Tax benefits in Dubai - What you need to know

Dubai has established itself as a leading global center for entrepreneurs, investors and digital nomads, particularly due to its attractive tax conditions. A key advantage of setting up a company in Dubai is that it is almost completely tax-free. In fact, in Dubai there are neither Income tax still Trade taxwhich makes it a particularly advantageous location for companies and private individuals who want to reduce their tax burden.

Tax exemption in Dubai - What applies and what doesn't?

In Dubai No income tax or Trade tax on. This means that individuals and companies based in the UAE can retain their income and business profits in full. In 2023, however, a Corporate income tax introduced, which with only 9% on corporate profits. This tax only affects companies and not private individuals. For entrepreneurs based in Dubai, however, the tax burden remains very low compared to most Western countries.

The 183-day rule - making the right use of tax exemption in Dubai

To enjoy full tax exemption in Dubai, it is not enough to simply set up a company in Dubai. In order to be considered a tax resident in Dubai and benefit from the tax advantages, it is necessary that you are resident in your home country - for example in Germany. unsubscribe and adhere to the so-called 183-day rulehold. This rule states that you should not be more than 183 days per year in Germany, i.e. less than six months.

This requirement is crucial in order to be recognized as a tax resident in Dubai and to benefit from the advantages of tax exemption. If you do not comply with the 183-day rule or continue to have close ties to Germany, you may remain liable for tax in Germany despite setting up a company in Dubai.

Who benefits most from the tax exemption in Dubai?

Certain professional groups in particular can benefit enormously from the tax advantages of setting up a company in Dubai. These include, among others:

• Online entrepreneurOperators of e-commerce businesses or internet-based platforms.
• Network MarketerEntrepreneurs who are active in distribution networks and align their business globally.
• TraderPersons who actively trade in shares, cryptocurrencies or other financial instruments.
• Classic companies: Companies from traditional sectors such as trade, production or services.
• Coaches and consultantsSelf-employed persons who offer their services online and work from any location.
• Digital nomadsPeople who earn their income online and work worldwide.
• Influencer and content creatorEntrepreneurs who generate income through social media or digital content.

For these groups, setting up a company in Dubai not only offers the opportunity to significantly reduce their tax burden, but also to benefit from the UAE's international network and modern infrastructure.

Can I continue to live in Germany and still save taxes by having a company in Dubai?

Nothat is not possible. Even if you set up a company in Dubai, you remain liable for tax in Germany if certain criteria are met that are clearly regulated in German tax law.

According to the German Foreign Tax Act (§6) you are still liable to pay tax in Germany on your entire global income if one of the following points applies:

• You are registered in GermanyEven if you have a company in Dubai, you remain liable for tax in Germany as long as you are registered there.
• You have a place of residence in GermanyIf you continue to own an apartment or property in Germany and use it as your permanent residence, you are considered a tax resident by the German authorities.
• You have the key powerIf you own a property or apartment in Germany and have access to it at all times, this can be regarded as your permanent residence.
• Your center of life is in GermanyIf your family, professional relationships or other central aspects of your life are in Germany, your center of life is considered to be in Germany.
• You spend more than 183 days a year in GermanyEven if you have a company in Dubai, you remain liable for tax in Germany if you spend more than 183 days per year in Germany.

These regulations apply not only in Germany, but also in other countries such as Austria and the Switzerland. You are also liable to pay tax there on your worldwide income if the above criteria are met.

Company formation in Dubai: The path to tax exemption

If you wish to benefit from tax exemption in Dubai, it is essential that you fulfill all tax requirements to end your tax residency in Germany or other countries. These include:

• Deregistration of residence in GermanyDeregister with the German authorities in order to no longer be considered a tax resident in Germany.
• Compliance with the 183-day ruleMake sure that you do not stay in Germany for more than 183 days a year.
• Relocation of the center of lifeYour center of life should clearly be in Dubai or another tax-advantageous country. This also means that your most important personal and professional relationships are located outside Germany.

By complying with these measures, you can obtain the status of a non-resident in Germany for tax purposes and at the same time enjoy the tax benefits of setting up a company in Dubai.

Conclusion: Making the right use of tax exemption in Dubai

The Tax exemption in Dubai offers a unique opportunity for entrepreneurs, online businesses, investors and digital nomads to significantly reduce their tax burden. With the absence of income and business taxes and a low corporate tax rate, Dubai remains one of the most attractive locations worldwide. However, it is crucial that you understand the 183-day rule and the applicable tax regulations in your home country in order to take full advantage of the tax exemption in Dubai.

Thorough planning and following all the necessary steps are essential to ensure that you do not remain liable for tax in your home country. With the right approach, you can enjoy the benefits of a tax-advantaged company domicile in Dubai and grow your business in one of the world's leading commercial centers.