Company Formation in the UAE and Residency - what are the exact costs?

[karishi]

Hi, I've read that some people on the forum have set up companies in the UAE and are resident there.
I was wondering what are the real expenses for first year and for other years, and exactly how residency work. My understanding is that with a company you get residency, as long as you visit the country once every 180 days, but I suppose you than have to rent something to substantiate that residency, is that correct?

 

[JustAnotherNomad]

The UAE does not care, as far as I know. As long as you’re not out of the country for more than 180 days, they’ll probably consider you a resident.
But if you want to get a tax residency certificate, you need to stay at least 183 days per year in the UAE.

What does that mean in practice? Check the tax treaty between other countries you spend time in and the UAE, if there are any. Also check the national rules of those countries.
There will probably be a rule that if you stay less than 183 days in both countries, certain other criteria will decide. Such as where you have the center of your economic and personal life etc.
Of course then it would be useful (to put it mildly) to be able to show a lease agreement, utility bill etc. to show that you have stronger ties to the UAE than to the other country.

 

[karishi]

The UAE does not care, as far as I know. As long as you’re not out of the country for more than 180 days, they’ll probably consider you a resident.
But if you want to get a tax residency certificate, you need to stay at least 183 days per year in the UAE.

What does that mean in practice? Check the tax treaty between other countries you spend time in and the UAE, if there are any. Also check the national rules of those countries.
There will probably be a rule that if you stay less than 183 days in both countries, certain other criteria will decide. Such as where you have the center of your economic and personal life etc.
Of course then it would be useful (to put it mildly) to be able to show a lease agreement, utility bill etc. to show that you have stronger ties to the UAE than to the other country.

So I'm Italian, currently resident in Albania, moving my residency to Spain. I have no wife, children, any kind of property in any country, but I will inherit at some point a house in Italy. I'm moving my residency to Spain because the Albanian residency was something I did in 2012, but I have nothing there, I never go there, while I spend 5 months a year in Spain and I'm a permanent resident of Spain since 2008,as I lived there for one year. I currently have a company in St. Vincent and the Grenadines which sells IT services ( website or app development, I have clients in the UK, France and US at the moment ) and TransferWise as the only bank account, so no CRS problems for now.
My question about residency was more a curiosity, if I ever was to tell Italy that I'm resident in the UAE I would need an address, right?How can UAE give me residency if I don't have an address?That's what I'm curious about. My current plan could be to move everything into the UAE, but keep telling to Italy that I'm resident in Spain, as being resident in the UAE is a red flag in Italy, although I never made more than 20.000€ a year in Italy, so I always flew under the radar, but it's always better to have my home country believe I'm resident in a high tax country.
So my long term setup would be:
- For Italy, pretend to be resident in Spain. I can show Italy that I spend more time in Spain than in Italy. Once you get registered as non resident, Italy doesn't check much, the important thing is that they are able to deliver the papers for voting to the address you are registered to, otherwise they might get suspicious about the address.
- For Spain, to have nothing there, I don't even have a rental contracts, no banks, nothing. I would remove empadronamiento next year, but I have no business ties to spain, as having the permanent residency status meant I didn't even need a bank account to have the green nie.
- For UAE, be resident there by entering once every 180 days and keep the company there, and all my bank accounts there.
No wife, no kids, no property ( unless I buy something with the company ), not more than 182 days in any state.

 

[JohnLocke]

If you make a Google search on OffshoreCorpTalk you will quickly find threads with fees and up/downs for the UAE.

As I read a setup there costs between 10K and 15K Euro to setup and also to maintain on a annual basis. So you need to have some sort of profits each year if this should make sense.

 

[JustAnotherNomad]

Cost can be much lower than that if you don’t have local employees and don’t need to incorporate in Dubai. And now with the virus, many free zones offer discounts on top.
You should be able to incorporate for $2000-4000 easily. Then add another $1000 or so for things like visa costs etc. I believe that’s even including the fees for a service provider, should you decide not to do everything yourself (which is probably a good idea).

 

[JohnLocke]

It's probably the cheapest we've seen here at OffshoreCorpTalk ever. It is so impossible to set up a company myself unless you speak Arabic I have read up to. So the prices you mention must be for locals and only for locals not for those not residing in the united emirates.

 

[JustAnotherNomad]

LOL. No, it’s the same prices for everyone. And it’s also not impossible if you don’t speak Arabic. At least some of the free zones have their own sales teams that speak English.
But of course, we are not talking about free zones outside of Dubai - but even in Dubai there are some ok options if you don’t have employees.
Just be careful with the rules because some free zones seem cheap, but require you to rent an outrageously expensive office from them. And some require an annual audit, which costs extra money. But not all do.

 

[BlueMist]

It's probably the cheapest we've seen here at OffshoreCorpTalk ever. It is so impossible to set up a company myself unless you speak Arabic I have read up to. So the prices you mention must be for locals and only for locals not for those not residing in the united emirates.

One of the most respected freezones outside of Dubai and Abu Dhabi - Creative City Fujairah has a promo running AED 19,995 ($5,500) all inclusive:

• Trade License Valid for 1 Year
• 1 Free Visa Valid for 3 Years
• 3 Free business activities for life
• Free E-Channel Deposit and Registration
• Free Emirates ID & Medical
• License issued in 2 days

They work with Mashreq and RAKBank for setting up bank accounts. There is no need for using intermediaries or agents because these freezone representatives have people who will guide you step by step. They will provide you with everything: employment contract sample, payslips sample etc.

 

[JustAnotherNomad]

That’s a great deal, especially if the bank account is pretty much guaranteed.
How much is the renewal?

Other “affordable” free zones are IFZA, Ajman, RAK, maybe others. I think some of them also have discounts now.

 

[JohnLocke]

So, do you think an offer applies as a general guideline on the price level of a company founded in the UAE? I think that when we have a thread where we discuss prices in normal circumstances (here I do not count on this week's offer) then it is still unrealistic to start a company for $ 2000 - 4000 as suggested in this thread. And even more inelastic that if you are in France and only speak French that you can create a company there yourself!

But back to this week's deals, what's the downside of setting up a company in Fujairah over Dubai or Abu Dhabi - no downsides?

 

[JustAnotherNomad]

@Admin

@BlueMist just confirmed to you that there is no need to speak Arabic or use an agency, at least with some free zones, because they have their own English-speaking staff who will help you. Of course if you only speak some Amazonian tribal language and don’t know how to use Google Translate, then you may face some difficulties.

And yes, there are discounts now, but there are also very affordable options anyway. The discounts are just 10-20%. I mentioned other free zones you can check out. Of those I mentioned, I think only IFZA is running a promotion, all the others have regular pricing.

And the downside with free zones outside of Dubai/Abu Dhabi is that it can be more difficult to open a bank account. Also, officially you’re only allowed to work from there and not elsewhere in the UAE. But I don’t think that is enforced. And you can of course use a virtual office in Dubai for mail forwarding.

 

[BlueMist]

That’s a great deal, especially if the bank account is pretty much guaranteed.
How much is the renewal?

Other “affordable” free zones are IFZA, Ajman, RAK, maybe others. I think some of them also have discounts now.

Whether bank account is guaranteed or not I have no idea but this is what they told me who they work with.
The renewal fees depend on the type of license packages that you choose. I can see 2 non visa and 4 visa packages. I think the current renewal fees for the freelancer package is 23,000 + e-channel renewal fee of AED 1,125. I am still on the old deal of AED 17,500, as they haven't changed the pricing yet for the old customers.

Yes, this offer is fantastic, it refers to their lowest visa plan "Commercial Plus One" - good for single shareholders (FZE) and 2 residence visas as allowed. The offer is great as you don't pay for E-Channel deposit of AED 5,512.50 (waived) and registration for AED 2,310 (waived) - these are the fees I had to pay Also residence visa is included, something that cost AED 4510 and is valid for 3 years. They also included medical and Emirates ID, which altogether cost around AED 750.

So, do you think an offer applies as a general guideline on the price level of a company founded in the UAE? I think that when we have a thread where we discuss prices in normal circumstances (here I do not count on this week's offer) then it is still unrealistic to start a company for $ 2000 - 4000 as suggested in this thread. And even more inelastic that if you are in France and only speak French that you can create a company there yourself!

But back to this week's deals, what's the downside of setting up a company in Fujairah over Dubai or Abu Dhabi - no downsides?

I have not seen any downsides really, apart from having Fujairah on the invoices vs Dubai Creative City is one of the most easy going freezones as no audits are required, no business plan to submit, no paid up capital is required.

I would say this offer is rather exception (given the pandemic situation) rather than a norm. I would normally expect discounted fees if you were willing to pay trade licence fees 3 years in advance and that's without medical and Emirates ID. If you remove the benefits included you would pay AED 19,995 + E-Channel deposit of AED 5,512.50 + e-channel registration AED 2,310 + residence visa AED 4,510 + medical and Emirates ID around AED 800. There could be some other smaller fees, so called typing fees for medical and emirates id. So one have to dish out approx. AED 33,500 without such benefits. That's $9100.

 

[BlueMist]

@Admin

@BlueMist just confirmed to you that there is no need to speak Arabic or use an agency, at least with some free zones, because they have their own English-speaking staff who will help you. Of course if you only speak some Amazonian tribal language and don’t know how to use Google Translate, then you may face some difficulties.

And yes, there are discounts now, but there are also very affordable options anyway. The discounts are just 10-20%. I mentioned other free zones you can check out. Of those I mentioned, I think only IFZA is running a promotion, all the others have regular pricing.

And the downside with free zones outside of Dubai/Abu Dhabi is that it can be more difficult to open a bank account. Also, officially you’re only allowed to work from there and not elsewhere in the UAE. But I don’t think that is enforced. And you can of course use a virtual office in Dubai for mail forwarding.

Actually the funny thing is that if you go to their Dubai office, you would actually have extremely tough time to speak arabic, even if you insisted to. I am sure they would have to search for someone a good 30 mins before finally finding someone who speaks Arabic
If you go to Creative City in Fujairah then yes, your chances will be much better for people there to speak Arabic, but there is no need to put your feet in Fujairah, unless you want to convert your driving license.

You know what the problem of Arab families in Dubai is? Is that their kids don't speak Arabic

However just to make it clear: trade license is issued in both english and arabic (1 page). Employment contracts, VAT registrations are bi-lingual. Official requests for salary certificate or NOC can be requested in english, however freezone will issue salary certificate in Arabic (this is mainly required for sponsoring dependants).

 

[onemansomewhere]

Here are some more information over what was written by other people here:

Everyone foreigne who wants Emirates ID has to have a valid UAE health insurance. It is additional USD 1500-2000 per year.

The echapest way is to register as sole proprietor in one of Free zones. It is cheaper than incorporation a company. If you do not need a company, there is no reason to pay more. Incorporation is 2000-4000 USD. Registering as sole proprietor is 1000-2000 USD.

To be a tax resident in the UAE, you have to own residential real estate or have rented some. And you have to stay there at least 183 days per year. COmming just once per 180 days just do not cancel your visa / residence permit. Just having a residence permit is not making you a tax resident in the UAE.

Freezone company can not use UAE double tax treaties if it is not administered from within the UAE. Company is administered from within the UAE if it is administered by UAE tax resident. So, if you incorporate a freezone company, obtain residence permit, but you will not be UAE tax resident, this company will not have access to UAE double tax treaties. And you will be not considered to be UAE tax resident for your foreign income. Any paying entity will withold a withholding tax from any payment done to you or to your company.

 

[JustAnotherNomad]

I believe the health insurance is not mandatory in all free zones. But in Dubai, it’s definitely required. Anyway I think there should be cheaper options than $1500 to fulfill that requirement.

 

[karishi]

If you make a Google search on OffshoreCorpTalk you will quickly find threads with fees and up/downs for the UAE.

As I read a setup there costs between 10K and 15K Euro to setup and also to maintain on a annual basis. So you need to have some sort of profits each year if this should make sense.

I searched for UAE but the search function doesn't work when search terms too short

 

[onemansomewhere]

I believe the health insurance is not mandatory in all free zones. But in Dubai, it’s definitely required. Anyway I think there should be cheaper options than $1500 to fulfill that requirement.

Health insurance is mandatory for all foreigners who are applying for Emirates ID. Does not matter in which emirate nor which feee zone. Sure, if you are 21 years old and with excellent health conditions, you can find some for 1200 USD. I am not so young. And I believe, thaat tho most of members here are not.

 

[JustAnotherNomad]

I have been in touch with a service provider who claimed they could get an Emirates ID without health insurance, provided I incorporate in the right free zone. I don’t know the details though.
Obviously you would want a good private health insurance anyway, so that’s a cost you’d have to pay anyway. The only question is how to avoid having to pay for bad UAE health insurance, or pay as little as possible for the absolute minimum coverage.

 

[NicolasMaduro]

Perhaps its a new rule/law? My friend has a residency visa trough Fujairah and he is stupid enough not to have health insurance,
and he got an Emirates ID.

 

[JustAnotherNomad]

Like I said, you would probably want to get health insurance anyway, just not silly UAE health insurance, but coverage through a proper big international insurance provider.
So avoiding UAE health insurance doesn’t mean you’re not insured.