Buying or leasing a car in Dubai: costs, VAT and registration 2026

For most people who move to Dubai, a car is not a luxury but a necessity. The metro covers only part of the city, and many residential areas, free zones and schools are realistically only reachable by car or taxi. So the question is rarely whether you need a car, but how you get one: buy, finance or lease. This article reflects the situation as of October 2026, with the costs that actually arise and the steps at the Roads and Transport Authority (RTA).

Key points at a glance

• Buying a car in the UAE is subject to 5% VAT, both for new cars and for used cars from registered dealers. Only a private sale between individuals is generally outside VAT.
• If you import a vehicle, 5% customs duty on the CIF value applies, plus 5% VAT on top.
• You can only register a car in your name once you hold a residence visa and an Emirates ID. Until then, renting or leasing is the only option.
• No valid motor insurance, no registration. RTA registration is valid for twelve months and must be renewed every year.
• Car loans are capped at 80% of the vehicle value and a term of 60 months.
• As a resident you need a UAE driving licence. Licences from Germany, Austria and Switzerland can be exchanged without a driving test.

Buying vs leasing: the comparison

What is called “leasing” in Dubai is usually long-term rental: you pay a fixed monthly rate, insurance, registration and maintenance are typically included, and the car belongs to the provider. Classic leasing with a residual value and purchase option also exists, mainly through dealers and banks, but it is less common.

What buying a car actually costs

5% VAT on the purchase price

The common claim that there is no VAT on cars in Dubai has been wrong since VAT was introduced on 1 January 2018. Vehicles are subject to the standard rate of 5%. Dealers include VAT in the price. For used cars bought from a registered dealer, VAT may be charged only on the dealer’s margin under the profit margin scheme. If you buy from a private individual, no VAT applies, because private individuals do not make taxable supplies.

If you buy the car through your own company, note that input VAT on a vehicle that is available for private use is generally not recoverable under UAE VAT rules. For Corporate Tax, only the business share of the costs counts. What the UAE genuinely does not have is an annual vehicle tax like in Germany.

Imports: customs duty plus VAT

For vehicles you import from Europe, customs charges 5% on the CIF value, meaning purchase price plus freight and insurance. 5% VAT is then added to the total including duty. On top come shipping, port fees, technical inspection and possibly modifications to lights or speedometer. Used imported vehicles in Dubai generally must not be older than ten years. For common models, buying locally is therefore usually cheaper than importing.

RTA fees

These are guide values as of October 2026. Smaller service fees are added, and the RTA fee calculator is binding. Short vanity plates are auctioned separately by the RTA and sometimes sell for more than the car itself. You do not need one for everyday life.

Financing: what the Central Bank requires

Car loans are offered by banks and licensed finance companies. The rules of the UAE Central Bank set tight limits:

• The loan may not exceed 80% of the vehicle value, so you need at least 20% equity.
• The term is limited to 60 months.
• Your total monthly loan repayments may not exceed half of your salary.
• The vehicle serves as collateral, and the bank is registered with the RTA as the secured party.

In practice, banks ask for proof of salary, often a salary transfer to an account with the lending bank, and a minimum period of employment. If you are an entrepreneur without a classic salary, the bank looks at bank statements and your company documents instead. Without a UAE account, it does not work. How to open one is explained on our page on bank accounts in Dubai.

Leasing and long-term rental in practice

Leasing plays to its strengths in the arrival phase. As long as your residence visa has not been issued, you cannot register a car in your name, but you can rent one. As a visitor, you may drive a rental car with your German, Austrian or Swiss licence. Once you are a resident, rental companies require a UAE licence.

Check these points in the contract:

• Mileage limit: excess kilometres are charged per kilometre.
• Deposit: it is usually blocked on your credit card and released only weeks after return, because fines and toll charges arrive late.
• Salik and fines: the provider passes them on, often with a handling fee.
• Excess: check how much you pay in case of damage and whether full cover without excess is available.
• Early return: if you do not keep the minimum term, a penalty often applies.

Large rental firms and specialised leasing providers offer terms from one month to several years. Get several offers and compare the total cost including deposit, insurance and mileage limit, not just the monthly rate.

RTA registration: how it works

Driving without valid registration is not allowed in Dubai. The responsible authority is the Roads and Transport Authority (RTA). The result is the vehicle registration card, the “Mulkiya”, which you can also access digitally in the RTA app. You need a traffic file in your name linked to your Emirates ID.

New cars

With a new car, the dealer usually handles registration. You provide your Emirates ID, driving licence and proof of insurance, and the dealer submits the customs certificate and purchase contract. New vehicles in Dubai are exempt from technical inspection for the first years; after that, it is required at every renewal.

Used cars

1. Technical inspection at an approved test centre
2. Take out insurance in your name
3. Have any bank financing registered by the seller cleared
4. Ownership transfer at the RTA, online or at a service centre
5. Issue of the Mulkiya and, if needed, new plates

Before buying, check whether the vehicle has outstanding fines or a registered loan. Both must be cleared before the transfer. GCC-spec vehicles are built for heat and constant air conditioning. With imports from the US or Japan, take a close look at the accident history.

Insurance: mandatory before registration

Third-party liability insurance is required by law and is a precondition for every registration and renewal. Most owners choose comprehensive cover. For newer vehicles, “agency repair” is common, meaning repairs at the brand’s authorised workshop. The premium depends on the vehicle value, the car’s age, your driving experience and claims history. Some insurers take into account a no-claims certificate from your previous insurer in Europe, so ask for it specifically.

Salik, parking and fuel

Dubai charges road tolls through the Salik system. A tag on the windscreen is detected at the toll gates, and the fee is deducted automatically from your Salik account. Since 31 January 2025, time-based rates apply:

Different times apply during Ramadan. If your Salik balance is too low, top it up promptly, otherwise fines follow. Public parking costs vary by zone and time of day and are paid by app or SMS.

Fuel prices are set monthly by a government committee. They are well below DACH levels but move with the oil price, so we deliberately do not quote fixed prices per litre. At most petrol stations you are served by staff, and EV charging points are widely available across the city.

Driving licence: exchange instead of starting over

Once you hold a residence visa, you need a UAE driving licence. Germany, Austria and Switzerland are among the countries whose licences the RTA exchanges without driving school or test. You need your Emirates ID, an eye test at an approved optician and your original licence. Total fees are around AED 1,100. More details are in our article on the driving licence in Dubai.

Traffic rules and checks

A new federal traffic law has applied in the UAE since 29 March 2025. Among other things, it tightens penalties for driving under the influence of alcohol or drugs. There is effectively zero tolerance for alcohol at the wheel, with heavy fines, licence withdrawal and imprisonment possible. The police do carry out checks, and the network of speed cameras is dense. Fines are recorded on your traffic file and must be paid at the latest before the registration is renewed. In addition, there is a points system (“black points”) that leads to licence suspension once the limit is exceeded.

Our view

For the first months after moving, leasing or long-term rental is almost always the right choice. You are mobile before your visa, Emirates ID, licence and bank account are in place, and you do not tie up capital. Buying pays off if you stay several years and want to manage the vehicle yourself. Be realistic in your calculation: 5% VAT, insurance, annual registration and depreciation all belong in it.

If you buy the car through your own company, document its use properly. Private use excludes input VAT recovery, and for Corporate Tax only part of the costs counts. In any case, the path to your own car starts with your residence status. How to obtain a visa and Emirates ID through your own company is explained on our pages on company formation in Dubai and Dubai residency.

FAQ

Do I pay VAT on a car in Dubai?

Yes. New cars and used cars from registered dealers are subject to 5% VAT. A private sale between individuals is not subject to VAT.

Can I buy a car without a residence visa?

You can only register a vehicle with an Emirates ID and a traffic file. Until then, renting or leasing remains the option.

Can I bring my car from Germany?

Yes, if it meets the import requirements: left-hand drive, generally no older than ten years as a used car, a passed technical inspection and, where necessary, adjustments to local standards. 5% customs duty on the CIF value and 5% VAT apply. For common models, buying locally is usually cheaper.

How large must the down payment be for a car loan?

At least 20%, because banks may finance no more than 80% of the vehicle value. The maximum term is 60 months.

How often do I need to renew the registration?

Every year. You need valid insurance, paid fines and, for older vehicles, a passed technical inspection.

Who is liable for fines and tolls when leasing?

You as the driver. The provider receives the notices and passes them on to you, usually via the credit card on file.

Planning your move to Dubai? In an initial consultation we clarify which structure suits you and in which order company, visa, bank account and everyday topics such as your car are best tackled. Book an initial consultation

As of October 2026. Fees, rates and requirements change. The current information from the RTA, the Central Bank and the Federal Tax Authority is authoritative. This article is not legal or tax advice.