If you are a Moroccan living abroad and rent out property in Morocco, the 2026 Finance Law created a new 5% withholding tax on rent. It does not cover all landlords: it applies to rent paid to companies and to professionals taxed under the actual or simplified net income regime. For an individual MRE owner, the rental income rules apply, as amended by the 2025 Finance Law. This guide describes both regimes based on DGI tax circulars No. 736 and No. 737.
Check whether the 5% withholding applies to you
The 2026 Finance Law creates a 5% withholding tax on the gross amount excluding VAT of rental income paid to companies subject to corporate tax and to individuals taxed under the actual or simplified net income regime, for buildings that are part of their business assets. Its schedule is set by Article 247-XXXXVI of the General Tax Code. For rent paid to companies, it has applied since 1 July 2026 when the tenant is the State, a local authority, a public body, a bank, an insurer or a company with turnover of 500 million dirhams or more, then from 1 January 2027 (350 million) and 1 January 2028 (200 million). It is credited against the tax due and does not exempt anyone from the annual return.
💡 Tip: Circular No. 737 makes it clear: rent paid to a private individual, taxed as rental income, is not covered by this 5% withholding. It remains subject, as the case may be, to the 10% or 15% withholding or to the 20% final flat rate.
⚠️ Warning: Do not confuse the 5% withholding tax with VAT. These are two distinct mechanisms.
Understand how your rental income is taxed
Rental income of MRE property owners is subject to Moroccan income tax. Gross taxable income is the rent received, plus owner expenses charged to the tenant, minus charges the owner bears on the tenant's behalf. A 40% flat-rate allowance applies: net taxable income equals 60% of gross income. Since 1 January 2025, the first bracket of the scale, from 0 to 40,000 dirhams of net income, is taxed at 0%. If rent is your only taxable income in Morocco, no tax is due as long as net income stays below this threshold, which is about 66,700 dirhams of gross rent a year (about 5,560 dirhams a month).
💡 Tip: Even when no tax is due, circular No. 736 points out that rental income not exceeding 40,000 dirhams must be included in the annual global income return.
⚠️ Warning: The 40% allowance is a flat rate: it replaces the deduction of expenses.
Know who withholds the tax
When the tenant is a legal entity (company, public body, association) or an individual taxed under the actual or simplified net income regime, it withholds 10% or 15% at source, not as a final tax, if the gross rent paid to the owner exceeds 40,000 dirhams a year. This withholding is then adjusted in the annual global income return. When the tenant is a private individual, there is no withholding: the owner declares the rental income in the annual return, and it is taxed at the progressive scale.
The optional 20% final flat rate
Since the 2025 Finance Law, an owner whose rent is subject to withholding tax can opt for a 20% final flat rate, applied to the gross amount, with neither the 40% allowance nor the 40,000-dirham threshold. The request is made electronically to the DGI, against a receipt. A copy of the receipt is given to the tenants at least 30 days before the following month's rent is due. The option covers all properties whose rent is subject to withholding, and this income no longer has to be included in the annual return.
💡 Tip: This option only concerns rent subject to withholding, that is, paid by a company, a public body or a professional. Rent paid by a private individual is not eligible.
File online at tax.gov.ma
Returns are filed electronically on the DGI portal, tax.gov.ma (SIMPL-IR service), with a tax identification number. The annual global income return is filed before 1 March of the year following the one in which the rent was received.
In depth
For MRE property owners, the tax treaties Morocco has signed with most European countries generally provide that real estate income is taxable in the country where the property is located, that is, in Morocco. The country of residence then eliminates double taxation, through a tax credit or an exemption, depending on the applicable treaty.
❌ Common mistakes to avoid
- ✕Thinking that the 2026 Finance Law's 5% withholding covers rent paid by a private individual
- ✕Taking the 10% or 15% withholding for a final tax: it is adjusted in the annual return
- ✕Believing that the 20% final flat rate is open to rent paid by a private individual
- ✕Skipping the annual return when no tax is due
🔗 Official links and resources
❓ Frequently asked questions
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