Expatriate taxation in Dubai: understanding, anticipating and optimizing

A tax system without income tax

One of the pillars of Dubai's economic appeal lies in the complete absence of personal income tax . Expatriates therefore receive their salaries without any tax withholding, a rare advantage worldwide. This measure, in place since the creation of the United Arab Emirates, makes Dubai a prime location for international executives and investors seeking to preserve the profitability of their income.

Indirect sampling measured

While there is no direct taxation, indirect taxes do exist. A 5% VAT rate , introduced in 2018, applies to the majority of goods and services, though it remains significantly lower than the rate in Europe (20% in France). Specific taxes are levied on products considered risky for health – alcohol, tobacco, and sugary drinks – as well as on the hotel and restaurant sector, contributing to the financing of local infrastructure.

Corporate tax: a recent development

Since June 2023, the United Arab Emirates has applied a 9% corporate tax rate on profits exceeding AED 375,000 (approximately €95,000) . This reform reflects a commitment to aligning with international standards while protecting small businesses. Startups and small enterprises thus remain in a highly competitive environment.

Free trade zones: the major lever for attractiveness

Free zones remain a key asset for foreign investors. Under certain conditions, they offer corporate tax exemptions of up to 50 years , 100% foreign ownership , and the free repatriation of capital . Each zone has its own specializations—technology, healthcare, logistics, finance—allowing companies to choose an ecosystem tailored to their sector.

The France‑United Arab Emirates tax treaty: an essential shield

The tax treaty signed between France and the United Arab Emirates aims to avoid double taxation . It determines which country has the right to tax each type of income: salaries, dividends, interest, pensions, or real estate income.

The fundamental principles

Professional income earned in Dubai is not taxed in France, provided the taxpayer is a UAE tax resident . Private pensions follow the same principle, while certain public pensions remain taxable in France. As for dividends and interest, the treaty provides for a reduction or elimination of withholding tax , thus avoiding double taxation.

Formalities and evidence to keep

To fully benefit from the provisions of the agreement, it is essential to prove your tax residency in Dubai . French authorities may require documents such as your employment contract , payslips , or a tax residency certificate issued by the UAE. These documents allow the administration to recognize your non‑resident status.

Residual tax obligations in France

Moving abroad does not mean severing all tax ties with France. Certain taxes continue to apply, particularly for non‑residents who still have economic interests in France.

Tax residency: a determining criterion

Tax status depends on specific criteria: primary residence, length of stay in France (more than 183 days per year), or main source of income. If these criteria are no longer met, the taxpayer is considered a tax resident of Dubai and therefore benefits from the bilateral tax treaty.

Declaration and administrative obligations

Non‑resident taxpayers must still declare their French‑source income (rent, dividends, public pensions). They are also required to declare any bank accounts held abroad , including those in Dubai. Failure to comply with this obligation can result in significant financial penalties .

IFI and exit tax: points to watch out for

• IFI (Real Estate Wealth Tax) : Non‑residents remain taxable only on their real estate located in France . Real estate held in Dubai is not included in the calculation.

• Exit tax : applicable to individuals transferring their tax residence outside of France while holding significant shares in a company. The taxation of unrealized capital gains is generally suspended until the shares are sold.

France vs. Dubai: Two opposing tax models

The result: the tax differential clearly works in favor of Dubai, where purchasing power and the net return on real estate investments are considerably strengthened.

Practical tips for a smooth expatriation

1. Accurately determine your tax residence
   before departure.

2. Keep all your supporting documents
   relating to your professional and tax situation.

3. Declare your foreign accounts
   to the French administration, even in the case of non‑residence.

4. Conduct a wealth audit
   to anticipate potential effects of IFI or exit tax.

5. Rely on the bilateral tax treaty
   to secure your situation.

6. Invest in local real estate ,
   exempt from IFI and benefiting from strong appreciation potential.

7. Seek guidance from a tax or wealth management expert .
   in order to develop a tailored strategy.

In conclusion: a tax framework conducive to financial freedom

Dubai stands out as a model of balance between attractiveness and regulatory rigor . The absence of income tax, moderate corporate taxation, and the transparency established by the Franco‑Emirati convention make it a preferred destination for investors seeking stability and optimization.
But beyond the tax advantages, the success of an expatriation hinges on rigorous planning and a thorough understanding of bilateral obligations . Moving to Dubai is, above all, choosing a new wealth management approach, where financial freedom is combined with legal security.