Setting up a company in Dubai while maintaining residence in Germany is an attractive option for many entrepreneurs. Dubai offers numerous advantages such as a competitive tax system, a strategic geographical location and impressive business opportunities. However, there are also some challenges and legal frameworks that must be considered. In this guide, you will learn everything you need to know about the requirements, tax aspects, company forms and legal frameworks associated with setting up a company in Dubai.
Key findings
- It is possible to set up a company in Dubai and maintain residency in Germany, but it requires an adequate presence in Dubai.
- Setting up a company in Dubai offers significant tax advantages, but requires compliance with certain tax obligations in Germany.
- Choosing the right company structure and free zone in Dubai is crucial to the success of the company.
- A local manager and an office in Dubai are necessary to meet legal and tax requirements.
- With the right planning and support, bureaucratic, cultural and logistical challenges can be overcome.
Requirements for setting up a company in Dubai
Required documents
To set up a company in Dubai , various documents are required. These include:
- Passport copies of all shareholders
- Proof of residential address
- Bank reference letter
- Business plan or description of business ideas
Local presence and office requirements
Depending on the type of company you choose, it may be necessary to have a physical presence in Dubai. This often means that an office must be rented. Specific office requirements must be observed, especially when setting up a free zone in Dubai .
| Company form | Office requirement |
|---|---|
| Freezone | Office in the free zone required |
| Offshore | No physical presence necessary |
Role of the local managing director
In many cases, it is necessary to appoint a local managing director. This must be based in Dubai and can play an important role in ensuring compliance with local regulations. The role of the local managing director is particularly important in order to meet legal requirements and successfully implement the business ideas.
The legal requirements for setting up a company in Dubai are varied. It is important to be aware of the specific rules and regulations to avoid legal problems.
Tax advantages and obligations in Dubai and Germany
Tax advantages in Dubai
Taxes in Dubai are manageable and not comparable to German conditions. For example, no income tax and only a small amount of VAT have to be paid. In addition, there is the corporation tax of nine percent (from June 2023), which only has to be paid by local companies, above a very high tax-free allowance. Dubai is considered a tax haven and offers numerous advantages for entrepreneurs who emigrate to Dubai or the UAE.
Tax obligations in Germany
Anyone who wants to benefit from the business opportunities in Dubai but does not want to relocate should pay attention to the tax laws in their home country to ensure that all required taxes are paid. It should be noted that in most cases and depending on the location, it is not possible to benefit from the tax advantages in Dubai in this case, as income tax usually has to be paid in the home country.
Important: Even though Dubai is considered a tax-free paradise, entrepreneurs should not underestimate the tax obligations in Germany. Thorough planning and advice are essential to avoid tax disadvantages.
Double taxation agreement and its effects
Germany and Dubai do not have a double taxation agreement. This means that the actual place of business must be proven to be in Dubai. Therefore, if you set up a company in Dubai, you will need your own premises, staff and a local business address. In addition, all business must definitely be managed from Dubai.
A cost calculator can be helpful in determining the financial impact of various tax obligations and making an informed decision.
Choosing the right company form and free zone
Popular business forms in Dubai
There are various types of companies in Dubai that can be chosen depending on your business model and goals. The most popular ones include:
-
Freezone companies
- Freezone Sole Proprietorship (FZE)
- Freezone Limited Liability Company (FZCO or FZ-LLC)
-
Mainland companies
- one-man business
- Civil society
- Limited Liability Company (LLC)
- Joint Stock Company (PJSC)
Advantages and disadvantages of the different free zones
Choosing the right freezone is crucial to the success of your company formation in Dubai. Each freezone offers different benefits and requirements. Here are some of the main advantages of setting up a company in a freezone:
- 100% foreign ownership without local partner
- Tax incentives as long as business is carried out within the free zone or abroad
- Opportunity to sponsor foreign employees and apply for residence visas
- Infrastructure tailored to specific industries and business areas
However, some disadvantages may be:
- Restrictions on business relationships with local customers
- Higher costs for office space and services within the free zone
Criteria for selecting the right free zone
When choosing the right free zone, you should consider the following criteria:
- Business model and objective : Which free zone best suits your business model?
- Costs : Use a cost calculator to compare the financial aspects of the different free zones.
- Infrastructure : Which free zone offers the best infrastructure for your industry?
- Legal requirements : What legal requirements must be met?
Thorough advice and support from experts can make the start-up process much easier and avoid legal pitfalls.
Legal framework and compliance
The legal requirements for setting up a company in Dubai are varied. It is important to be aware of the specific rules and regulations in order to avoid legal problems. This also includes adhering to the cultural customs of the Arab-Muslim and Indian cultures.
Legal requirements in Dubai
The complexity of these processes and the need to comply with all relevant regulations can be challenging for many. In addition, setting up a company in Dubai can involve various challenges and risks, particularly with regard to tax aspects such as exit tax, foreign tax law and relocation of functions abroad. It is therefore extremely important to seek professional advice in advance in order not to overlook any tax risks.
Compliance requirements in Germany
Adhering to German compliance requirements is equally important. Business owners must ensure that they comply with all relevant German laws and regulations to avoid legal consequences. This includes, among other things, taking into account tax obligations and adhering to German accounting standards.
Important legal pitfalls
There are several legal pitfalls that entrepreneurs need to be aware of. These include:
- Exit taxation : When the company headquarters is relocated abroad, considerable tax burdens can arise.
- Foreign Tax Act : This law regulates the taxation of foreign income and can entail complex requirements.
- Relocation of functions : Relocating company functions abroad can also bring with it tax and legal challenges.
Setting up a company in Dubai requires careful planning and comprehensive knowledge of local laws and regulations.
Practical tips for doing business in Dubai
In Dubai, networking is an essential part of business success. Personal relationships and trust play a big role . It is advisable to regularly attend local business meetings and networking events. This should familiarize yourself with the local business culture, which is strongly characterized by respect and politeness.
Effective local management is crucial to the success of your business in Dubai. Here are some tips:
- Cultural sensitivity : Understand and respect local customs and business practices.
- Communication : Maintain open and clear communication with your team and business partners.
- Flexibility : Be prepared to adapt to rapidly changing market conditions.
A well-managed on-site team can make the difference between success and failure.
Dubai offers a variety of resources and services that entrepreneurs can take advantage of, including:
- Freelancers and agencies : Use local talent for specialized tasks.
- Consulting firms : These can help you navigate the local market.
- Educational Institutions : Schools for children in Dubai offer international standards, which is an advantage for entrepreneurs who move to Dubai with their families.
A job in Dubai can also be an opportunity for family members to develop professionally while supporting family life.
Common challenges and how to overcome them
A common challenge with budgeting is the lack of accurate and up-to-date financial data . Without access to reliable information about income and expenses, it can be difficult to make informed decisions. Business owners should ensure they have a robust accounting system in place and regularly review financial reports.
The business culture in Dubai differs significantly from that in Germany. It is important to familiarize yourself with local customs and show respect for cultural differences . Entrepreneurs should take time to build networks and maintain relationships, as personal connections are of great importance in the Arab business world.
The costs of starting and running a business in Dubai can be high. Entrepreneurs need to plan carefully and create a detailed budget to avoid financial bottlenecks. Logistical challenges, such as importing goods and complying with local regulations, can also be time-consuming and costly.
Tip: Use local resources and services to reduce costs and work more efficiently. Local consultants and service providers can provide valuable support and help overcome bureaucratic hurdles.
Support and advice for entrepreneurs
Setting up a business in a foreign country can be complex, so it is advisable to seek support from experts right from the start. They can guide and advise you on choosing the company structure, applying for a license and other necessary steps. An experienced strategic partner can offer close cooperation and support in overcoming problems and obstacles.
Ongoing support with fixed contact persons is essential. Whether remotely or on-site, continuous support helps in various areas and ensures a smooth process before, during and after the company is founded.
Entrepreneurs planning to set up a company in Dubai will find comprehensive support and advice from us. Use our cost calculator and learn more about the advantages of the RAK and IFZA free zones. Visit our website for detailed information and get started today!
Conclusion
Setting up a company in Dubai while maintaining residency in Germany is an attractive option for many entrepreneurs. Dubai offers numerous advantages such as a competitive tax system, a strategic geographical location and impressive business opportunities. However, there are also some challenges and legal frameworks that must be considered. Having an actual presence in Dubai through an office and a local managing director is essential to meet the legal and tax requirements in both Germany and the United Arab Emirates. With the right planning and support, entrepreneurs can successfully set up a company in Dubai and benefit from the many advantages.
frequently asked Questions
Can you set up a company in Dubai and keep your residence in Germany?
Yes. However, it is crucial to establish an appropriate presence outside Germany and especially in the Emirates through an office and a local managing director. This is the only way to create a solid business foundation.
What documents are required to set up a company in Dubai?
To set up a company in Dubai, you will need, among other things, a valid passport, a detailed business plan, letters of reference from your bank and possibly other specific documents depending on the type of business.
What tax advantages does Dubai offer for entrepreneurs?
Dubai offers significant tax advantages, including no income tax for individuals and a very low corporate tax rate. This makes Dubai an attractive location for entrepreneurs.
What tax obligations do I have in Germany if I set up a company in Dubai?
Even if you set up a company in Dubai, as a German citizen you remain liable to pay taxes in Germany. It is important to properly declare all income and follow German tax laws.
Is it necessary to reside in Dubai to set up a company?
Setting up a company in Dubai does not always have to involve moving. However, it is important to provide the appropriate base by having an office and at least one local or at least non-German-based managing director.
What are the most common challenges when starting a company in Dubai?
The most common challenges include bureaucratic hurdles, cultural differences, financial and logistical challenges. However, with the right planning and support, these can be overcome.