Renting Out Property in Dubai and Taxes: What Actually Applies

If you rent out an apartment in Dubai, you do not pay income tax on it. That is the short answer, and it is correct. But that does not make letting tax-free in the sense of free of charges: there are fees, possibly VAT, and in certain constellations corporate tax as well.

The personal level: no income tax

The United Arab Emirates do not levy income tax on natural persons. Rental income from privately held property is not taxable at this level.

Corporate tax, which has applied since June 2023, does not apply here either: income of natural persons from real estate investment is excluded as long as the activity does not require a licence. So if you hold one or more apartments as private assets and let them on a long-term basis, you remain outside corporate tax, regardless of the amount of income.

When corporate tax does apply

The line is drawn by the licensing requirement, not by the number of properties.

If you contribute the property to a company, you exchange the personal exemption for a regime with registration obligations, bookkeeping and an annual tax return. That can make sense, but not for tax reasons.

VAT: the type of use makes the difference

For VAT, the Emirates draw a sharp distinction between residential and commercial property.

• Residential property: long-term letting is exempt from VAT. The landlord does not charge 5% and, in return, cannot reclaim input tax
• Commercial property: offices, shops and warehouse space are subject to the standard rate of 5%
• Registration obligation: if your taxable supplies exceed AED 375,000 a year, you must register. VAT-exempt residential letting does not count towards this

A landlord with two apartments therefore stays out of scope. If you let a shop, you can quickly exceed the threshold.

The fees that actually apply

This is where the difference between “tax-free” and “free of charge” lies.

• Housing fee: in Dubai, a charge of five percent of the annual rent is levied, collected in monthly instalments via the utility bill. It is paid by the tenant, but in the market it is part of the price
• Ejari: every tenancy agreement must be registered. Without registration, utility connections and visa processes do not work
• Management: service charges for the development, maintenance and, where applicable, agent's commission
• Short-term letting: if you let as a holiday home, you need a permit from the tourism authority and must pay a fee per overnight stay

The last point is regularly overlooked. Letting via booking platforms without an operator permit is not permitted and is penalised.

The sale

When you sell a property in the Emirates, there is no tax on the capital gain. A transfer fee is payable to the land department, usually four percent of the purchase price, plus agent and registration fees.

In your home country, on the other hand, the sale may very well be taxable: in Germany, for example, the ten-year period for private disposals (private Veräußerungsgeschäfte) also applies to a property abroad as long as unlimited tax liability exists. If you are planning a sale, you should know this period before you sign the sale contract.

In the video: The most expensive mistake with property in Dubai rarely happens on site but at home. Hannes Danho explains what really matters in terms of taxation.

What happens in your home country

Here the case splits according to residence.

If you are actually resident in the Emirates, the rental income from Dubai no longer concerns Germany, Austria or Switzerland.

If you still live in your home country and merely own an apartment in Dubai, you must declare the income there. Allocation follows the situs principle, but the practical effect depends on the relevant treaty:

• Germany: no treaty since the end of 2021. The income is included as part of worldwide income; there is nothing to credit because nothing is payable in the Emirates
• Austria: the credit method has applied since 2023. Here too, the full Austrian tax burden remains
• Switzerland: generally the exemption method, usually subject to progression

The idea that an apartment in Dubai produces tax-free rental income while you yourself live in Germany therefore does not work.

Do not forget reporting obligations

Acquiring a foreign property and the income from it are subject to notification and filing obligations in your home country. In addition, there is the automatic exchange of information on accounts into which the rent is paid.

If you hold the apartment through a company in the Emirates, this also raises the question of CFC taxation (Hinzurechnungsbesteuerung), as letting generally counts as passive income.

How we see it

Dubai is attractive as a rental location, but the reason is the yield, not the absence of tax. Gross yields are considerably higher than what can be achieved in major German cities; on the other hand, there are higher running costs, short tenancy cycles and a more volatile market.

From our client work: the most common mistake is assuming that buying an apartment automatically provides a residence permit and thus tax residency. A property investor visa is subject to conditions, and the visa alone does not establish residency; that requires actual presence.

Our advice: before buying, clarify whether you want to hold the property privately or through a company. The private option is simpler from a tax perspective; a company makes sense when liability, succession or several parties are involved. Restructuring afterwards is expensive because the transfer triggers fees.

Clarify before letting

• Will you hold the property privately or through a company?
• Residential or commercial space, and therefore VAT-exempt or not?
• Long-term letting or short-term letting requiring a permit?
• Where are you tax resident, and what follows from that in your home country?
• Is the tenancy agreement registered with Ejari?

As of 28 August 2026. This article does not replace individual tax advice.

How structure and residency can be set up for this is explained on our page on tax planning.