What You Need to Know About Setting Up a Company in Dubai
For many Germans, becoming self-employed and setting up their own company remains no more than a dream. Understandably so, because founding a company involves immensely high costs right from the outset that are difficult to cover. Taxes in particular, which account for just under half of the profit generated, must be paid to the state, so that once fixed costs have been deducted, little tends to remain for an entrepreneur at the end of the month. The solution to this problem is clear: setting up a company in Dubai.
About the Emirate of Dubai
Dubai is one of the seven emirates of the United Arab Emirates (UAE) on the Persian Gulf. The rapid growth of the city of Dubai in recent decades is primarily attributable to the countless construction projects financed by private investors. Since building regulations gave cause for criticism in the past, Dubai responded quickly and considerably tightened the requirements a construction project must meet in order to be approved. The aim was both to protect and safeguard investors and to improve the quality of construction projects. The result is architectural masterpieces that cannot be found anywhere else in the world and that draw almost 17 million tourists to Dubai each year, all inspired by the city.
But why is Dubai so popular with those who relocate?
Dubai is known for its highly liberal economic policy. Restrictions on economic and business activity are barely noticeable, and environmental protection requirements play only a minor role. Even more attractive, however, are the tax advantages associated with relocating to Dubai: in Dubai, neither income tax nor corporate tax is levied. Among other things, this is a perfect basis for setting up a company abroad.
Setting up a company in Dubai
The UAE has a total of 7 emirates, and in which of them you set up your company is, in principle, immaterial. For example, you can run a company in Dubai but live in Ras al Khaimah, or vice versa. Both are possible. You should, however, keep in mind that real estate in Dubai is somewhat more expensive than in the other emirates.
Irrespective of this, you should base your company formation on the sector in which you operate and, above all, on where your business transactions will take place. Using these criteria, you can also choose the legal form that is right for you. Here you can broadly distinguish between 3 types of company: Mainland, Freezone and Offshore.
The Mainland company
A Mainland company is comparable to a German GmbH. Setting up such a company is particularly worthwhile if you wish to sell both products and services within and outside the UAE.
The Mainland company can be established in two different ways: through a license and/or through a GmbH of which you are the sole owner. In the past there was also a third option, whereby you needed an Emirati partner to set up a company. This requirement has, however, been abolished and now applies only in the rarest of cases, such as in the oil sector.
The Freezone company
There are a total of 45 free trade zones (freezones) in the UAE. Accordingly, if your primary business activity or your customers are based abroad and therefore also outside the UAE, setting up a Freezone company is the right choice for you. In certain cases you are, of course, permitted as a Freezone company to produce, store or deliver goods within the UAE. However, you are subject to certain restrictions that you must observe.
The Offshore company
Although the Offshore company is similar to the Freezone company, it differs from it in one respect: you have merely registered the company in the UAE or Dubai yourself, but you do not have to be present there in person, as is the case with the Freezone company.
The Influencer license
More and more influencers have recognised the enormous potential Dubai offers and are increasingly relocating to the emirate to produce their content there. Since this content production can be regarded as both a product and a service, a license must be applied for from the NMC (National Media Council).
3 benefits of setting up a company in Dubai
- You are not required to reside in the UAE when setting up a Freezone company.
This means that in some cases you can set up a company in Dubai without having to be present there. When applying for a company license and setting up the company itself, we at Danho & Partner are glad to assist you with our professional expertise.
- You can open a bank account when you set up a company.
This is essential for you as an entrepreneur in order to be able to issue invoices and receive payments. For this you need a residence visa, which we will likewise apply for on your behalf.
- You enjoy numerous tax advantages.
In Dubai you are almost entirely exempt from taxes. The only exception is the 5% value added tax, which you must pay as a Mainland company. As a Freezone company you are exempt from it.
Support with setting up a company
Dubai is one of the countries in the world that explicitly promote entrepreneurship. For this reason, the emirate has established numerous funding schemes to make it easier for entrepreneurs to build a business in the UAE. The Dubai Startup Hub, for example, deserves particular mention here. This is a cloud platform that supports the national startup ecosystem.
With the Dubai Future Accelerator, young entrepreneurs, in turn, have the opportunity to try their hand at doing business and to treat the city of Dubai as a test run.
Talk to us
Get in touch to discuss your individual case. We offer detailed solutions tailored precisely to your needs.
Our location
Our office is strategically positioned in the heart of Dubai and offers convenient access to major landmarks, transport hubs and the international airport.
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