Market participants are always looking for the optimal economic conditions for their activities.
These conditions are currently the most favorable in the United Arab Emirates (UAE) – for example in Abu Dhabi.
This is mainly due to the financial conditions – comprehensive tax exemption, low tariffs, anonymity and safe finances – but also the favorable administrative environment, which proves that 90% of the companies in Abu Dhabi are small and medium-sized enterprises.
That is why it is recommended to set up a so-called FreeZone company - but essentially "offshore" - company there.
Our law firm deals with tax law optimization as one of its focal points and has already gone through this process itself, so that it offers its clients the company formation service in Abu Dhabi as a well thought-out business model.
As part of asset management, we take over the assets entrusted to us and invest the assets after consultation with our clients.
The following overview helps with the first decision – the competent specialist lawyers of our law firm and our experienced partner accounting office help to work out the details and implement them!
For what activities are these companies founded?
These offshore companies operate in Abu Dhabi - mostly specialized - free trade and investment zones and conduct their activities outside of Abu Dhabi – i.e. they have no commercial relationship with customers in Abu Dhabi.
The company is suitable for investments in holding companies or for conducting global trading / economic activities (e.g. e-commerce, marketing) with its headquarters in Abu Dhabi.
What specific advantages do companies enjoy?
These companies enjoy benefits that encompass the entire activity and are extremely attractive:
- Corporate income tax exemption
- Exemption from withholding tax
- Income Tax Exemption – UAE and Hungary have an agreement to avoid double taxation
- Duty is only 4% and there are many duty exemptions
- Exemption from preparing an annual report
- Exemption from the obligation to keep accounts in some free trade zones
- no exchange of information between Abu Dhabi and foreign authorities
- no trading restrictions and currency restrictions
- Opening a bank account in Abu Dhabi
- Abu Dhabi is not considered a tax haven
- Returns well above the European average can be achieved when investing in residential real estate
- Real estate investments by offshore companies can be financed at low interest rates
- The local currency is pegged to the USD, so the exchange rate risk is also low
- Invested funds are safe and can be moved 100% freely at any time
Is a settlement/personal presence necessary?
Personal entry to Abu Dhabi is not required for incorporation, only for visa application and bank account opening.
A branch is also not required for the operation of the company (management can be carried out from abroad), the company only has to maintain an office at its registered office.
A visa is required for personal stay – investor visa for opening a bank account - which can be obtained through the company.
How long does it take to start/maintain a business and what are the costs involved?
The registration of the company itself is fast, it takes only 3-5 days. Opening a bank account, on the other hand, is more time-consuming and requires expert knowledge.
The costs of setting up a company vary and depend heavily on the location (free zone), the activity and the type of company and are from EUR 4,500 (incl. fee), as well as our fee for opening a bank account by separate agreement.
In addition, there are the other necessary costs approx. EUR 2000 (investor visa, UAE ID card and the necessary medical examination).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.