MAR, paragraph 20).
• Taxes covered (Article 8). On the French side, income tax, corporate tax and payroll tax. CSG and CRDS are not listed, and the treaty covers no wealth tax: the real estate wealth tax applies under domestic law alone (BOI-INT-CVB-MAR, paragraph 40).
• Income from immovable property (Article 9). Taxable only in the State where the property is located, including agricultural and forestry income. The rule is exclusive: rent from Marrakech received by a French resident is taxable only in Morocco; rent from Paris received by a Moroccan resident is taxable only in France.
• Dividends (Article 13). Taxable in the State of the recipient and, at source, at no more than 15% of the gross amount. French-source dividends paid to a Moroccan resident who is the beneficial owner are exempt from French withholding tax if they are taxable in Morocco in that person's name; the Conseil d'État held that this condition does not require actual taxation (CE, 19 November 2014, no. 362800). For Moroccan dividends received in France, Article 25, paragraph 3, deems Moroccan tax to have been paid at 25%, which gives a notional credit, capped at the French tax.
• Interest (Article 14). Taxable in the State of the recipient and, at source, at no more than 15% for term deposits and cash certificates and 10% for other interest. Tax levied in the source State gives rise to a credit in the State of the recipient.
• Pensions and life annuities (Article 17). Taxable only in the State of the recipient's domicile, whether private or government. The French tax authorities draw the consequence: pensions paid by a payer established in France to a person domiciled in Morocco are not taxable in France (BOI-INT-CVB-MAR, paragraph 280).
• Salaries and government remuneration (Articles 18 and 18 bis). Private salaries are taxable where the employment is exercised, except for an assignment of no more than 183 days in the tax year meeting three conditions. Government salaries, other than pensions, are taxable only in the paying State, unless the recipient is domiciled in the other State without being a national of the first; the protocol leaves the case of dual nationals to agreement between the two administrations.
• Capital gains (Article 24). Gains on immovable property are taxable in the State where it is located; gains on assets of a permanent establishment, in the State of that establishment; all other gains, including on securities, only in the State where the seller is domiciled.
• Relief from double taxation (Article 25). A State may not include in its tax base income that is taxable exclusively in the other, but may take it into account for the rate. For dividends, interest and royalties, the State of domicile taxes the gross amount and grants a reduction equal to the tax levied in the other State, capped at its own tax.

Five decisions on retirees' domicile and Moroccan dividends

Disputes first concern domicile: Article 17 reserves pensions to Morocco only if the recipient is domiciled there within the meaning of Article 2. We have not identified a decision directly on the 25% notional credit itself; the last decision below concerns the tax reduction under Article 25(2).

• The centre of professional activities comes before the length of stay. A taxpayer who had a permanent home in both countries and stayed mostly in Morocco is nevertheless domiciled in France, where the centre of his professional activities lies (farming, holdings in several companies): his French dividends and his wife's pension are taxable there (CAA Nantes, 24 March 1999, No. 98NT00948, on remand after CE, 6 April 1998, No. 161481, which had set aside the same court's judgment of 29 June 1994).
• Family and a home left in France outweigh property in Morocco. A taxpayer whose wife and daughter lived in France, who spent three or four days a week in his Paris flat and was affiliated to social security in Paris, has his permanent home in France: his retirement pensions, which Article 17 reserves to the State of domicile, are taxable in France (CAA Paris, 28 June 2023, No. 21PA04308).
• A Moroccan lease and an expired residence permit do not make a home. The taxpayers produced a Moroccan lease shared with another family, with no proof of occupation, and a residence permit that had expired in 2012; all their professional income was French-source. They did not establish a permanent home in Morocco (CAA Douai, 28 September 2023, No. 22DA00176).
• Withholding on dividends: the exemption rests on three conditions. The French distributing company obtains discharge of the withholding where the dividends are taxable in Morocco under Moroccan legislation, the recipient is the beneficial owner and shows Moroccan residence, here through certificates from the Moroccan tax authority (CE, 19 November 2014, No. 362800).
• The tax credit presupposes Moroccan tax actually paid. The tax reduction under Article 25(2) attached to Moroccan withholding on royalties is due only if the tax was actually levied; where the evidence produced is insufficient, the tax authorities may require a certificate from the Moroccan tax services (CE, 18 June 2021, No. 433323).

A private-sector retiree moves to Marrakech and keeps a flat in Paris

• The facts. A former private-sector executive, a French national, always domiciled in France. Basic State pension and Agirc-Arrco supplementary pension: €36,000 a year. They move to Morocco and let their Paris flat unfurnished, for €12,000 of annual rent.
• Domicile. Once the flat is let, it is no longer at their disposal on a lasting basis: their only permanent home is in Morocco and they are domiciled there under Article 2. Had they kept the flat for their own use, they would have a home in each country; as a retiree with no professional activity, the country of the longer stay would prevail. Counting days then becomes part of the file.
• The pensions. Taxable only in Morocco (Article 17). Article 182 A of the French tax code subjects French-source pensions paid to non-residents to withholding tax; the treaty removes France's right to tax these pensions. In practice, a certificate of Moroccan tax domicile given to the pension fund avoids withholding; tax wrongly withheld is recovered through a claim within the applicable time limit. The amount of Moroccan tax is a matter of Moroccan law alone, which the firm has checked by a Moroccan adviser; we do not quantify it here. French social levies on pensions are governed by the Social Security Code, not by the treaty, and depend in particular on the health cover retained.
• The Paris rent. Taxable only in France (Article 9). Under the micro-foncier regime, net income is €8,400 (€12,000 less the 30% allowance). A non-resident's income tax cannot be less than 20% of that income (Article 197 A of the French tax code), i.e. €1,680, unless the average rate computed on worldwide income is shown to be lower. French social levies are added: since Morocco is not covered by the EU coordination regulation, the CSG and CRDS exemption in Article L. 136-6 of the Social Security Code does not apply, and the rate is 17.2%, i.e. €1,444.80.
• A later sale of the flat. The gain is taxable in France (Article 24). As an EU national who was domiciled in France for at least two years, they may claim the exemption of Article 150 U, II, 2° of the French tax code, capped at €150,000 of net gain and one dwelling, if the sale takes place by 31 December of the tenth year after departure or if they have had free use of the property since 1 January of the previous year. A let flat does not meet the latter condition. Otherwise, the levy is 19% (Article 244 bis A), after taper relief for the holding period, plus social levies, and appointing an accredited tax representative is in principle required, unless exempted, in particular where the price does not exceed €150,000.

A single inheritance rule, in Article 26

• The text. Chapter II of the treaty deals with registration and stamp duties, and its Article 26, paragraph 3, provides that Moroccan securities forming part of the estate of a person of French nationality domiciled in Morocco are exempt in France from inheritance tax. It applies to estates opened after 1 December 1971 (Article 33).
• Assets outside the rule. It covers neither real estate, nor bank accounts, nor assets located in France, nor deceased persons domiciled in France, nor gifts. There is no treaty between France and Morocco allocating all the assets of an estate, as the estate tax treaties concluded with other countries do. For everything else, France applies its domestic law, Article 750 ter of the French tax code.
• Deceased domiciled in France. All their assets, in France and in Morocco, are subject to French inheritance tax (750 ter, 1°). Duties paid in Morocco on assets located there are credited against French tax, up to the tax on those assets (Article 784 A of the French tax code).
• Deceased domiciled in Morocco. Assets located in France are taxable in France (750 ter, 2°), including French real estate held through a company in which the deceased, alone or with their spouse, their ascendants or descendants or their siblings, holds more than half, and, proportionately, shares in unlisted foreign companies whose assets consist mainly of French real estate. Assets located outside France are also taxable where the heir has been domiciled in France for at least six of the previous ten years (750 ter, 3°). This is where Article 26, paragraph 3, applies: if the deceased was a French national, Moroccan securities escape French tax, even when received by an heir domiciled in France. The riad and the Moroccan bank accounts, however, remain within the French tax base.
• The remaining risk. Outside Article 26, nothing prevents both countries from taxing the same asset; the Article 784 A credit is only granted for foreign tax paid on assets located outside France. Planning the transfer (choice of domicile, nature of the assets, timing of gifts) is done with this limit in mind, with a Moroccan adviser for the Moroccan side.

The mechanisms that apply after the return is filed

• The notional credit on Moroccan dividends. A French resident receives €10,000 of dividends from a Moroccan company. Morocco may levy no more than €1,500 (Article 13). In France, at the 12.8% flat rate, the related income tax is €1,280; the notional 25% credit, i.e. €2,500, wipes it out entirely, but the excess is lost. French social levies, at 18.6% on investment income, i.e. €1,860, remain due: the treaty does not cover CSG, and the credit cannot be set against them. The notional credit does not apply to dividends exempt from tax, in particular under the parent-subsidiary regime (BOI-INT-CVB-MAR), nor where the recipient is subject neither to income tax nor to corporate tax on those dividends (Article 25(3)(d)). Keep the evidence of Moroccan taxation of the dividends.
• Mutual agreement procedure (Article 31). A taxpayer who considers that they are taxed in a way that does not conform to the treaty files a claim with the authorities of the State whose taxation they dispute; if it remains unanswered for six months, it may be brought before the authorities of the other State, which then seek agreement with the first. Cases that warrant it are referred to a joint commission with equal representation. The text provides for no mandatory arbitration.
• Exchange of information (Article 28). The two administrations exchange, spontaneously or on request, information needed to assess and collect the taxes covered, subject to commercial, industrial or professional secrecy. A French resident must in any event report each year accounts opened, held, used or closed in Morocco (Article 1649 A of the French tax code, form no. 3916-3916 bis).
• Assistance in collection (Articles 29 and 30). Each State helps the other collect taxes that are finally due, once domestic remedies are exhausted, and may take protective measures. An exchange of letters of 29 May 1970 allows the taxpayer to ask for enforcement to be suspended if they show they own assets in the creditor State.