Dubai has become a very attractive destination for entrepreneurs, highly skilled professionals, investors and their families. Much of that appeal is due to the city’s independent regulation, supportive infrastructure and tax-friendly regime within its multiple free-zones. In addition, October 2022 saw the approval of new visas that have been specifically designed to facilitate the immigration process.
Beyond just being desirable to individuals and companies, more and more families are making the city home. The education system in Dubai has one of the highest concentrations of international schools (90%). International schools offer various national curriculums such as UK, US, Indian, Canadian, French and German among other options. Since 2001, public schools are also open to expat (non-Emirati) boys and girls for a fee.
Buying residential property in Dubai
For many individuals, moving to another country and purchasing a home is one of their main priorities, and depending on the type of visa being applied for, a requirement. When thinking about acquiring property in Dubai, it is important to be aware of the legal process and the tax consequences.
Since 2002, Dubai has opened its residential market to foreigners. It is important at the outset to understand that the property should be located in designated leasehold (near the city center) or freehold areas (spread out across the Emirate). There is a limited number of units available to foreigners, however, the number has increased significantly and there is a vast option of apartments, villas and townhouses.
The process of buying is relatively straightforward. A valid passport will be required and there is no need for a resident visa. The process on average takes 30 days to complete once the sale agreement has been signed.
Leveraging the Dubai International Financial Center
Dubai is highly supportive of business. In 2002 the United Arab Emirates granted each Emirate the ability to organize special economic zones (financial free zones) and empower each free zone with their own legal and regulatory framework. In the same year, the Dubai International Financial Center (DIFC) was established as a financial hub for companies operating in the Middle East, Africa and South Asia markets, and started operations in 2004.
Dubai has a dual legal system of Civil and Shariah/Islamic law. However, the DIFC is governed by common law and operates in English, i.e. laws and regulations are written in English and authorities default to English law in the event of ambiguity. The DIFC is regulated by the Dubai Financial Services Authority (DFSA), an independent regulator exclusive to the free zone, with its own judicial system independent from the UAE and the Emirate of Dubai.
The DIFC's independent jurisdiction extends to a range of areas including corporate, commercial, civil (wills and probate registry for non-Muslims), employment, trusts, and securities law. Other laws of the UAE or the Emirate of Dubai such as criminal law and immigration regulations continue to apply within the DIFC (according to Shariah Law).
Which Visa is right for you?
Since October 2022 the visa options for Dubai have grown substantially. The Golden visa is a long-term residence visa that enables foreign talent to live, work and/or study in the UAE. Golden visas are issued for five or ten years.
Eligible persons are Real Estate investors, Entrepreneurs, Highly skilled professionals, Individuals with exceptional talent, Scientists and researchers, Outstanding students and graduates, Humanitarian pioneers and Frontline heroes.
Another option is the Remote Work Visa, previously called the Virtual Working visa, which is designed to allow individuals to work remotely from the UAE. Also available are the Freelance Visa and Retirement Visa.
Consider your tax obligations
One of the advantages of residing in Dubai is that the UAE does not have a federal income tax system, nor does any of its Emirates. There is no tax on income, capital gains, gifts, wealth or inheritance for individuals.
However, the most significant tax for private individuals is property transfer tax on any local real estate transaction. Real Estate landlords and tenants are generally subject to tax based on annual rent value.
It should be noted that the UAE has recently introduced a corporate tax which may affect you.
You are advised to take independent tax and legal advice well in advance of your move so that you can spot planning opportunities in time. Review the steps you need to take to exit the country you are leaving.
Prepare an exit and arrival checklists, which most likely will include taxation and immigration status, holding of local assets such as real estate or participations in local entities that might be restricted to nationals or residents. Having your existing structures reviewed by your tax and legal advisors before you move can prevent unexpected tax/legal consequences. Include in your list any structure in which you have a role as trustee, protector, investment advisor, director, etc.
Talk to us
Moving to a new country can be both an exciting and a challenging experience. At J.P. Morgan, we have partnered with countless families on this journey, and we are here to help you navigate the move. Our focus throughout is to ensure that you are equipped with the insight and information you need to understand the key opportunities and challenges, and to make decisions with confidence.
To find out more, please contact your J.P. Morgan team.
