A frequently heard phrase when it comes to living and working in Dubai is: "Gross equals net". Many expats and international professionals are attracted by this statement, as Dubai is known for its tax-free salaries. But is this really the case? In this article, we take a closer look at whether the salary you earn in Dubai is actually completely tax-free and what other costs you need to consider.

1. tax exemption in Dubai: does gross really equal net?

The principle of "gross = net" applies in the United Arab Emirates (UAE) due to the absence of personal income tax on salaries. In fact, the UAE does not levy direct income tax on wages and salaries. This means that you will receive the full amount of the salary agreed in your employment contract - without any deductions for tax.

1.1 No income tax

One of the biggest advantages Dubai offers as a place to work is the lack of income tax. This applies to both local citizens and foreign workers. Unlike many other countries where a significant portion of income is deducted for tax, in Dubai your income remains 100 % untouched.

For many expats, this is the decisive factor as to why they choose a career in Dubai. A comparatively higher net salary can increase the attractiveness of living in Dubai enormously.

1.2 No capital gains or inheritance tax

In addition to the lack of income tax, there is also no capital gains tax or inheritance tax in the UAE. This means that profits from investments, real estate or the sale of assets are also tax-free. This also contributes to Dubai's financial attractiveness.

2. indirect costs and deductions: What you should still bear in mind

Although income in Dubai is tax-free, there are other costs and deductions that put the impression that "gross equals net" into perspective. Although these costs are not comparable to direct taxes, they should be included in your financial planning.

2.1 Health insurance

In Dubai, it is mandatory for companies to offer health insurance to their employees. However, the benefits are often limited to the bare essentials and many expats opt for extended private health insurance to cover more comprehensive health services. These additional insurances usually have to be paid for by the employee and can significantly increase the monthly costs.

2.2 Accommodation and cost of living

The cost of living in Dubai, especially for accommodation, can be very high. In many employment contracts, expats are either provided with accommodation or receive an additional housing allowance. Nevertheless, rents in Dubai, especially in popular residential areas such as Dubai Marina, Downtown or Palm Jumeirah, are significant and can take up a large portion of an expat's income.

In addition, ancillary costs such as electricity, water and air conditioning can be quite high. These often have to be borne by the tenant and can further increase the monthly expenses.

2.3 School fees

For expats with children, school fees in Dubai are a significant financial burden. International schools are widely available in Dubai, but fees can be very high, especially for prestigious schools. Many employers offer their employees subsidies for school fees, but in many cases these do not cover the entire cost.

2.4 Value added tax (VAT)

Since 2018, a value added tax (VAT) of 5 % has been levied on most goods and services in the UAE. Although this may seem low compared to VAT rates in many other countries, it can still have an impact on the cost of living, especially for large purchases or regular spending on consumer goods.

2.5 Work visa and sponsorship costs

In most cases, the employer will cover the costs of the work visa and sponsorship. However, if an employee wants to bring their family to Dubai, additional costs for visas and residence permits may arise, which must be borne by the employee themselves.

3. comparison with other countries: How big is the advantage really?

The great advantage of tax-free income in Dubai is particularly evident when compared to countries with high tax rates. In many European countries, such as Germany or France, the tax rate on income can easily reach 30-40 %. This means that a similar gross salary in Dubai represents a much higher net disposable income.

Example:

• An employee in Germany with a gross annual salary of EUR 100,000 could expect to net around EUR 55,000 after deducting taxes and social security contributions.
• In Dubai, the same employee would receive the full salary of the equivalent of 100,000 euros (depending on the exchange rate), without any deductions for taxes.

This difference can be particularly significant for higher salaries, as higher incomes are taxed more heavily in countries with progressive tax systems.

4. important considerations for expats

Although the tax-free salaries in Dubai are a great incentive, expats should also consider the overall cost of living in Dubai. Here are some points to consider when making a decision:

• LifestyleDubai offers a luxurious lifestyle, but this comes at a price. High-end restaurants, leisure activities and residential areas can be expensive.
• Savings targetsAlthough income is tax-free, expats should ensure they have sufficient reserves for unexpected expenses and consider their savings, especially if they have moved to Dubai to build long-term wealth.
• Professional developmentDubai offers many career opportunities, but expats should also consider how their work experience in Dubai will affect future careers in other countries should they wish to return later.

Conclusion: Does gross really equal net in Dubai?

Yes, technically speaking, the gross salary in Dubai is equal to the net salary, as there are no direct income taxes. However, it is important to also consider the indirect costs and the high cost of living, which can take up a significant portion of income. For many expats, however, Dubai remains an extremely attractive destination as the tax-free salaries combined with the luxurious lifestyle and career opportunities offer unique benefits that are often hard to find in other countries.