I. Introduction
The United Arab Emirates (UAE) has long been a preferred destination for high-net-worth and ultra-high-net-worth individuals looking to relocate. However, in recent years—particularly since the 2020 pandemic and the rise of remote work—there has been a growing influx of entrepreneurs, freelancers, and business-minded individuals seeking new opportunities.
For those managing multiple ventures, establishing a holding company can offer significant benefits. Choosing the right jurisdiction for such a structure is crucial, and the UAE presents a compelling case.
This article explores the key legal and tax advantages of setting up a personal holding company in the UAE.
II. Key Advantages
- A Stable and Well-Developed Legal Framework The UAE boasts a well-established and internationally recognized legal system, attracting some of the world’s largest multinational corporations. Regulators actively engage with stakeholders to refine legislation and conduct public consultations before making amendments, ensuring an evolving and business-friendly environment.
- Multiple Jurisdictions to Choose From The UAE is a federation of seven emirates, each with its own legislative powers. Additionally, various free zones across the country have distinct regulatory frameworks. This variety enables investors to compare and select the jurisdiction that best aligns with their specific needs and budget. The competition among jurisdictions also results in better services and cost-effective options for businesses.
- Flexible Legal Systems, Including Common Law Options While the UAE’s mainland legal system is rooted in civil law with influences from French and Islamic legal traditions, certain free zones—such as the Abu Dhabi Global Market (ADGM) and the Dubai International Financial Centre (DIFC)—operate under English common law. This flexibility is highly beneficial for structuring complex agreements, shareholder arrangements, and trusts.
- Efficient Dispute Resolution Mechanisms The UAE’s court system is relatively fast and efficient compared to many jurisdictions. Businesses also have the option to settle disputes through arbitration centers like the Dubai International Arbitration Centre (DIAC). In some cases, companies can opt to have disputes heard in specialized courts such as the DIFC Courts, which follow internationally recognized legal standards.
- Strong Commitment to Privacy Privacy is deeply ingrained in UAE business culture. While regulations such as anti-money laundering laws require certain disclosures, most business information remains confidential, ensuring a high level of discretion for investors.
- Minimal Administrative and Maintenance Burdens The UAE enforces Economic Substance Regulations (ESR) for certain business activities, including holding companies. However, compliance requirements for holding companies are generally straightforward and manageable. Each case should be assessed individually to ensure full compliance.
- Progressive Approach to Cryptocurrencies The UAE is one of the pioneering countries in cryptocurrency regulation, establishing the Virtual Assets Regulatory Authority (VARA) in Dubai. While banking relationships with cryptocurrency businesses can sometimes be challenging, the overall regulatory stance remains supportive, with many businesses already accepting payments in digital assets.
- Flexible Visa and Residency Policies The UAE offers some of the most accessible visa options globally. Foreign investors can obtain a UAE residence permit quickly—often within a few weeks—by establishing a company. This policy makes it easy for entrepreneurs and business owners to relocate and operate in the country.
- Business-Friendly Corporate Tax Regime In 2023, the UAE introduced a federal corporate tax of 9%, one of the lowest rates worldwide. The tax system also includes several relief measures:
- Profits up to AED 375,000 are taxed at 0%.
- Small business relief applies until 2026 for entities with annual revenues under AED 3 million.
- A participation exemption for dividends and capital gains offers additional tax efficiency.
- Foreign tax credits help mitigate double taxation.
These provisions make the UAE an attractive destination for holding companies.
- No Wealth, Gift, or Inheritance Tax Unlike many jurisdictions, the UAE does not impose wealth, gift, or inheritance taxes. This makes it an appealing option for long-term wealth preservation and succession planning.
- No Personal Income Tax on Salaries and Most Investment Returns The UAE’s corporate tax applies primarily to legal entities and business activities. However, wages, personal investment income, and real estate returns (not linked to a business license) remain tax-exempt, offering substantial financial advantages.
- Extensive Double Tax Treaty Network The UAE has signed over 140 double tax treaties, with more than 120 currently in force. This vast network allows UAE-based holding companies to benefit from reduced or exempted taxes on foreign-sourced income, such as dividends and capital gains, depending on treaty terms.
- Additional Benefits Beyond legal and tax advantages, the UAE offers a range of lifestyle and economic benefits, including:
- Exceptional safety and security
- World-class infrastructure
- Access to top-tier international schools
- A high standard of living
- A stable currency (AED) pegged to the US dollar
- A dynamic business environment fostering innovation and collaboration
III. How We Can Assist
Our team of legal and tax professionals specializes in helping clients establish holding companies in the UAE. We provide comprehensive support, including:
- Advising on the best jurisdiction based on individual needs
- Drafting and processing required documentation
- Facilitating company registration and compliance
- Assisting with UAE residency permits for shareholders and family members
- Supporting banking arrangements
For tailored guidance on setting up a holding company in the UAE, feel free to reach out to us.