Benefits of setting up a holding company in the UAE

Setting up a holding company can be a great way to own property in the UAE – it allows you to reduce administration, hold assets in a secure and private manner, allow flexibility to plug into a trust of foundation, and make life easy for yourself.

In some cases, for example, if you own property through a holding company in JAFZA offshore, you can also obtain a residency visa more easily.

There are also other benefits.

Often banking can be a struggle for holding companies, but if you can demonstrate that you own one or more properties, the whole process of working with banks can become far easier.

Today, a variety of different companies can own properties in Dubai. So, let’s look at one key option, the holding company, and four great benefits that come with it.

1. Gain a residency visa
Live in your own UAE property without worrying about visas. Owning a property in the UAE is easier than you might think.

We have a new five-year tourist visa, 100 per cent ownership of companies for non-Emiratis, and some people can potentially reside here for up to ten years on a single visa. This new visa is finally being made available for normal people, should they qualify.

If you dream of spending more time in the UAE but have problems with your visa, owning your property though a holding company could be the best option for you.

The holding company solution with JAFZA offshore will automatically entitle you to the all-important residency visa – the crucial document you need to spend more time here, sponsor your family, and obtain the all-important Emirates ID.

What’s more, your visa can be renewed repeatedly as long as your company stays open.

How to secure your visa
Obtaining a visa is simple if you buy property through a holding company in JAFZA (or by setting up a free zone company without the property.) However, it’s important to follow the right steps and make sure you complete the associated paperwork.

In terms of other options, it’s also worth noting that a DIFC special purpose vehicle (SPV) that owns property can issue a visa.

And while currently it’s unlikely that RAK International Corporate Centre (RAKICC) will issue visas, there’s no reason why
Abu Dhabi’s International Financial Centre (ADGM) wouldn’t follow JAFZA’s example in the future.

2. Save on taxes
Benefit from no taxes, even if you live abroad.

Huge tax breaks are one of the biggest draws for entrepreneurs and investors in the UAE, especially those buying property through a holding company.

As well as benefitting from no corporate, capital gains and dividend tax, those who set up a holding company have a distinct advantage over individual property owners, as this structure can plug into a wider structure globally.

How you can make significant tax savings
Individuals who leave the UAE to return home or live elsewhere may be liable to pay taxes on income earned abroad. This is not the case if you have a holding company, as the income can be taken out as a dividend which has a lower tax charge in most European countries than standard tax rates on income.

In fact, there are significant tax savings to be made if you buy property via a holding company.

Furthermore, there is no income tax in the UAE, so tax savings are considerable compared to most countries. But there is a cost to having a company, so you will need to work out the cost benefit to make sure it makes sense for you.

3. Benefit from different ownership options
Split your shares or own 100 per cent of the company.

Another big attraction of buying property through a holding company is that it allows you to own shares or other assets in different companies.

This means your holding company can be used for property ownership as well as investing in other companies.

With more ownership options, you have more flexibility in the investment decisions you wish to make in the UAE.

Moreover, it can reduce your personal exposure to risk. This is because the assets are held by the company, not the individual. Thus, you have an increased level of protection from risks such as debt liabilities and lawsuits.

Choosing the right ownership option
It’s important to know that in the UAE, there are different types of holding companies you can own, depending on the emirate, such as through RAK, ADGM, JAFZA, or DIFC SPV under a foundation.

4. Easy banking
Simplify your corporate banking.

Opening a corporate bank account in the UAE can be particularly challenging for newcomers.

How you can simplify your banking
If you have a residency visa and you hold a UAE business license through JAFZA, it should be far easier to open a corporate bank account.

Furthermore, with internet banking, you can access funds at will from anywhere in the world, offering greater control over company finances wherever you reside.

With the UAE becoming more and more popular with expats as a place to live and work, owning a property through a holding company makes good business sense in more ways than one.

Michael Burke is managing partner at real estate firm Arabian Escapes