Setting up a company in Dubai while maintaining residency in Germany is an attractive option for entrepreneurs who want to benefit from the tax advantages and dynamic business environment in the Emirates. However, it is essential to pay close attention to the legal and tax requirements in both Germany and Dubai. A solid local presence in Dubai, including an office and a managing director, is crucial to ensure long-term success.
Key findings
- Setting up a company in Dubai does not require relocation of residence to Dubai, but does require an appropriate local presence.
- Dubai offers a competitive tax system and numerous economic advantages for entrepreneurs.
- Avoiding double taxation requires a clear separation of business activities between Dubai and Germany.
- Legal framework and compliance requirements in Dubai must be carefully observed.
- A solid business foundation in Dubai, including an office and a local managing director, is crucial for long-term success.
Legal framework for setting up a company in Dubai
Requirements for foreign entrepreneurs
The legal framework and compliance requirements in Dubai must be carefully observed. Choosing the right company structure and opening a bank account are crucial steps in the incorporation process. Foreign entrepreneurs must meet certain requirements to be able to set up a company in Dubai. These include complying with local laws and regulations and ensuring a physical presence on site.
Necessary documents and permits
Various documents and permits are required to set up a company in Dubai. These include:
- A valid passport
- A detailed business plan
- Proof of financial capacity
- Approvals from local authorities
A cost calculator can be helpful to calculate the fees and costs in advance.
Role of the local sponsor
In many cases, the involvement of a local sponsor is necessary. This sponsor must be a citizen of the United Arab Emirates (UAE) and usually holds 51% of the company shares. The local sponsor plays an important role in compliance with legal requirements and can also assist in obtaining the necessary permits.
Setting up a company in Dubai while maintaining residence in Germany is an attractive option for entrepreneurs who want to benefit from the tax advantages and dynamic business environment in the Emirates.
Tax benefits and obligations
Tax system in Dubai
Dubai offers an extremely attractive tax system for entrepreneurs. There is no income tax and only a low value added tax . From June 2023, a corporate tax of nine percent will be introduced, but this only applies to local companies and is charged above a very high tax-free threshold.
Double taxation agreement
Germany and the United Arab Emirates have concluded a double taxation agreement (DTA). This agreement is intended to ensure that income is not taxed twice. However, entrepreneurs should seek professional advice to understand the exact rules and advantages of the DTA.
Tax obligations in Germany
Entrepreneurs who maintain their residence in Germany must be aware of their tax obligations. These include:
- Income tax : All income, including that earned in Dubai, must be taxed in Germany.
- Trade tax : If the business ideas are also implemented in Germany, trade tax may be payable.
- Sales tax : Sales tax may be payable on services or deliveries of goods to Germany.
It is extremely important to seek professional advice in advance in order not to overlook any tax risks.
Practical steps to start a company in Dubai
Selection of company form
Choosing the right company structure is crucial to the success of your business operations in Dubai. There are several different legal structures you can choose from, including free zone companies , offshore companies and local companies. Each of these structures has its own advantages and disadvantages, depending on your business goals and requirements.
Registration process
The registration process in Dubai can be complex and requires compliance with various legal requirements. A business formation expert will guide you through the necessary steps to start your business. Note that the requirements may vary depending on your specific business formation.
- Selection of company form
- Submission of the necessary documents
- Obtaining the necessary permits
- Registration with the relevant authorities
A structured plan and compliance with legal requirements are the key to success.
Opening a business account
After successfully registering your business, the next step is to open a business account. This is essential for handling your financial transactions. Many banks in Dubai offer special accounts for companies operating in the free zones. Make sure you have all the necessary documents ready to speed up the process.
- Passport copies of the shareholders
- Articles of Association
- Trading license
- Proof of company headquarters
A well-managed business account is essential for the smooth running of your business activities.
Establish a business presence in Dubai
A strong local presence is crucial for the success of a business in Dubai. This includes not only having a physical office but also hiring local staff. A local presence makes it easier to build and maintain relationships with customers and business partners.
Moving to Dubai with family can facilitate integration and understanding of local culture and business practices.
Challenges and solutions
The cultural differences between Germany and Dubai can be challenging. It is important to familiarize yourself with local customs and business practices to avoid misunderstandings. An experienced strategic partner can provide valuable support in this regard.
Compliance with the legal requirements in Dubai is essential. Entrepreneurs should seek professional advice in advance in order not to overlook any tax risks. This includes aspects such as exit taxation, foreign tax law and relocation of functions abroad.
A long-term business strategy is crucial for success in Dubai. Entrepreneurs should prepare for the need for a local presence and ensure they meet legal requirements. Working closely with local partners can help overcome obstacles and ensure sustainable success.
Despite the many advantages, there are also some challenges and risks that must be taken into account when setting up a company in Dubai. Cultural customs from the Arab-Muslim and Indian cultural areas may require adaptation. In addition, there is currently no valid double taxation agreement between Germany and the United Arab Emirates, which can make international cooperation more difficult.
Advantages of starting a company in Dubai
Dubai is a tax haven for entrepreneurs. Companies benefit from exemption from corporate taxes and income taxes. There are also numerous agreements to avoid double taxation with various countries around the world.
Due to its strategic location between East and West, Dubai acts as an ideal trade centre, allowing companies to access a variety of international markets and business opportunities.
The advantages of living in the UAE are numerous: a high quality of life, modern infrastructure and a safe environment. These factors make Dubai not only an attractive location for starting a company, but also for the personal lives of entrepreneurs.
Setting up a company in Dubai offers numerous advantages, such as tax incentives and strategic location, but also challenges that need to be overcome.
Setting up a company in Dubai offers numerous advantages, including tax incentives and a strategic location. Use our comprehensive consulting service and practical cost calculator to plan your company formation as best as possible. Visit our website for more information and get started today!
Conclusion
Setting up a company in Dubai while maintaining residency in Germany is an attractive option for entrepreneurs who want to benefit from the tax advantages and dynamic business environment in the Emirates. However, it is essential to pay close attention to the legal and tax requirements in both Germany and Dubai. A solid local presence in Dubai, including an office and a managing director, is crucial to meeting the legal requirements and being able to fully exploit the benefits. With the right preparation and compliance with legal requirements, setting up a company in Dubai can be a rewarding and successful venture.
frequently asked Questions
Can you set up a company in Dubai and keep your residence in Germany?
Yes, it is possible to set up a company in Dubai while maintaining residency in Germany. However, it is important to establish an appropriate presence in Dubai through an office and a local managing director.
Is it necessary to reside in Dubai to set up a company?
No, setting up a company in Dubai does not always require a move. However, it is important to provide the appropriate base by having an office and at least one local managing director.
What tax advantages does Dubai offer for entrepreneurs?
Dubai offers a competitive tax system with low profit taxes. In addition, in many cases there is no income tax, which makes it particularly attractive for entrepreneurs.
What documents and permits are required to set up a company in Dubai?
To set up a company in Dubai, you will need a valid passport, visa, incorporation documents and, if necessary, permits from local authorities. A local sponsor may also be required.
What role does a local sponsor play when setting up a company in Dubai?
A local sponsor is often necessary to set up a company in Dubai. The sponsor, who must be a UAE citizen, typically holds 51% of the company shares, while the foreign entrepreneur owns the remaining 49%.
How to avoid double taxation when setting up a company in Dubai?
To avoid double taxation, entrepreneurs should use the double taxation agreements between Germany and the UAE. A clear separation of business activities and compliance with the tax regulations of both countries are crucial.