UK Ltd - UAE LLC/FZCO Structure & Relocation

[Reznov]

I've been reading about the recent changes with UAE CT and found the threads on this forum quite thorough and useful considering how confusing the situation is. Reviewing all the available information I've structured a plan and I would appreciate your feedback.

Background:

I have a business in the UK where property is bought, refurbished and then let out short term.
I moved to a fairly low tax country a few years ago and split the business's marketing into a separate local company while keeping the UK LTD to facilitate mortgages, PAYE and other operations with around 20 employees. The money flows through the marketing company which keeps a commission then it's forwarded to UK Ltd to cover operational costs. CT and dividend tax paid, net profits in personal bank account then reinvested in the UK Ltd.
This structure works fairly well, but taxes will go up next year and there might be room for improvement in the current structure.

Something which is probably a bit more specific to my situation and a possible advantage is the fact that the business is capital intensive. I have already loaned the UK Ltd a few million pounds interest free as current personal taxes are not advantageous to warrant charging any.

The business has no UAE customers

I'm a dual citizen (UK and EU)

New Structure:

1. UAE company to facilitate visa for myself,
2. Arrange to stay a minimum of 90 days in the country per year
3. Wio bank accounts for myself and UAE company (the more I keep transactions in GBP the better, ideally no FX at all)
4. Move marketing operations in the UAE company
5. Salary of 100k AED to myself per month
6. Benefit from 375k AED 0% CT allowance
7. Charge interest at arm's length on loans made to UK Ltd from my personal accounts after applying for exemption from 20% WHT tax, double tax treaty with UAE indicates 0% would be awarded by HMRC (?)

Between the interest charged, the salary and the CT allowance I should be able to pay 0% in UAE and reduce UK Ltd profit to a minimum.

There is a possibility to forgo the UAE company entirely and just charge interest if UAE company set up and maintenance is problematic.

Questions:

1. UAE FZCO or LLC (mainland)? - set up, bank accounts, ongoing costs, accounting etc.
2. Do we have some clarity on UAE company CT allowable expenses? - car, travel, 'equipment'
3. Are you allowed to pay a UAE salary in foreign currency ie. GBP?
4. General feedback on the new structure?

 

[Ancova]

I've been reading about the recent changes with UAE CT and found the threads on this forum quite thorough and useful considering how confusing the situation is. Reviewing all the available information I've structured a plan and I would appreciate your feedback.

Background:

I have a business in the UK where property is bought, refurbished and then let out short term.
I moved to a fairly low tax country a few years ago and split the business's marketing into a separate local company while keeping the UK LTD to facilitate mortgages, PAYE and other operations with around 20 employees. The money flows through the marketing company which keeps a commission then it's forwarded to UK Ltd to cover operational costs. CT and dividend tax paid, net profits in personal bank account then reinvested in the UK Ltd.
This structure works fairly well, but taxes will go up next year and there might be room for improvement in the current structure.

Something which is probably a bit more specific to my situation and a possible advantage is the fact that the business is capital intensive. I have already loaned the UK Ltd a few million pounds interest free as current personal taxes are not advantageous to warrant charging any.

The business has no UAE customers

I'm a dual citizen (UK and EU)

New Structure:

1. UAE company to facilitate visa for myself,
2. Arrange to stay a minimum of 90 days in the country per year
3. Wio bank accounts for myself and UAE company (the more I keep transactions in GBP the better, ideally no FX at all)
4. Move marketing operations in the UAE company
5. Salary of 100k AED to myself per month
6. Benefit from 375k AED 0% CT allowance
7. Charge interest at arm's length on loans made to UK Ltd from my personal accounts after applying for exemption from 20% WHT tax, double tax treaty with UAE indicates 0% would be awarded by HMRC (?)

Between the interest charged, the salary and the CT allowance I should be able to pay 0% in UAE and reduce UK Ltd profit to a minimum.

There is a possibility to forgo the UAE company entirely and just charge interest if UAE company set up and maintenance is problematic.

Questions:

1. UAE FZCO or LLC (mainland)? - set up, bank accounts, ongoing costs, accounting etc.
2. Do we have some clarity on UAE company CT allowable expenses? - car, travel, 'equipment'
3. Are you allowed to pay a UAE salary in foreign currency ie. GBP?
4. General feedback on the new structure?

Greetings!

1.
If I understood correctly, your UAE company would be a marketing company which would sponsor only 1 visa for yourself. In this case I would suggest a Free Zone. For such a setup, we charge AED 33,900 and it includes:

• Trade License
• Certificate of Formation
• MOA&AOA
• Unit lease agreement for a Flexi Desk

Additionally, the above includes the following as well:

• Appointments, Pick up and Drop off for the VIP Medical and Biometrics
• Personal and Corporate Bank Account

The yearly renewal will be AED 20,000. The visa is only renewable every 2 years and costs AED 3,750 every 2 years.

We also provide accounting services and this costs AED 4,000 (up to 50 transactions).

An additional service which you might want (if you do not want to spend 90 days a year in Dubai) is the Tax Residency certificate for AED 4,000.


2.
Expenditure that is not of a capital nature and is incurred wholly and exclusively for the purposes of the Taxable Person’s Business should generally be tax deductible. The UAE CT Law disallows / restricts the deduction of certain expenses. This is to ensure that relief can only be obtained for expenses incurred for the purpose of generating Taxable Income, and to address possible situations of abuse or excessive deductions.

Where expenditure is incurred for more than one purpose, a deduction will be allowed for any identifiable part or proportion of the expenses incurred wholly and exclusively for deriving Taxable Income. Also, an appropriate proportion of any unidentifiable part or proportion of the expenses incurred for the purposes of deriving Taxable Income that has been determined on a fair and reasonable basis can be claimed for deduction for UAE CT purposes.

3.
Salaries can only be paid in UAE.

4.
For anything else I would suggest a call so we can discuss in more details. Feel free to email [email protected]

 

[PiersBlack]

Greetings!

1.
If I understood correctly, your UAE company would be a marketing company which would sponsor only 1 visa for yourself. In this case I would suggest a Free Zone. For such a setup, we charge AED 33,900 and it includes:

• Trade License
• Certificate of Formation
• MOA&AOA
• Unit lease agreement for a Flexi Desk

Additionally, the above includes the following as well:

• Appointments, Pick up and Drop off for the VIP Medical and Biometrics
• Personal and Corporate Bank Account

The yearly renewal will be AED 20,000. The visa is only renewable every 2 years and costs AED 3,750 every 2 years.

We also provide accounting services and this costs AED 4,000 (up to 50 transactions).

An additional service which you might want (if you do not want to spend 90 days a year in Dubai) is the Tax Residency certificate for AED 4,000.


2.
Expenditure that is not of a capital nature and is incurred wholly and exclusively for the purposes of the Taxable Person’s Business should generally be tax deductible. The UAE CT Law disallows / restricts the deduction of certain expenses. This is to ensure that relief can only be obtained for expenses incurred for the purpose of generating Taxable Income, and to address possible situations of abuse or excessive deductions.

Where expenditure is incurred for more than one purpose, a deduction will be allowed for any identifiable part or proportion of the expenses incurred wholly and exclusively for deriving Taxable Income. Also, an appropriate proportion of any unidentifiable part or proportion of the expenses incurred for the purposes of deriving Taxable Income that has been determined on a fair and reasonable basis can be claimed for deduction for UAE CT purposes.

3.
Salaries can only be paid in UAE.

4.
For anything else I would suggest a call so we can discuss in more details. Feel free to email [email protected]

Hi @Ancova, do you have a solution to help with ejary/utility bills for people with companies in a Freezone who don't really live in Dubai? This is an issue when KYC renewal arrives for the bank account.

 

[Ancova]

Hi @Ancova, do you have a solution to help with ejary/utility bills for people with companies in a Freezone who don't really live in Dubai? This is an issue when KYC renewal arrives for the bank account.

Hello, yes we do! Fee free to email me for more details.

 

[myhand]

It's a little late to relocate after your action. You may get away with it, but you will never be able to get back to the UK if they figure out what you have done before you left the UK.