Five key questions for expats moving to, or living in, the UAE

Moving to a new country requires advance planning, especially when it comes to anticipating the legal and tax consequences of such a project in order to avoid any surprises. When moving to the United Arab Emirates, you should pay attention to the kind of visas required in the region. It is also key to clarify your tax situation with your country of departure, find out what specific steps are required for entrepreneurs and business owners, and be aware of the laws that will apply to you in your new country of residence.

Below, we outline five key questions to consider before moving to the UAE.

1. What kind of visa do you need? Do you need to apply for an investment, retirement or employee visa before moving to the UAE?

• The type of resident visa to apply for is the natural starting point for anyone wishing to move to the UAE. The type of visa you need will depend on your life plans and the reason for moving to the Emirates, along with the expected duration of your stay.

• In general, expatriates receive residence permits for a fixed time period based on a sponsorship system when moving to the UAE.

• The Emirates have now added a new category of visas valid for longer periods, notably up to ten years. These new visas are primarily for retirees, investors, entrepreneurs and highly skilled professionals and students.

2. Perhaps you have chosen to move to the UAE for its favourable tax climate, but have you actually cut tax ties with your country of departure?

• Leaving your home country is not without its tax consequences. If you wish to permanently leave your country, you should plan your departure well in advance.
• Check that you have dealt with all of the formalities associated with your departure and that you have met all of your tax obligations.
• Make sure you have truly planned out your new life in the UAE, so that you can shift your vital interests as well as your cultural, financial and social connections.
• It may be advisable for you to request a Tax Residency Certificate issued by the Federal Tax Authority of the UAE. This document enables residents of the UAE to benefit from the double taxation agreements entered into with the UAE and to clarify the personal tax status of people wishing to live and work in the Emirates.
• Take into account the tax obligations that could remain following your departure. Each country defines its own tax regime, and it is likely that your country of departure will continue to tax you on certain types of assets – this is often the case with real estate assets, for example.

3. Do you plan on setting up a business when moving to the UAE? What is the best structure?

• The type of company you choose to set up will be largely dictated by the nature of the business activity you intend to engage in. Do you intend to develop an international or local business? Do you need to establish a physical presence in the UAE such as setting up an office? Do you intend to set up in one of the UAE's many free zones, or create a local business?
• If you opt for a free zone, take into account certain restrictions associated with this type of company. In particular, you should make sure that the business activity you wish to engage in is a recognised activity for companies operating in the free zone and that you obtain an ad hoc licence.
• If, on the other hand, you wish to start a local business, find out the applicable rules from the competent authorities – particularly those regarding shareholding. Since 1 June 2021, creating a local company no longer requires an Emirati partner to hold an interest of at least 51%, with the exception of certain so-called "strategic" activities as defined by the competent authorities of each Emirate state.
• Since 1 June 2023, companies that are effectively incorporated or managed in the UAE and whose profits exceed AED 375,000 are taxed at a fixed rate of 9%. This levy can also be applied to companies registered in free zones, subject to certain exceptions, or to certain individuals who carry out a commercial activity (subject to a trading licence).

4. What law will apply if there are significant upheavals in your family, such as marriage, divorce, child custody disputes, etc.?

• In the interests of accommodating its large expatriate population and aligning itself with best international practices, the UAE have passed a federal law regulating matters of family law for the country’s non-Muslim residents.
• The concept of civil marriage is now recognised in the UAE, and it is possible, under certain conditions, for non-Muslims to marry before the UAE’s civil authorities.
• Another important change is the introduction of divorce without the need to show the existence of any ‘fault’ on the part of the other spouse. Hence, divorce can be granted if one spouse states before the court that he or she wishes to end the marital union without being required to justify or show any wrongdoing by either party during the marriage.
• Within the framework of the divorce, in the absence of any litigation on this matter, joint and equal custody of the children will be granted to both parents. In the event of litigation, the court can be asked to intervene and reach a decision on the matter. The primary consideration will always be the best interests of the child.

Read also: Expats in the UAE: new succession laws for non-Muslims (lombardodier.com)