Dubai has been a popular tax haven for expats from all over the world for years. High-tax countries such as the UK, France, Germany, Italy and Austria in particular lose thousands of wealthy people to the metropolis on the Arabian Gulf every year.
But what taxes are there in Dubai and how attractive are they really in an international comparison?
This comprehensive guide details all the taxes in Dubai and explains why they are so attractive, so many people come to Dubai primarily for the taxes. Emigrate to Dubai.
All taxes in Dubai at a glance
The fact that there are absolutely no taxes in Dubai is a myth and has not been the case for a long time. Nevertheless, the tax advantages are enormous, especially for certain people. Here is an overview of all the most important taxes and tax categories and their rates.
Private
At a private level, you are still completely tax-exempt as long as you do not carry out any commercial activities. Therefore, income from a job through salary and other income is still tax-free.
Income
The income that you receive from your job as a salary is tax-free without limits. There are also no additional social security contributions, as is the case in many other countries. Gross is therefore always net when it comes to salary.
However, if you are now self-employed and run a company, this salary must not be infinitely large. For example, if a company has a turnover of USD 1 million and the expected profit is USD 800,000, then the salary must not correspond to the amount of the profit and erode it.
This is based on American tax law and is referred to as an arm's length, i.e. an industry standard. This means that an entrepreneur's salary must also be customary in the industry and in a healthy relationship to turnover.
Investment income
Kapitalerträge durch Aktien, ETFs, Zinsen oder Ähnlichem sind weiterhin ohne Limit von der Steuer befreit. Deshalb ist Dubai vor allem bei Anlegern besonders beliebt. Das gilt aber auch für aktive Trader, d.h Trading unterliegt auch weiterhin nicht der Besteuerung, sofern man es ausschließlich für sich selbst tätigt. Dies unterscheidet Dubai stark von anderen Steueroasen, die zwar passive Kapitalerträge nicht besteuern, aber aktives Trading oder Investment (z.B Schweiz).
Crypto
Tax-exempt capital gains also include cryptocurrencies. Dubai has now become a veritable hub for numerous blockchain companies and investors. There are still no taxes on crypto profits.
Dividends
Dividends received from shareholdings in companies are also completely tax-free. This means that distributions from dividend shares, but also from shareholdings in companies, are exempt from any tax.
Real estate & Airbnb
Real estate is generally tax-exempt in Dubai as long as it is not used for short-term rentals on a large scale, similar to a hotel. In practice, you can therefore buy as many apartments as you like and the rental income from them is tax-free without limit.
However, short-term rentals via airbnb or booking.com require a license from the Dubai Department for Economy and Tourism. The so-called Holiday Home Permit is sufficient for up to 8 accommodation units. If there are more, you need a mainland company with the "Vacation Home Rental" license.
There is also no annual property tax, as in many other countries.
Only the purchase is subject to a 4% fee for the Dubai Land Department. This is known as the DLD fee.
Inheritance, gift & wealth tax
Another reason why so many wealthy people move to Dubai is that there are no taxes on inheritance, gifts and assets. In Germany, there is again talk of introducing a wealth tax and in Switzerland there is still one. Inheritance and gifts are taxed in many countries around the world.
In Dubai, the transfer of assets of all kinds is not taxed.
The company
For a very long time, companies in Dubai were completely exempt from tax. However, times have changed. Since 2023, there has been a so-called corporate tax. This is generally 9% and taxes the profits of companies.
In practice, however, there are several points that influence or exclude this.
Small Business Relief
Companies with a turnover of less than AED 3 million are still exempt from tax. Converted, this is approximately USD 800,000 that can still be turned over tax-free as a company. Profits are also not taxed as long as turnover does not exceed this limit.
Qualified Income / Activities
There is still a complete tax exemption without a limit for certain companies or business activities that are carried out in free zones. These activities are so-called Qualified Activities and may only be carried out in free zones. These include the following activities, among others:
- Manufacture of goods or materials. b. Processing of goods or materials.
- Trade in qualified raw materials.
- Holding shares and other securities for investment purposes.
- Ownership, management and operation of ships.
- Reinsurance services.
- Fund administration services. h. Asset and investment management services.
- Head office services for related parties. j. Treasury and financing services for related parties.
- Financing and leasing of aircraft.
- Distribution of goods or materials to or from a particular zone.
- Logistics services.
375,000 AED allowance
Zudem gibt es ungeachtet vom Umsatz einen Freibetrag von rund 375.000 AED, umgerechnet über 100.000 USD, der nicht besteuert werden muss. Egal wie hoch der Umsatz oder Gewinn des Unternehmens ist, diesen Freibetrag muss man de facto nicht versteuern.
VAT
Since 2018, there has been a VAT of 5% in the UAE. This tax applies to the sale of products and services sold within the UAE. At the same time, companies can reclaim this VAT when purchasing products and services from other companies.
For companies, this is only mandatory if VAT-liable turnover is more than AED 375,000. Below this amount, you do not have to register or pay VAT. A so-called VAT Exempt is applied.
Real estate is generally exempt from VAT, unless it is commercial real estate.
Wer Waren im Ausland kauft und die VAE als Resident einführt muss in der Regel zusätzlich zur VAT auch Zoll bezahlen. Dieser liegt auch bei 5% und somit liegt die Abgabe bei rund 10% auf die meisten importieren Waren.
Source: https://mof.gov.ae/vat/
Steuerfalle: Offshore Firma (z.B)US LLC
Immer wieder kursiert der Mythos, dass man als Unternehmer die 9% Körperschaftssteuer in den VAE relativ leicht umgehen kann, indem man eine Offshore Gesellschaft in einer Steueroase mit 0% gründet. Besonders beliebt dabei sind unter anderem die USA mit der US LLC.
Jedoch handelt es sich hierbei um eine Steuerfalle, denn Offshore Gesellschaften, welche am Blatt Papier im Ausland gegründet wurden, aber effektiv aus Dubai bzw. den VAE geleitet werden unterliegen auch hier den Steuergesetzen.
Das ist relativ klar geregelt und ist auch auf dem OECD Standard geschützt, der den Unternehmensitz und Steuersitz mit dem Ort der Leitung begründet. Der Fachbegriff ist Place of Effective Mangeent.
Dies ist auch im Auszug des Gesetztextes für Unternehmenssteuerrecht in den VAE klar zu entnehmen. Somit handelt es sich nicht um eine Grauzone, oder Lücke wie es manche bezeichnen, sondern vielmehr und klare Steuerhinterziehung.
Summary
In summary, the UAE remains a very attractive tax jurisdiction for employees, entrepreneurs and investors. There is extensive tax exemption at the private level and there are also numerous regulations and laws for companies that reduce, circumvent or legally exclude the recently introduced 9%.
