Many entrepreneurs in Germany and Europe are looking for legal ways to optimize their tax burden. One interesting and effective strategy is to set up a company in Dubai and then invoice it to your own GmbH. As the United Arab Emirates (UAE), including Dubai, does not levy income or corporate taxes on profits, this offers the opportunity to make significant tax savings. However, there are some important legal and tax considerations that need to be taken into account.

In this article, we explain how the strategy works, how you can benefit from tax-free gains, and how Setupco Consulting can assist you in setting up a company in Dubai and achieving optimal tax results.

1. how invoicing from Dubai works

The basic idea is to set up a company in Dubai that sells services or products to your GmbH in Germany. Since there are no income or corporate taxes in Dubai, you can accumulate the profits in Dubai tax-free. By receiving invoices from Dubai, your GmbH can claim the corresponding costs as business expenses, reducing the taxable profit in Germany.

Example:

• You own a limited liability company in Germany.
• You set up a company in Dubai that offers consulting or IT services.
• Your GmbH purchases services from the company in Dubai and receives corresponding invoices.
• The GmbH can deduct these invoices as business expenses and thus reduce its tax burden in Germany.

2. why economic substance is important

For this strategy to be recognized by the German tax authorities, it is crucial that your company in Dubai has economic substance. This means that it is a real company with real business activities and not just a "letterbox company". Tax authorities pay particular attention to the fact that business activities are actually carried out in Dubai.

Economic substance may include, for example

• A physical office in Dubai
• Employees in Dubai who manage the day-to-day business
• Actual provision of services or sale of products from Dubai

Setupco Consulting can help you to ensure that your company in Dubai meets the necessary requirements and can demonstrate economic substance. We offer support in setting up, providing office space and building the necessary infrastructure.

3. transfer prices and the arm's length comparison

An important aspect of invoicing between your GmbH in Germany and the company in Dubai is the so-called Arm's length comparison. This means that the prices for services or products charged between the two companies must be at arm's length. The German tax authorities could check whether the prices are realistic and whether they correspond to the prices that you would also charge an independent third party.

It is important to ensure that your prices are comprehensible and well documented in order to prevent the tax authorities from classifying your strategy as tax avoidance. Here too Setupco Consulting to ensure that all arm's length requirements are met.

4. double taxation agreements and tax advantages

Another important point to consider is the Double taxation agreements (DTA) between Germany and the United Arab Emirates. This agreement ensures that income earned in Dubai is not taxed again in Germany. This means that your company's profits remain tax-free in Dubai, provided they are booked correctly and treated in accordance with the applicable regulations.

5. advantages of setting up a company in Dubai with Setupco

5.1 Tax savings

As no income or corporation tax is payable in Dubai (with the exception of certain sectors such as oil and gas), you can keep your company's profits there tax-free. By invoicing your GmbH in Germany, you reduce the taxable profit and lower your tax burden.

5.2 Simple company formation

With Setupco Consulting the establishment of a company in Dubai becomes uncomplicated and efficient. We help you choose the right corporate structure, register with the relevant authorities and meet all legal requirements.

5.3 Ensuring economic substance

We not only offer you support with the legal foundation, but also with setting up office space, building up staff and ensuring that your company meets the requirements for economic substance.

5.4 Long-term tax benefits

With a well-structured international company set-up, you can not only save taxes in the short term, but also benefit from the advantages of a tax-free environment in Dubai in the long term. We make sure that your entire structure is legal and compliant with German and international tax regulations.

6. how Setupco Consulting supports start-ups

Setupco Consulting specializes in helping entrepreneurs set up and operate companies in Dubai. Our services include:

• Establishment and registration of companies in Dubai
• Provision of office space and postal addresses
• Support in complying with local regulations and laws
• Advice on tax and legal issues
• Help with the preparation of invoices and bookkeeping

Our goal is to provide you with a comprehensive solution that allows you to save on taxes while ensuring that all your transactions are legally compliant and transparent.

Optimize your taxes and be successful in Dubai with Setupco Consulting

Establishing a company in Dubai and taking advantage of the tax benefits there can be an extremely effective way to reduce the tax burden of your GmbH in Germany. However, this strategy requires careful planning and compliance with legal requirements.

Setupco Consulting is at your side to ensure that your Dubai business has economic substance, your invoices meet arm's length requirements and you can legally take advantage of all tax benefits. Contact us to find out more about how we can help you optimize your business internationally and successfully implement your tax strategy.