Dubai – once a sleepy fishing village in the middle of the desert, has transformed into a modern, world-class city in less than 30 years.
It comes as no surprise that the United Arab Emirates is one of the most business-friendly tax jurisdictions in the world, offering a quality lifestyle incomparable to many popular destinations.
The UAE is extremely generous in offering a variety of residency programs aimed at attracting the world’s best talent and most successful entrepreneurs. The biggest attraction is that there is no personal tax in the UAE – no income tax, no wealth tax, no capital gains tax, and no inheritance tax – you are completely tax-free on your personal income. With residence in the UAE, filing tax returns will be a thing of the past, as there are no reporting obligations. For digital entrepreneurs, nomads, freelancers, and remote business owners, the UAE ought be one for your radar when deciding on your global citizen strategy.
So, what options do you have for gaining residency in this vibrant Gulf nation?
Let’s take a closer look.
Option #1 – The 1-year Remote Work Visa
It’s a suitable option if you don’t have much of a connection to the UAE already, and not yet sure if it is the place for you, and most certainly do not want to commit to purchasing real estate there – or perhaps can’t afford it yet.
Introducing the remote work visa. It is the most affordable route to take, and thus a good entry visa for those looking to explore Emirates life.
While it is the most affordable route, it comes at the expense that it only grants you 1-year in the UAE. The good news is that can be renewed easily for a second year.
To qualify for the “Virtual Work Residence Visa” in the UAE, you will need to show proof of:
- employment with an organization outside of the UAE through an employment contract OR show proof that you own your own company based abroad and pay yourself a salary as an employee.
- a monthly gross income of no less than $3,500, through pay slips from the previous months.
Option #2 – UAE’s 5-year Green Visa
This is one of the UAE’s newer visas, replacing an older 2-year investor visa. As a freelancer or remote business owner, it provides the opportunity to incorporate a local UAE company and sponsor yourself as an employee of that same company.
This visa also allows you to sponsor family members, including your spouse, dependent children, parents, and first-degree relatives. Additionally, it has a 5-year validity and can be renewed indefinitely, which is a major attraction.
The catch here is that you are required to show proof of a much higher income to qualify for the Green Visa. You must show evidence of self-employment where you earned at least 360,000 AED (approx. $98,000) per year in the past two years.
Here’s how it works:
- Form a Company:
There are two types of companies you can form in the UAE:
- Freezone Company – a company where business activities are conducted primarily outside of the UAE and at a 0% corporate tax rate. “Freezones” are special economic zones with their own rules and regulations and their own tax and custom duty benefits for foreign investors and business owners. Starting a freezone company has different requirements from a mainland company, such as what kind of industries it covers. Freezones also cover specific geographic locations in the UAE, for example this is relevant when buying real estate as a foreigner – you will have to buy in a freezone.
- Mainland Company – a company where business is primarily conducted from within the UAE and with services or products targeted domestically in the UAE. Mainland companies are taxed at a corporate rate of 9%, however, by opening a mainland company instead of a freezone company you will have much better access to local corporate banking options, and it generally offers more lenient treatment when requesting sponsorship.
It’s worth noting that not all business activities allow a mainland company to be 100% foreign-owned. For professional services, it can be 100% owned, but for commercial or industrial licenses, the company must be at least 51% owned by an Emirati citizen. Freezone companies allow 100% ownership for foreigners no matter what the business activity is.
Overall the Emirate government in recent years has been trying to push people more towards the mainland company option, as a way to get hold of the 9% corporate taxes.
2. Self-Sponsorship:
Once you have formed a company in the UAE, you are eligible to sponsor yourself as an employee, as well as any family members who qualify to come with you. To self-sponsor as an employee, you must be classified in the first, second, or third occupation level as per the Ministry of Human Resources and Emiratisation – although most likely if you are self-sponsoring you will be covered by this. Additionally, it requires a bachelor’s degree and you must pay yourself at least 15,000 AED per month (approx. $4,000)
Requirements:
- For Freelancers and Self-Employed:
- Hold a bachelor’s degree or specialized diploma.
- Show evidence of self-employed income from the previous two years, with a minimum annual income of AED 360,000.
- Alternatively, prove financial solvency throughout the stay in the UAE.
- For Skilled Employees:
- Have a valid employment contract and be classified in the first, second, or third occupational level as per the Ministry of Human Resources and Emiratisation.
- Hold a minimum of a bachelor’s degree.
- Have a monthly salary of at least AED 15,000.
Option #3 – The UAE’s Golden Visa (5-10 years)
The UAE’s Golden Visa is an investment migration program where you can gain long-term residency through investment in real estate or by depositing funds into an Emirati bank account. It is by far the most exclusive residency program currently offered by the UAE, and boasts an impressive number of benefits, including:
- Long-term, renewable residence visa valid for 5-10 years depending on the route
- No requirements on time spent inside the country, whereas with most other visas, your residency will expire if you spend more than 6 months outside of the UAE.
- Not only can sponsor your family members, but you can additionally sponsor an unlimited number of domestic helpers – maids, nannies, drivers etc.
- You will be given the ESAAD privilege card for free (this gives huge discounts, deals, and benefits on a variety of local products and services including schools, hospitals, retail stores, hospitality and leisure activities, hotels, car rentals, flights, and other travel packages)
- Even if the primary applicant passes away, your family can stay in the UAE until the visa expires and can be renewed
There are several ways to get the UAE’s Golden Visa, however, the most popular routes would certainly have to be either through real estate investment or through a bank deposit. Here are the main routes to getting your long-term multiply-entry residence permit in the UAE:
- Real Estate Investment (5 years)
Invest in property at the minimum value of 2 million AED (approx $544,000) in any Freehold Zones (these are areas where foreigners can purchase real estate)
What’s amazing about this route compared to real estate migration investment programs in other countries, is that you do not need to have the entire 2 million AED up front. Instead, you can actually qualify for the visa with a 2 million AED property financed with a mortgage where the minimum down payment is at least 20%.
That means if you have 400,000 AED or approximately $109,000 on hand, you can qualify for a ten-year Golden Visa in the UAE. That’s insanely low for a Golden Visa.
2. Bank deposit (10 years)
Deposit 2 million AED in an accredited local bank account with a minimum 2-year lockin, barring you from accessing the funds for those 2 years. Many banks in the UAE offer a high-interest savings account specifically for this purpose.
3. Other Routes
There are also possibilities to qualify for the visa by investing in existing companies with a value of at least 2 million AED, or by starting an innovative startup in the country, but these options are a little less common and much more complex to qualify for. If you want to come to the UAE by incorporating your own business, the most attractive route I would recommend is the Green Visa rather than the Golden Visa, as it will require a lot of documentation and standards to meet to qualify as innovative. You will need vouching and credibility from others involved etc. so this makes it quite a challenging route but it is possible.
Additionally, there are some special Golden Visa visas granted to certain highly skilled professionals and artists, such as athletes, people in performing arts, etc. These are quite rare though.
One way that is a little common but not targeting those looking for a global citizen lifestyle is having employment sponsorship for certain highly specialized fields. Mainly targeting professionals such as doctors, scientists, or engineers. You will also need a minimum monthly salary of 30,000 AED (approximately $8,100)
Tax Residency vs. Physical Residency
All visa programs in the UAE grant you physical residency, allowing you to stay in the country. To keep this physical residency active and your local residency card valid, you must not be absent from the UAE for more than six months (180 days). However, this rule doesn’t apply to Golden Visa holders, who retain their residency status regardless of how many days they spend in the UAE each year.
For other visa holders, it’s enough to enter the UAE for just one day every six months to maintain physical residency.
Tax Residency
Holding physical residency in the UAE does not automatically make you a tax resident. To be considered a tax resident, you must meet one of these criteria:
- Be physically present in the United Arab Emirates for a period of 183 days or more during a consecutive 12-month period.
- Has one’s usual or primary place of residence and one’s center of financial and personal interests in the United Arab Emirates.
- Was physically present in the United Arab Emirates for a period of 90 days or more in a consecutive 12-month period and is a UAE national, holds a valid residence permit in the United Arab Emirates, or holds the nationality of any Gulf Cooperation Council (GCC) member state, where the individual:
- has a permanent place of residence in the United Arab Emirates, or
- carries on an employment or a business in the United Arab Emirates.
Most people will need to spend at least 183 days in the UAE to qualify as tax residents unless they have a registered address in the country.
Proving UAE Tax Residency
Even if you don’t spend the full 183 days in the UAE, it’s possible to prove your tax residency. If you have a UAE International Tax Residency Certificate and are not primarily living in another country (thus not triggering tax obligations there), you can establish your residency status.
International Tax Residency Certificate
The UAE has no personal income tax or reporting obligations. To prove tax residency, you can obtain an International Tax Residency Certificate by showing evidence of having spent the last 183 days in the country. A domestic tax residency certificate is available if you have spent at least 90 days in the UAE. This document is essential when leaving your home country’s tax system, as it proves your tax residency in the UAE.
Double Taxation Agreements
The UAE has double taxation agreements with over 130 countries, exempting you from paying taxes in these countries if an agreement exists. To benefit from these agreements, you will need the UAE International Tax Residency Certificate.
Special Note for US Citizens
US citizens must be aware that the USA has a global taxation system. This means you must declare your income in the US and could be taxed if the US determines you aren’t being taxed sufficiently in the UAE, which, with its 0% tax rate, is likely.