Double Taxation Treaties: A Major Asset for Free Zones
Morocco has signed over 55 double taxation conventions (DTCs) with partner countries worldwide. These treaties are particularly useful for companies established in free zones that conduct cross-border operations — dividend transfers, royalty payments, service fees, and expatriate salaries.
Main Applicable Double Taxation Conventions
| Country | Withholding tax dividends | Withholding tax royalties | Withholding tax interest |
|---|---|---|---|
| France | 15% (5% if +25% shares) | 10% | 10% |
| Spain | 10% (5% if +25% shares) | 10% | 10% |
| Germany | 15% (5% if +25% shares) | 10% | 10% |
| Netherlands | 10% (6.5% if +25% shares) | 10% | 10% |
| United Kingdom | 10% | 10% | 10% |
| Belgium | 10% (6.5% if +25% shares) | 10% | 10% |
| UAE | 0% | 10% | 0% |
Indicative rates — refer to each treaty text for precise conditions.
How to Use DTCs in a Free Zone?
To benefit from a reduced withholding tax rate under a DTC, the free zone company must:
- Be a Moroccan tax resident: hold a tax residency certificate issued by the General Directorate of Taxes (DGI).
- Meet the treaty conditions: in particular, the beneficial ownership clauses and, in some cases, anti-abuse clauses (LOB – Limitation of Benefits).
- Produce the required documents: residency certificate, specific forms requested by the source state.
Free Zone and Exclusion Clauses
Note: some double taxation conventions contain specific clauses that may exclude companies benefiting from preferential tax regimes (such as free zones) from certain treaty benefits. It is essential to analyze the applicable convention before structuring significant financial flows.
OECD Anti-Abuse Rules (BEPS)
As part of the OECD BEPS project, Morocco has incorporated anti-abuse clauses into its treaties, such as the Principal Purpose Test (PPT). A purely artificial structure created solely to benefit from a DTC’s advantages without real economic substance may be recharacterized.
Conclusion
Double taxation conventions are a valuable tool for companies in Moroccan free zones, provided they are used correctly with genuine economic substance. Cabinet Dami & Associés assists you in analyzing the DTCs applicable to your situation and optimally structuring your financial flows.
