Deferred income in Morocco: calculation and impact on the result

In November you sell a twelve-month subscription, collected up front. Two months concern the year that is ending, ten concern the next one. Deferred income removes from the result the portion invoiced but not yet performed, and parks it as a liability until it is. Unlike its mirror image, the prepaid expense, it can come with VAT that is already due.

1. Which receipts are concerned

Deferred income targets sales already recorded as revenue that cover a future period. It must not be confused with a deposit, which was never recorded as revenue in the first place.

Situation	Treatment	Account concerned
Annual subscription collected in advance	Deferred income on the portion still to run	Deferred income
Rent received in advance	Deferred income	Deferred income
Maintenance contract sold	Deferred income on the remaining period	Deferred income
Deposit received, nothing performed	Advance received, never recorded as revenue	Customers — advances and deposits received
Gift card sold	A liability to the customer until it is used	A liability account, not revenue

The gift card is the case most often handled badly in retail. Taking money for a gift card creates no revenue: it creates a liability. The revenue arises on the day the customer uses it, not the day they buy it.

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2. Calculating the portion to defer

The calculation is the same time apportionment used for costs, applied here to the revenue amount excluding VAT and to the length of the contract.

1. Take the amount excluding VAT recorded as revenue.
2. Identify the period covered by the service, start and end.
3. Count the portion falling after the closing date.
4. Apply that fraction to the amount excluding VAT.
5. Note the calculation and keep the contract or subscription document.
6. Confirm that the service has genuinely not started on that portion.

Example: a subscription of 6,000 dirhams excluding VAT covering 1 November to 31 October, with the year closing on 31 December. Two months are performed, ten remain. Deferred income is 5,000 dirhams, and the closed year keeps only 1,000 dirhams of revenue.

3. VAT does not follow the revenue

This is the major difference from prepaid expenses, and the point that surprises people most. Restating the revenue in the accounts does not make VAT that has become due disappear.

• Under the cash-received regime: VAT falls due on collection, regardless of performance. You collected twelve months, so VAT covers twelve months, even though ten are deferred in the accounts.
• Under the debits regime: VAT falls due on invoicing. An annual invoice issued makes the VAT due in full, again with no link to performance.
• Practical consequence: Deferred income applies to the amount excluding VAT only. The output VAT account is not touched at closing.
• A useful check: A deferred income account that does not tie back to the VAT returns is not an anomaly: the two do not follow the same rule.

Remember the formula: accounting follows performance, VAT follows collection or invoicing. Trying to align them at closing creates an error where none existed.

4. Reverse and track performance

Deferred revenue must come back into the result as the service is delivered. It is an ongoing follow-up, not a single entry forgotten in a corner of the accounts.

1. Reverse the entry at the opening of the following year.
2. The revenue then takes its place in the year that bears the service.
3. Check that the deferred income account has cleared after the reversal.
4. Recalculate at every close for multi-year contracts.
5. Reconcile the balance against your book of live subscriptions.

In a subscription model, this balance is a commercial indicator as much as an accounting one: it measures revenue already collected that still has to be delivered.

Mistakes to avoid

• Recording the whole of a subscription collected in advance as revenue.
• Booking a gift card as revenue at the point of sale.
• Confusing deferred income with a deposit received.
• Restating output VAT along with the revenue.
• Forgetting to reverse and losing the revenue in the following year.
• Not recalculating multi-year contracts at every close.

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Frequently asked questions

When should deferred income be recognised?

When a sale already recorded as revenue covers a period after the closing date. The test is performance of the service, not collection and not invoicing.

Should VAT be restated as well?

No. Under the cash-received regime VAT falls due on collection, and under the debits regime on invoicing. Deferring the revenue in the accounts changes neither. The restatement applies to the amount excluding VAT.

What is the difference from a deposit received?

A deposit was never recorded as revenue: it goes straight to liabilities as an advance. Deferred income corrects revenue that has already been recorded. The balance-sheet outcome is close; the accounting route is not.

How should gift cards be treated?

As a liability to the customer, not as revenue. Revenue is recognised when the card is used. Cards unused at their expiry date become revenue at that point, under the conditions set out in the contract.

Does BelloPOS handle deferred income?

Not as an accounting restatement. BelloPOS records sales and receipts with their dates, which gives you the basis; the split across years is calculated from contract durations, with your accountant.

What to take away

Deferred income is the restatement that stops cash being mistaken for performance. The calculation itself is simple; the trap lies elsewhere: VAT does not defer with the revenue, and a gift card is not a sale. Get those two points right and the rest follows.

Sources

The figures and rules quoted above come from these pages, read on the date given in the article.

• Ministry of Economy and Finance, General Code of Accounting Standardisation, read 1 September 2026
• Moroccan Tax Administration, 2026 General Tax Code

Read next

Other practical guides on the same subject:

• Prepaid expenses in Morocco: calculation and accounting entry
• Accounting cut-off in Morocco: matching costs and revenue to the right year
• Invoices to be issued in Morocco: recording sales not yet billed
• Profit versus cash flow in Morocco: where did the money go?