Dubai: Setting Up a Company, Getting a Residence Visa, and What Really Applies on Tax

Free zone or mainland

The UAE run two worlds for companies. Free zones are separate economic zones with their own authority, their own licences and their own visa desk. Dubai alone has more than two dozen, and the other emirates add more, such as RAKEZ in Ras Al Khaimah. Free zone companies have always allowed 100 percent foreign ownership, setup often runs fully online, and a flexi-desk instead of a real office is enough for the licence.

The limitation: a free zone company is designed for business inside the zone and with other countries. If you want to sell directly to customers in the local UAE market, depending on the activity you need a distributor, an additional permit, or a mainland company.

A mainland company is registered with the economic department of the respective emirate, in Dubai with the Department of Economy and Tourism. It used to require an Emirati majority shareholder holding 51 percent. That requirement fell away for most activities with the 2021 company law reform, now set out in Federal Decree-Law No. 32 of 2021. Strategic sectors are the exception. In practice, mainland means free access to the local market in exchange for a real lease and somewhat more paperwork.

For an online entrepreneur, consultant or trader selling internationally, the free zone is the usual route. Mainland makes sense when the customer sits in the UAE.

The residence visa through your own company

The visa hangs on the company. As a shareholder you are sponsored by your own company, just as an employer sponsors an employee. The sequence is almost the same in every zone:

• Licence and establishment card. The company receives its trade licence and a registration with the immigration authority that allows it to apply for visas.
• Entry permit. If you are not yet in the country, you get an entry permit. If you are already there, you change status.
• Medical test. Blood test and chest X-ray, mandatory for every residence visa from age 18.
• Emirates ID. Biometrics, meaning fingerprints and photo. The Emirates ID is the identity document for everything in the country: banks, leases, phone contracts, government offices. Without it you get practically nowhere.
• Residence visa. Now issued digitally and linked to the Emirates ID.

An investor or partner visa through a free zone company typically runs for two years and is renewed as long as the company exists and the licence is paid. Some zones offer longer terms. The flip side matters: cancel the licence or stop paying it and the visa goes with it. The visa is not a standalone right of residence but an attachment to the company.

What it costs: guide values

There are no fixed prices. Every zone has its own packages that change several times a year, and setup agencies build in their commission differently. The figures below are therefore guide values for 2026, not quotes:

• Licence in a low-cost free zone: entry packages in zones such as IFZA, Meydan or RAKEZ start at roughly 12,000 to 15,000 dirhams a year, often with a visa quota and a flexi-desk.
• Visa per person: entry permit, medical, Emirates ID and issuance together usually come to roughly 4,000 to 6,000 dirhams for two years.
• Extras: establishment card, immigration card, health insurance, translations and attestations.
• Realistic first year with one visa: roughly 18,000 to 25,000 dirhams, about 4,900 to 6,800 US dollars. Mainland with a real office costs noticeably more.

From the second year on you add the licence renewal and ongoing bookkeeping, and since corporate tax arrived, bookkeeping is no longer a formality.

Corporate tax: 9 percent, but not for everyone

Until 2023 Dubai was tax-free for companies outside the oil and banking sectors. Federal Decree-Law No. 47 of 2022 introduced a corporate tax for financial years beginning on or after 1 June 2023. The basic rule:

• 0 percent on taxable profit up to 375,000 dirhams.
• 9 percent on the portion above.

Every company must register and file a return, even if the result is zero. Missing the registration triggers penalties.

Free zone companies can obtain a special status as a Qualifying Free Zone Person. Then 0 percent applies to qualifying income and 9 percent to the rest. The conditions are tight: adequate substance in the UAE, meaning real staff and real activity on the ground, audited financial statements, arm's-length transfer pricing, and a de minimis test. Non-qualifying revenue may not exceed 5 percent of total revenue or 5 million dirhams, whichever is lower. Break the threshold and the status is lost for the current year and the following four. Which activities qualify is defined in a separate list, and services to end customers on the mainland are generally not on it. A one-person flexi-desk hardly meets the substance requirement.

For small companies there is Small Business Relief: if revenue in the tax period and in all previous periods stayed at or below 3 million dirhams, the company can elect to be treated as having no taxable profit. The relief originally covered tax periods ending by the end of 2026. With Ministerial Decision No. 131 of 2026, the Ministry of Finance extended it to tax periods ending on or before 31 December 2029. It must be elected in the return, it is not available to Qualifying Free Zone Persons or to members of large multinational groups, and artificially splitting one business across several companies falls under the anti-abuse rule.

Bottom line: for a small company below 3 million dirhams in revenue, corporate tax is usually not a cost item until 2029, but it is a compliance item. Above that, the question is whether the profit is really earned in the UAE.

No income tax, and the tax residency certificate

The UAE levy no income tax on individuals' salaries, dividends or investment income. That part of the promise is true.

Tax residency for individuals has been governed since 1 March 2023 by Cabinet Decision No. 85 of 2022. A natural person is tax resident in the UAE if they meet one of these conditions:

• Their usual place of residence and the centre of their financial and personal interests are in the UAE, regardless of the number of days.
• They were physically present for 183 days or more within a consecutive 12-month period.
• They were present for 90 days or more within 12 months, hold a valid residence visa (or are a UAE or GCC national), and either have a permanent place of residence in the UAE or carry on employment or a business there.

If you meet one of the conditions, you can apply to the Federal Tax Authority for a tax residency certificate. Typically required are the Emirates ID, an entry and exit report, a lease or title deed, and UAE bank statements. The certificate is evidence for banks and foreign authorities. It does not decide whether another country keeps treating you as taxable. More on that below.

The 180-day rule

A standard residence visa lapses if you spend more than 180 consecutive days outside the UAE, regardless of the printed expiry date. Each entry resets the counter. If you stayed away longer, a re-entry permit can be requested in some cases, which costs fees and is not automatic.

Golden Visa and Green Visa holders and their families are exempt. Whether investor visas through your own company are also exempt is described inconsistently. The safe assumption: 180 days apply until the authority (ICP, or GDRFA in Dubai) confirms otherwise for your case.

The rule sounds generous, but it is the opposite of a residence. Flying in for a weekend every five months to keep the visa alive meets the visa rule, but neither the 183 days nor, without a real home and real activity, the 90-day test.

The Golden Visa in brief

The Golden Visa is a long-term residence right for five or ten years that is not tied to an employer or your own company. The best-known routes:

• Real estate: property worth at least 2 million dirhams. Whether and how financed properties count is handled differently by the emirates' authorities.
• Investors and entrepreneurs: capital investments from 2 million dirhams or a company that pays a certain amount of tax, plus a separate track for founders with a recognised project.
• Skilled professionals: employees with a university degree in certain occupational groups and a monthly salary of at least 30,000 dirhams.

The main advantage in the context of this article is the exemption from the 180-day rule. On tax it changes nothing, neither in the UAE nor in Germany.

Banking: the real hurdle

Company and visa take weeks. The corporate bank account often takes longer, and it is the step where most setups stall in practice. UAE banks scrutinize new companies closely: source of funds, a credible business model, expected payment flows, customer countries and, above all, substance. A free zone licence with a flexi-desk, a shareholder who does not live in the country, and revenue from abroad quickly look like a shell company to a compliance department.

What improves the odds:

• Residence visa and Emirates ID first, then the account. Without the ID an application is pointless at most banks.
• A personal UAE account and a local address.
• A business plan, contracts or invoices from existing customers, and bank statements of your previous company.
• Realistic expectations about minimum balances and fees, which are noticeable at traditional banks. Digital business accounts from local providers are often the faster start.

Rejections usually come without a detailed reason. For the broader question of an account outside the EU, see the article on the non-EU bank account, and for where each tier of bank fits, the banking ladder.

Zero percent in Dubai does not mean zero in Germany

This is the most important section. Tax freedom in Dubai only describes what the UAE collect. Whether Germany keeps collecting is decided by German law alone, and in this case it is particularly strict, because there has been no double tax treaty between Germany and the UAE since 1 January 2022. The old treaty expired at the end of 2021. Talks about a new one have resumed, but none is in force. So there is no treaty tie-breaker that would settle a dual residence in favour of the UAE.

The points that matter:

• A home in Germany. If you keep a German home that you can use at any time, you remain fully taxable in Germany on your worldwide income under section 8 of the German Fiscal Code. A visa, an Emirates ID and a tax residency certificate change nothing. Even an "only occasionally used" flat or a room at your parents' can be enough.
• Extended limited tax liability. German citizens who were fully taxable in Germany for at least five of the last ten years, move to a low-tax country and keep substantial economic interests in Germany remain taxable for up to ten years under section 2 of the Foreign Tax Act on more than ordinary German-source income. The UAE without income tax are the textbook case.
• Exit tax. If you hold at least 1 percent of a corporation, such as your own GmbH, and were fully taxable in Germany for at least seven of the last twelve years, moving away triggers tax under section 6 of the Foreign Tax Act on the gain in value of the shares, as if you had sold them. Payable on request in seven annual instalments, against security.
• Place of management. A Dubai company that is actually run from a desk in Germany is subject to German corporate tax. And as long as you are resident in Germany, the German controlled foreign company rules apply on top for low-taxed foreign companies.

A real exit therefore means giving up the German home, actually moving your centre of life, running the company from there, and calculating the exit consequences beforehand. How it works out depends on your individual situation, which belongs with a tax adviser who knows both sides before you move.