Your Company Formation in Dubai

What Are the Advantages of Starting a Business in Dubai?

Starting a business in Dubai can be highly attractive for entrepreneurs for a multitude of reasons, especially due to the tax benefits. One of the standout advantages is the relatively low corporate tax of just 9% on profits exceeding the threshold of 375,000 AED. This comparatively low tax burden can significantly contribute to maximizing your company's profits.

Moreover, Dubai is characterized by a very business-friendly atmosphere. The bureaucratic effort required for establishing and running a business is significantly lower compared to many other places. This not only eases the process of business formation but also fosters a dynamic entrepreneurial spirit and innovation. Although bookkeeping is required, the tax system and the requirements for entrepreneurs in Dubai are straightforward and less complex than in many other countries. These factors combined make Dubai an attractive location for business startups, providing a solid foundation for growth and success.

Can I Build Personal Wealth Faster in Dubai?

To this question, we must respond with a definitive "Yes." Another significant advantage of living and working in Dubai is the absence of income tax. This means that a salary, for example, 60,000 AED per month, that you pay yourself through your company, remains entirely tax-free. Rental income in Dubai is also tax-free. These conditions make it possible to build personal wealth much faster than in many other countries.

In contrast, the tax burden in countries like Germany can be substantial. In addition to income tax or wage tax, there are additional taxes that can reduce your available income. These include, for example, vehicle tax, 19% VAT on private consumption, property tax, tobacco tax, and more. This cumulative tax burden constitutes a significant portion of your income and significantly slows down your wealth growth.

On the other hand, in Dubai, you benefit from a system that envisages significantly fewer tax liabilities. This allows more of your earned money to be available for personal growth, investments, and building private wealth. The comparison is clear: In Dubai, you can build your wealth at least twice as fast, simply because you pay fewer taxes and can make your money work more effectively for you.

What Requirements Must Be Met to Benefit from the Tax Advantages?

To fully leverage the tax benefits in Dubai, certain requirements need to be met. Firstly, it is essential that you completely relinquish your residence in Germany. This means you must not own or have access to any property in Germany, including holding keys to any property.

Additionally, a solid level of English is indispensable, as English is primarily spoken in Dubai alongside Arabic. The ability to communicate in English is, therefore, essential for daily life and business management.

A critical aspect that is often overlooked is the need for comprehensive advice before starting a business in Dubai. This is particularly relevant for individuals who are already shareholders of a GmbH or a foreign corporation with at least a 1% stake in Germany. Emigration in these cases can trigger what is known as exit taxation, which can lead to potentially high tax liabilities. Fortunately, there are strategies and planning options available to avoid or minimize such financial disadvantages. Thorough preparation and consultation are imperative to optimally utilize the tax benefits of Dubai while simultaneously avoiding potential pitfalls.