Dubai has long been an attractive destination for expats, particularly due to its tax benefits. However, with the introduction of new tax laws from June 2023, things have changed. In this guide, you'll learn how to save on taxes in Dubai and the important considerations you should keep in mind as an expat.
Key findings
- Dubai still offers significant tax advantages, despite the introduction of a 9% tax from June 2023.
- Private individuals and companies can operate largely tax-free in Dubai if certain conditions are met.
- It is important to know the tax laws in both Dubai and your home country to avoid double taxation.
- Tax advice is essential to meet all legal requirements and avoid tax errors.
- The quality of life and job opportunities in Dubai make it an attractive destination for expats.
Tax advantages in Dubai
Why Dubai is attractive from a tax perspective
Dubai is known as a tax haven and attracts many expats and entrepreneurs. One of the main reasons is the lack of income tax. This means that salaries, pensions and capital income are tax-free. There are also no wealth taxes and property taxes. This makes Dubai particularly attractive for those who want to maximize their income.
What taxes are there in Dubai?
There is no income tax, no wealth tax and no tax on real estate ownership in Dubai. There is only a 4% transfer fee when buying property. Since 2018, a 5% VAT has been levied. However, since June 2023, a corporate tax of 9% has been in effect , which is levied on the profits of companies.
Tax exemption for individuals and companies
Private individuals enjoy almost complete tax exemption in Dubai. There are special free zones for companies in which they are exempt from the new 9% corporate tax. Setting up a company in Dubai or a free zone in Dubai can therefore be particularly advantageous. However, it is important to observe the tax laws in your home country in order to avoid double taxation.
The advantages of living in the UAE are not only tax-related. The quality of life and the numerous business opportunities also make Dubai an attractive destination for expats.
A cost calculator can help you calculate the financial benefits of emigrating to Dubai in detail. Insurance in Dubai should also be taken into account when planning.
New tax laws from June 2023
Introduction of the 9% tax
From June 2023, entrepreneurs who have registered their company in Dubai will have to pay the statutory tax rate of 9% for incomes exceeding 375,000 UAE dirhams (102,000 USD or 90,007 EUR). This news hits many entrepreneurs hard , because Dubai was previously so attractive due to the 0% tax.
Impact on emigrants
The introduction of the 9% tax has a significant impact on expats who wish to start or operate a business in Dubai. It is important to understand the new tax obligations and plan accordingly. Here are some of the key points:
- Companies with an income exceeding 375,000 UAE Dirhams are subject to tax.
- Smaller companies and start-ups may be exempt from tax if their income is below this limit.
- The tax could reduce Dubai's attractiveness as a location for business start-ups.
It is advisable to familiarize yourself with the new tax laws at an early stage and, if necessary, seek tax advice.
Comparison with other countries
Compared to other countries, the tax rate of 9% in Dubai is still relatively low. Here is a brief overview:
| country | Corporate tax rate |
|---|---|
| Germany | 15% - 30% |
| USA | 21% |
| Malta | 5% - 35% |
| Singapore | 17% |
| Dubai | 9% |
Despite the new tax, Dubai remains an attractive location for companies compared to other countries.
Tax challenges for emigrants
Tax liability in the home country
When moving abroad, tax liability in the home country often remains. This can lead to double taxation if no corresponding agreements exist. It is important to deregister your place of residence correctly and to clearly define your center of life.
Double taxation agreement
Double taxation agreements (DTAs) are contracts between two countries designed to prevent a person from paying taxes on the same income in both countries. These agreements regulate which country has the right to tax and how the taxes paid abroad are credited.
Important tax considerations before emigrating
Before emigrating, various tax aspects should be considered:
- Deregister your residence correctly : Your residence must be officially deregistered in order to end your tax liability in your home country.
- Relocate your center of life : Your center of life should clearly be in the new country in order to take advantage of tax benefits.
- Inheritance tax & gift tax : These taxes can remain relevant even after emigration.
Careful planning and advice are essential to avoid tax disadvantages and to fully exploit the advantages of the new tax environment.
Tax planning and advice
Why tax advice is important
Sound tax advice is essential to understand and make the most of the complex tax regulations in Dubai. A qualified tax advisor can help you find legal ways to save taxes and successfully implement your business ideas . Illegal models are not sustainable and can lead to significant problems in the long term.
Good tax advice ensures that you can sleep soundly without the constant worry that something could go wrong.
Tips for tax planning
- Plan early: Start your tax planning as early as possible, ideally before you emigrate to Dubai.
- Get legal advice: Consult a qualified tax advisor to ensure you meet all legal requirements.
- Review business ideas: Have your business ideas evaluated by an expert to make the most of tax benefits.
- Avoid double taxation: Find out about double taxation agreements between your home country and the UAE.
- Regular review: Review your tax situation regularly to be able to respond to changes in tax law.
Avoid common mistakes
- Inadequate planning: Inadequate tax planning can lead to unexpected tax burdens.
- Lack of advice: Without professional advice, you can easily overlook important tax benefits.
- Illegal models: Avoid illegal tax models as they are not sustainable in the long term and can lead to legal problems.
- Ignorance of the law: Make sure you are fully aware of and comply with the tax laws and regulations in Dubai.
Living and working in Dubai
Advantages of living in Dubai
Dubai is a vibrant city in the United Arab Emirates, known worldwide for its luxurious hotels, shopping malls and skyscrapers. The city offers a modern and advanced way of life that attracts many expats. Another advantage is the multicultural environment, which makes it possible to meet people from all over the world and build new networks.
Job opportunities and taxes
Dubai is an important economic location in the Middle East and offers numerous job opportunities in various sectors. Jobs in the financial sector, construction and tourism are particularly popular. For expats who want to set up a company in Dubai, the city offers attractive tax advantages as there is no income tax. This makes emigrating to Dubai particularly attractive for entrepreneurs and skilled workers.
Long-term perspectives
For those who want to stay in Dubai long-term, there are many opportunities to integrate and lead a fulfilling life. The city offers a high quality of life, modern infrastructure and numerous leisure opportunities. Moving to Dubai with the family can be particularly advantageous , as there are many international schools for children and the city is considered very safe.
Dubai is a living example of how people from different backgrounds can live in harmony, and the unique community helps make the city so special.
Legal aspects of tax exemption
Legal framework
In Dubai, there is a clear legal framework that governs tax exemption for individuals and companies. It is important to know and understand these laws in detail in order to avoid legal problems. The most important legal bases include:
- The federal laws of the United Arab Emirates (UAE)
- Specific regulations of the individual emirates
- International agreements and treaties
Legal pitfalls
Despite the tax advantages in Dubai, there are some legal pitfalls that expats should be aware of. These include:
- The danger of “extended limited tax liability” in Germany
- Complex regulations when opening bank accounts and securities accounts
- Possible conflicts with international tax agreements
Please do not allow yourself to be hypnotized by half-knowledge about taxes. Sound advice is essential to avoid legal pitfalls.
How to stay legally tax-free
To remain legally tax-free in Dubai, expats should follow these steps:
- Thorough research into the tax and legal framework
- Proof of residence in Dubai to avoid tax liability in other countries
- Regularly review legal changes and adapt your own tax strategy
By following these steps, you can ensure that you can take full advantage of the tax benefits in Dubai without getting into legal trouble.
Legal aspects of tax exemption are of great importance for companies operating in Dubai. It is important to be aware of the applicable laws and regulations in order to benefit from the tax advantages. Visit our website to learn more about the legal framework and the advantages of setting up a company in Dubai .
Conclusion
Dubai remains an attractive destination for expats, especially entrepreneurs and wealthy individuals, despite the introduction of a 9% tax in June 2023. The city still offers numerous advantages, including a luxurious living environment, favorable business opportunities and a strategic location. However, it is important to thoroughly research current tax laws and seek professional advice if necessary to avoid tax mistakes. With proper planning and preparation, you can make the most of Dubai's benefits while meeting your tax obligations.
frequently asked Questions
What taxes are there in Dubai?
Dubai has had a corporate tax of 9% since June 2023. However, there is no income tax for private individuals.
Why is Dubai attractive from a tax perspective?
Dubai is attractive from a tax perspective because until recently there were no income or corporate taxes. However, since June 2023 there is a corporate tax of 9%.
How does the new 9% tax affect emigrants?
The new 9% tax mainly affects companies. Private individuals remain exempt from income tax. However, this can mean additional costs for entrepreneurs.
Do I have to pay taxes in my home country if I emigrate to Dubai?
This depends on the tax laws of your home country. In many cases, you will still have to pay taxes in your home country, especially if there is no double taxation agreement with the UAE.
What are the most important tax considerations before emigrating to Dubai?
Before emigrating to Dubai, you should check the tax laws in both Dubai and your home country. It is advisable to seek tax advice to clarify possible tax obligations and benefits.
How can I ensure that I stay legally tax-free in Dubai?
In order to remain legally tax-free in Dubai, you should adhere to the legal framework and regularly inform yourself about changes in tax laws. Professional tax advice can be helpful here.