Please Help! UAE Activity That Can Own Real Estate In Europe

[Businessguy32]

I am resident in Dubai for 10 years now.

I want to set up a company that can own European real estate and I am having problems with this.

I am trying to find the cheapest and most efficient way to do this but it is proving very difficult so I guess I am missing something.

DIFC and ADGM Holding companies are far too expensive, around €30,000 plus per year when you include the required office space, annual license fees etc. If you dont believe me i will list the costs for you

I know RAK ICC and Ajman Offshores can hold real estate but the bank accounts being difficult.

The money that will be generated will be coming from the rents in Europe and I think the activity needs to reflect this.

"Real estate activities with own or leased property" fits it the best but do I also need to add a holding activity as I need the company to also own the property? If I add the holding activity then it has ESR requirements, while reduced, still add more expense

 

[Martin Everson]

If 30k is too much then why not own it in your name as a private individual, why you need a company? Are you thinking of inheritance tax in Europe down the line or something?

Maybe @Fred can offer some insight.

 

[Businessguy32]

Asset protection and a lower tax rate. Flat rate of 25% if a foreign company owns the real estate. If a person owns it it is full tax even though they are a non resident landlord. That can amount to as high as 52% instead of 25% so quite a substantial difference

 

[Martin Everson]

Ok it may help if you explain which country in Europe you got these figures from?

 

[CyprusLawyer101]

You are thinking from where you are, but the reality is that most probably you need a non UAE company to hold European real estate assets. Fees could slash by 75% compared to what you get.

 

[Businessguy32]

Yes that is true. However if you examine what is gradually happening in the world in the last few years you will see a big shift towards substance. When I came to Dubai originally I had any number of banks to choose from that would open a bank account for an offshore company (Not just freezone and mainland). There was no requirement for staff, office anything. Buy an offshore entity, open with a flexidesk and you have a bank account in 2 days. Then changes started coming. CRS, Fatca, VAT, ESR Reporting requirements, UBO and now a corp tax of 9%. Substance is becoming key and if you dont have it you are just a shell and an easy target for tax authorities. Substance such as an actual physical office and staff cost money and time to do it.

This company is going to hopefully hold these real estate assets for the rest of my life and I feel most of the shell companies in other countries will be garbage after a few years unless you actually have substance and are willing to fly in for board meetings a few times a year etc and make it believable. The days of company agents being nominee director on thousands of companies will come to an end in the coming few years. Yes if you are handling buttons in terms of turnover, nobody will care but if you start making real money, then you will need to be be able to read what is coming and plan accordingly.

Perhaps I am just paranoid but the tax authorities certainly seem to be getting more aggressive and the exchange of information between countries is far ahead of what could be believed 10 years ago.

Since I am living in the UAE already, I believe the best approach is to keep it simple and have everything here, local bank account, Personal TRC, Corporate TRC etc.

However, the UAE company type and activity type allied with a good local banks is proving difficult to me, without spending too much in ADGM and DIFC.

 

[zzzzzz]

I am resident in Dubai for 10 years now.

Do you mind telling what type of residence visa do you recommend for long term residency in Dubai? Thanks.

 

[Silvio]

Asset protection and a lower tax rate. Flat rate of 25% if a foreign company owns the real estate. If a person owns it it is full tax even though they are a non resident landlord. That can amount to as high as 52% instead of 25% so quite a substantial difference

Usually what is done is opening a local company where you want to buy the assets. Later you can have your UAE company own that local company.

 

[loccu]

Yes that is true. However if you examine what is gradually happening in the world in the last few years you will see a big shift towards substance. When I came to Dubai originally I had any number of banks to choose from that would open a bank account for an offshore company (Not just freezone and mainland). There was no requirement for staff, office anything. Buy an offshore entity, open with a flexidesk and you have a bank account in 2 days. Then changes started coming. CRS, Fatca, VAT, ESR Reporting requirements, UBO and now a corp tax of 9%. Substance is becoming key and if you dont have it you are just a shell and an easy target for tax authorities. Substance such as an actual physical office and staff cost money and time to do it.

This company is going to hopefully hold these real estate assets for the rest of my life and I feel most of the shell companies in other countries will be garbage after a few years unless you actually have substance and are willing to fly in for board meetings a few times a year etc and make it believable. The days of company agents being nominee director on thousands of companies will come to an end in the coming few years. Yes if you are handling buttons in terms of turnover, nobody will care but if you start making real money, then you will need to be be able to read what is coming and plan accordingly.

Perhaps I am just paranoid but the tax authorities certainly seem to be getting more aggressive and the exchange of information between countries is far ahead of what could be believed 10 years ago.

Since I am living in the UAE already, I believe the best approach is to keep it simple and have everything here, local bank account, Personal TRC, Corporate TRC etc.

However, the UAE company type and activity type allied with a good local banks is proving difficult to me, without spending too much in ADGM and DIFC.

Curious if u got any further in your plans and strategy. Care to share an update?

 

[Houdini]

Perhaps I am just paranoid but the tax authorities certainly seem to be getting more aggressive and the exchange of information between countries is far ahead of what could be believed 10 years ago.

That is very true, they have improved fast their monitoring.

 

[Error404]

I am resident in Dubai for 10 years now.

I want to set up a company that can own European real estate and I am having problems with this.

I am trying to find the cheapest and most efficient way to do this but it is proving very difficult so I guess I am missing something.

DIFC and ADGM Holding companies are far too expensive, around €30,000 plus per year when you include the required office space, annual license fees etc. If you dont believe me i will list the costs for you

I know RAK ICC and Ajman Offshores can hold real estate but the bank accounts being difficult.

The money that will be generated will be coming from the rents in Europe and I think the activity needs to reflect this.

"Real estate activities with own or leased property" fits it the best but do I also need to add a holding activity as I need the company to also own the property? If I add the holding activity then it has ESR requirements, while reduced, still add more expense

One option to consider is setting up a company in a European jurisdiction that has favorable tax laws for real estate holding companies. For example, Cyprus has a relatively low corporate tax rate and a favorable double tax treaty network which may be beneficial for you.

Another option could be to set up a Special Purpose Vehicle (SPV) in a tax-neutral jurisdiction such as the British Virgin Islands or the Cayman Islands, which are commonly used for holding assets such as real estate. These jurisdictions typically have minimal reporting requirements and no corporate tax.

 

[ShillGates]

property income is taxed where its generated so it doesnt matter where your corp is. Just choose one in europe thats local, or in the most flexible jurisdiction

 

[loccu]

One option to consider is setting up a company in a European jurisdiction that has favorable tax laws for real estate holding companies. For example, Cyprus has a relatively low corporate tax rate and a favorable double tax treaty network which may be beneficial for you.

Another option could be to set up a Special Purpose Vehicle (SPV) in a tax-neutral jurisdiction such as the British Virgin Islands or the Cayman Islands, which are commonly used for holding assets such as real estate. These jurisdictions typically have minimal reporting requirements and no corporate tax.

I paid for an consult with an 'expert' in this area. Hé recommended opening a 'Limited by Guarantee' using the UAE company and holding assets in the LbG.

Do u have any idea's about this or whether there are better optioneel that u described?

 

[Businessguy32]

It turns out any offshore/freezone company can own foreign real estate and receive rents. Any onshore company too. You only really need license types for real estate within the UAE really. rather that speaking to tax advisors, I spoke to the authorities in the DED and in two different freezones and they confirmed same. so technically even a uae company with a web design activity only can own property in france for example and receive the rents and you will not be violating uae law. Obviously it it important to explain that to ENBD or whoever your relationship bank is but this seems to be the case.

You can own the property in a company in your home country in the name of your dubai entity and receive the rents. you will register your uae entity for tax in your home country and submit returns each year for local sourced income. Most european countries have a flat rate of 20 to 25% on rental income for foreign corporate landlords.

 

[bamboozlethemall]

It turns out any offshore/freezone company can own foreign real estate and receive rents. Any onshore company too. You only really need license types for real estate within the UAE really. rather that speaking to tax advisors, I spoke to the authorities in the DED and in two different freezones and they confirmed same. so technically even a uae company with a web design activity only can own property in france for example and receive the rents and you will not be violating uae law. Obviously it it important to explain that to ENBD or whoever your relationship bank is but this seems to be the case.

You can own the property in a company in your home country in the name of your dubai entity and receive the rents. you will register your uae entity for tax in your home country and submit returns each year for local sourced income. Most european countries have a flat rate of 20 to 25% on rental income for foreign corporate landlords.

If rent is not going to cross 375000aed per year why not go for mainland company with easy bank opening since above this threshold only tax starts to pile on at 9% rate.Other members feel free to correct me or provide your take on this idea.

 

[Businessguy32]

rent will pass 375k so better to stay with a freezone company where the tax will be zero on any amount

 

[drumtraks]

It turns out any offshore/freezone company can own foreign real estate and receive rents. Any onshore company too. You only really need license types for real estate within the UAE really. rather that speaking to tax advisors, I spoke to the authorities in the DED and in two different freezones and they confirmed same. so technically even a uae company with a web design activity only can own property in france for example and receive the rents and you will not be violating uae law. Obviously it it important to explain that to ENBD or whoever your relationship bank is but this seems to be the case.

You can own the property in a company in your home country in the name of your dubai entity and receive the rents. you will register your uae entity for tax in your home country and submit returns each year for local sourced income. Most european countries have a flat rate of 20 to 25% on rental income for foreign corporate landlords.

All of this is correct although I would strongly suggest you open a company in a favorable jurisdiction in EU which would allow you to pay only 5% CT plus if you’re smart about your accounting you’ll deduct 100% of anything spent with the properties, lowering this number. Then you send the money up to the parent company in the UAE tax free.

Plus if you set it up this way you may be eligible for European Funds (typically free money or highly advantageous loans) if you’re interested in renovating certain real estate properties in certain areas.