Taxation in Dubai: What You Need to Know Before Settling or Investing
Dubai is attracting more and more French entrepreneurs, executives, and investors. The reason is clear: this city combines a growing economy, exceptional political stability, and a favorable tax framework.
Taxation in Dubai: What You Need to Know Before Settling or Investing
Dubai is attracting more and more French entrepreneurs, executives, and investors. The reason is clear: this city combines a growing economy, exceptional political stability, and a favorable tax framework. However, before settling there or launching a business, it is essential to understand the local laws and the differences from the French system.
Dubai is not a tax haven
Contrary to popular belief, the United Arab Emirates are not classified as tax havens. A bilateral agreement has been established with France, allowing the French tax administration to verify the situation of French residents living in Dubai.
To be considered a tax resident in the United Arab Emirates, it is not enough to simply have a visa or a company there. You must also establish your center of life and economic interests: main residence, professional activity, bank accounts, daily expenses, and effective presence of at least 183 days per year.
A poorly prepared move could result in additional taxation in France. It is therefore advisable to get assistance to prepare your departure in a compliant and secure manner.
Setting up a business in Dubai: permits, zones and responsibilities
Any economic activity, whether commercial, service, or industrial, requires an operating permit, a license.
The choice of structure will depend on your project:
Freezone: 100% foreign ownership, simplified procedures but limited access to the local market.
Mainland: allows operation in the Emirati market, but imposes more administrative responsibilities.
Licenses can be renewed annually, with an average cost ranging from 15,000 to 30,000 AED, depending on the activity. In addition to visa costs for employees, it should be noted that health insurance is essential, as without it no work permit can be granted.
A business tax set at 9%
Since 2023, the United Arab Emirates have implemented a 9% tax on profits exceeding 375,000 AED (approximately 89,000 euros). This rate, one of the lowest in the world, is very attractive compared to the 25% tax applied in France.
This tax framework stimulates the expansion of small and medium-sized enterprises, allowing them to reallocate their profits into development, marketing, or research. Thus, young companies and foreign investors benefit from significant net profitability and solid regulatory stability.
No income tax and mandatory social contributions
Dubai stands out for the complete absence of personal income tax. Salaries, dividends, and capital gains are not subject to tax, which improves purchasing power and makes the destination more attractive for expatriates.
On the other hand, there is no social contribution system similar to France's. It is therefore imperative for each resident to take out private insurance and plan for their own retirement. This social independence requires careful planning, particularly for families and self-employed workers.
A VAT rate of 5%, compared to 20% in France
Introduced in 2018, the Value Added Tax (VAT) in the United Arab Emirates has a rate of 5%. It applies to most products and services, including commercial and real estate transactions.
This reduced rate allows companies to offer more competitive prices and optimize their profit margins. By comparison, the French VAT, which is set at 20%, imposes a significantly heavier burden on businesses and consumers.
A business-friendly climate and modern infrastructure
Dubai has built its appeal on a simple approach: stability, efficiency, and global openness. The administration has significantly digitized its processes, company creation is generally fast, and logistics facilities are among the most efficient in the world.
The country also supports economic diversification: real estate, commerce, technology, finance, sports, renewable energy... There are many promising sectors where French entrepreneurs discover real opportunities.
Essential considerations before settling in the United Arab Emirates
Before deciding to settle or invest in Dubai, it is essential to carefully consider certain aspects:
• The selection of the business form (Freezone, Mainland, Holding) is based on your commercial and tax objectives.
• The total cost of setup and operation, including licenses, offices, visas, and insurance.
• The necessary reporting obligations to avoid double taxation and ensure compliance with French authorities.
• The support of qualified specialists, mastering both French tax law and local legislation.
In conclusion
Settling in Dubai means enjoying a favorable tax regime, a robust economy, and a framework conducive to international expansion. However, the success of an expatriation or business launch depends on preparation, strategy, and compliance with standards.
It is strongly recommended to conduct a comprehensive tax and legal assessment before taking any action, in order to determine the optimal strategy for your personal and professional situation.
Personalized support by LATRECHE ASSOCIATES
LATRECHE ASSOCIATES guides entrepreneurs, investors, and individuals in their establishment and organization processes in Dubai. Our consulting firm conducts a complete analysis of your tax and wealth situation, guides you in choosing the most appropriate structure, and ensures compliance between France and the United Arab Emirates.