The tax agreement between Morocco and Spain strengthens support for investing companies

1. The tax agreement in the Tangier-Tetouan-Al Hoceima region
2. Purpose of the debate
3. A solid legal framework in Morocco

On 25 September, a conference-debate on the provisions of the tax agreement between Morocco and Spain was held in Tangier, organised by the General Confederation of Enterprises (CGEM) of Tangier-Tetouan-Al Hoceima, in collaboration with the Morocco-Spain Economic Council (CEMAES), the Official Spanish Chamber of Commerce in Morocco (Tangier, Nador and Kenitra) and IFA Morocco.

The event served to inform those present about the tax treatment of royalties and, in particular, the concept of permanent establishment.​

Under the slogan ‘The Morocco-Spain Tax Agreement: reading and interpreting the provisions relating to royalties and permanent establishments’, this conference gave speakers the opportunity to highlight the practical implications of these provisions for both Moroccan and Spanish companies.

The experts recalled that the Tax Convention between Morocco and Spain, signed in Madrid on 10 July 1978 and which came into force on 16 May 1985, is largely inspired by the old OECD Models, and stressed that the main objective is to avoid double taxation and prevent tax evasion in income and wealth taxes.

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The Tax Agreement in the Tangier-Tetouan-Al Hoceima region

The Tax Agreement between Morocco and Spain defines the criteria for tax residence and regulates the taxation rules applicable to different types of income, but also establishes the conditions for the recognition of a permanent establishment.

The regional president of the CGEM in Tangier-Tetouan-Al Hoceima, Omar Kadaoui, highlighted that the region is home to a significant number of Spanish companies and stated that this meeting aims to inform investors based in the northern region of Morocco about the different provisions of the bilateral Tax Agreement in order to avoid any risk of double taxation.

"This Tax Agreement between Spain and Morocco contributes to the development of the Tangier-Tetouan-Al Hoceima region, which has a high concentration of foreign investment. In this regard, the CGEM in the northern region is responsible for organising similar meetings in order to provide all the necessary clarifications and further facilitate the establishment of investors not only in Tangier-Tetouan-Al Hoceima, but throughout Morocco," added Kadaoui.

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According to the statement by the regional president of the CGEM, the meeting represents a platform for dialogue between tax law professionals, economic operators and representatives of the relevant administrations, which aims to strengthen cooperation and the exchange of knowledge between the two countries.

The conference-debate allowed participants to share specific cases and experiences in tax matters, in order to clarify and improve the application of the agreement in both countries without falling into double taxation.

This meeting also seeks to encourage Spanish investors to continue believing in the country and in the Tangier-Tetouan-Al Hoceima region, which is distinguished by its cultural richness and exceptional openness, and is a strategic centre for domestic and foreign investment thanks to its connectivity, modern infrastructure, dynamism and growing attractiveness to Moroccan and, above all, international investors.

Objective of the debate

Asmae Charki, President of IFA Morocco, stated that the objective of discussing the Tax Agreement between Morocco and Spain is to clarify the existing provisions and identify problems related to its application, proposing constructive and beneficial recommendations.

The aim is to make the reading and interpretation of the agreement as consistent as possible, since analysing and knowing how to apply the provisions of Articles 12 and 15 of the General Tax Code (CGI) is a very difficult exercise that requires the intervention of tax experts to address key issues relating to royalties and permanent establishments.

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According to Charki, several factors have led to the Tax Agreement between Morocco and Spain being scrutinised:

• Morocco is one of Spain's main customers in Africa, accounting for more than 70% of its exports to the continent.
• It is our country's seventh largest customer worldwide.
• It is Spain's third largest partner outside the European Union.
• Economic and trade exchanges between the two countries reached record levels in 2024, reflecting the strength of bilateral economic relations.
• The stock of investments is estimated at €2 billion.
• More than 27,000 jobs have been created.
• More than 40 Spanish companies are established in the Tangier-Tetouan-Al Hoceima region.
• There is a common goal of hosting the 2030 World Cup, with joint organisation by Morocco, Spain and Portugal.
• The aim is to strengthen not only sporting cooperation, but also economic, industrial and political synergies between Morocco and Spain.

A solid legal framework in Morocco

Among Morocco's strategic objectives for 2030 is the construction of a stable and coherent legal and tax framework. This idea was emphasised by Mahat Chraibi, tax specialist and member of IFA Morocco, who highlighted the efforts made by Rabat to create a more predictable and attractive vision of an independent legal framework.

‘Implementing the Tax Convention protects both Spanish companies with a permanent establishment in Morocco and Moroccan companies in Spain from double taxation,’ explained Chraibi, who gave the example of non-resident companies complaining that they have been wrongly subject to withholding tax in Morocco and asking how to recover it, taking into account the contracts they have signed.

‘This therefore raises the problem of a tax deficiency in terms of purchases and expenses for the Moroccan entity, increasing the cost for the company and causing an imbalance between income and expenses between the parent company and the permanent establishment,’ added the tax expert.

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For his part, Mehdi Toumi, tax expert and member of IFA Morocco, shed light on the provisions of Articles 12 and 15 of the General Tax Code (CGI), pointing out the different royalties, including the granting of operating licences; remuneration for the provision of scientific, technical and other information; studies carried out in Morocco or abroad; remuneration for technical assistance; remuneration for exploitation; the organisation or exercise of artistic activities; rental rights; honoraria and remuneration for services of all kinds.

In the same context, Mahat explained the remuneration for services of any kind used in Morocco or provided by persons of origin, explaining circular note 717, which defined a series of remunerations and royalties provided for in Article 15.