Doing business in Dubai: what do you need to know as a Dutch entrepreneur?

Doing business in Dubai is attracting an increasing number of Dutch people: 9% corporate tax since 2023 (versus 19-25.8% corporate tax in the Netherlands), 0% income tax, and a hub position for the Middle East, Asia, and Africa. However, the reality is nuanced. Substance requirements under ATAD, a residence test by the Dutch Tax and Customs Administration, and higher practical costs than often portrayed. Below is an honest overview for Dutch entrepreneurs considering relocating to Dubai.

The short answer

• Tax benefit: 9% UAE corporate tax, 0% income tax for residents, 5% VAT.
• Routes: mainland, free zone, offshore – each with its own profile.
• Substance required: office, people, board meetings in UAE.
• Dutch Tax and Customs Administration: verifies residence and place of establishment – ​​no “paper” Dubai BV.
• Realistic costs: 15,000-50,000 euros/year for the complete package.

Why do entrepreneurs choose Dubai?

Floor — IT consultant (35) from Amsterdam — explores Dubai. Her reasons:

• Low tax: 9% UAE Corporate Tax vs. 25.8% Dutch Corporate Income Tax on profit above 200,000 euros.
• No income tax for residents.
• Customers in the Middle East and Asia.
• English-speaking business climate.
• Good connections (8-hour flights to everywhere).
• Modern, safe, international.

But Floor's accountant adds a caveat: Dubai is no longer a tax haven. Corporate tax since 2023, VAT since 2018, and economic substance since 2019. The story is nuanced.

Three main routes

Mainland

Standard Dubai LLC. Since 2021: 100% foreign ownership possible in most sectors. Local sales permitted. 9% corporate tax on profits above AED 375,000 (~€95,000). For those wishing to sell locally.

Free zone

One of 40+ free zones (IFZA, JAFZA, Silicon Oasis, DMCC). 100% foreign ownership, no local trade without a distributor. Under the Qualifying Free Zone Person (QFZP) regime: 0% corporate tax on qualifying income. For international trade.

Offshore

For example, RAK ICC: no local trade, no visa, no office required. Especially for holding structures. No substance, high risk of reclassification by the Dutch Tax Authorities.

Tax in Dubai – reality

• Corporate Tax 9%: above AED 375,000 (~95,000 euros) profit, since June 2023.
• 0% for QFZP: free zone companies with “qualifying income” – conditions strict.
• 5% VAT: since 2018, for most supplies and services.
• No income tax: for residents (residency required).
• No inheritance tax, no wealth tax.

Comparison in the Netherlands for SMEs with a profit of 500,000 euros: Dubai 9% = 45,000 euros vs. the Netherlands 25.8% = 129,000 euros. Difference 84,000 euros – provided the structure has substance.

Substance requirements – the real hurdle

Under the Economic Substance Regulations (ESR) and ATAD: a Dubai company must actually operate there. Especially for Dutch nationals with a holding company:

• Office in UAE (no PO box only).
• Employees or management in the UAE.
• Board meetings in UAE – documentable.
• Decisions taken in UAE.
• Actual operational activity.

For a “paper” Dubai BV: the Dutch Tax and Customs Administration can invoke the place of establishment fiction (Art. 4 AWR) and tax the profit in the Netherlands retroactively. See Dubai substance requirements.

Dutch tax reality

The Netherlands continues to look at:

• Residence of Director-MajorShareholder: for stay in the Netherlands >183 days: subject to Dutch tax.
• Place of establishment of a BV: effective management is decisive, not only the formal registered office.
• Permanent establishment: if work is performed in the Netherlands: subject to Dutch tax.
• CFC rules: passive income in a low-tax country can be taxed in the Netherlands.

If you want to do Dubai right: emigrate with the whole family, set up an office, and truly relocate the business. Otherwise, Dutch aspects remain relevant.

Costs – realistic picture

• Free zone license: 4,000-15,000 euros per year.
• Mainland license: 8,000-25,000 euros per year.
• Office (flex desk minimum): 2,000-10,000 euros/year.
• Residency visa: 1,500-3,500 euros per person.
• Living in Dubai: 2,000-5,000 euros/month for an apartment.
• International school: 10,000-25,000 euros/child/year.
• Consultants first year: 10,000-30,000 euros.

Realistic: 30,000-100,000 euros/year for a decent setup with substance.

Honest recommendation

Dubai works for entrepreneurs with international activity, sufficient profit (200,000+ euros/year), a willingness to actually emigrate, and a realistic budget. Not for those who only want a “Dubai BV” with a Dutch life. Invest in sound Dutch tax advice plus a UAE advisor — both necessary for compliance. For those who only want to park some profit: don't do it; a Dutch correction almost always follows.

For other topics: starting a business in Dubai, tax benefits in Dubai , and risks of doing business in Dubai.

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