Your decision has been made. You are about to
set up a company in Dubai, in the United Arab Emirates. But you are unsure about the type of business to launch: free-zone or mainland? Offshore? Freelance? Or perhaps a foundation?
We will review these different types of companies so that you can make the best decision for your business project.
Free-zone or mainland company?
Many entrepreneurs hesitate between a
free-zone and mainland company. Let us review the advantages and disadvantages of these 2 types of companies to make things clearer:
- The free-zone company is often preferred by foreign business owners. Unlike a mainland company, it does not require an Emirati partner. The free-zone company is based on common law, is simple to manage administratively, and makes it possible to have an office with employees. However, there are some disadvantages: the office must be located in a free zone (and prices are sometimes very high), and not all activities are permitted under this status. In fact, it is not possible to operate in the local market with a free-zone company.
- The mainland company is undoubtedly the one that offers the most advantages to entrepreneurs, but it is difficult to access without an Emirati partner. With a mainland company, you can operate in the local market and open offices in many locations (which is not possible with a free-zone company). However, the administrative procedures for opening and managing a mainland company are rather time-consuming. The total cost of such a company is also high.
Your choice between a free-zone and mainland company therefore depends entirely on your business project and the complexity of the procedures you expect to face.
The case of the offshore company
For many years, many entrepreneurs set up
offshore companies in Dubai, in the United Arab Emirates. At present, we cannot recommend this option. The United Arab Emirates pays close attention to the economic substance of companies established on its territory. A law was even passed to this effect in 2019.
If you want to set up a fully legal company that allows you to benefit from advantageous tax treaties in Dubai, we therefore recommend that you consider free-zone status instead.
The freelance license
Do you want to carry out your business alone, without any employees? Are you looking for an inexpensive status that does not require many administrative procedures? The
freelance license may be of interest to you:
- Simple and quick registration
- Low cost
- No need for an Emirati partner
The
freelance license has many advantages, but be aware that it remains limited:
- You cannot obtain a business bank account
- You cannot hire employees
- You cannot have a physical office
- The permitted activities are very limited
The foundation
It is also possible to set up a
foundation in the United Arab Emirates. This is an independent legal entity whose specific feature is that it holds assets separately from the founder's personal property. The
foundation is based on civil law jurisdiction rather than common law.
In general, in the United Arab Emirates, foundations are used in the following cases:
- As a charitable or philanthropic foundation
- To structure assets, an inheritance, or estate planning
- To protect assets
- As a long-term holding structure
If you are hesitating between a foundation, a mainland company, or a free-zone company, we can only recommend that you contact one of the advisers at our firm. We can provide you with valuable advice whatever
your business project in Dubai. Our firm mainly handles the formation and ongoing management of so-called “free-zone” companies in the United Arab Emirates, but we can still help you if you are interested in another structure.
