Taxation of property income in Morocco: what rate of withholding tax to apply in 2023?

• What are the changes introduced by the 2023 finance law on the taxation of property income in Morocco?

• What are the withholding tax rates to be applied in 2023 on rents paid

Before the entry into force of the LF 2023, article 73 of the CGI provided for the taxation of income from property with income tax at the rate of:

✓ 10% if the gross annual amount is less than 120 DH and;

✓ 15% otherwise.
These two rates were liberating from the IR.

The modifications introduced by the LF 2023 are as follows:

▪ Maintenance of the current method of collection, ie the application of the rates of 10% and 15% withheld at source (non-discharging).

▪ The reinstatement of the taxation of property income at the rates of the progressive scale. From now on, the net taxable income will be obtained by applying a 40% deduction on the corresponding gross property income:

➢ Income received and from the rental of built and unbuilt buildings and constructions of any kind;

➢ At the rental value of the buildings and constructions that the owners make freely available to third parties.

➢ Eviction compensation paid to occupants of real estate by the owners of said property.

➢ Income from profits distributed by OPCIs.

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▪ The integration of property income in the annual declaration of global income.

▪ The removal of the option for the spontaneous payment of the IR relating to property income.

▪ Exemption from the withholding tax obligation:

➢ When the gross annual amount of taxable property income paid to an owner does not exceed 30 DH.

➢ OPCIs in respect of proceeds from profits distributed to natural persons subject to income tax under the real net income regime or that of simplified net income, provided that these persons provide a certificate of ownership of the securities including the number of their IR identification.

As a reminder, the rates applied within the framework of the withholding tax applied in 2023 in Morocco on property income are as follows:

(*) these rates are no longer free from 1^er January 2023