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Three main structures for a Dubai company: mainland (local trade + 9% corporate tax), free zone (international + potentially 0% via QFZP), and offshore (holding company only, no visa). The choice depends on whether local UAE trade is required, ownership structure, budget, and substance willingness. Below are the three routes with their pros and cons, and how Floor and Pim made their choice.
The short answer
- Mainland: local trade, 100% ownership since 2021, 9% Corporate Tax, most expensive route.
- Free zone: international trade, possibly 0% via QFZP, cheaper, no direct UAE mainland sales.
- Offshore: holding only, no visa, no substance, high Dutch risk.
- Best for SMEs: free zone in 80% of cases.
- Mainland: at a truly local UAE market.
Mainland — regular Dubai LLC
Advantages
- Direct sales to UAE mainland customers (consumers and businesses).
- 100% foreign ownership since 2021 (in most sectors).
- Complete flexibility in activities.
- Government contracts possible.
- Visa quota dependent on company size and office space.
Disadvantages
- Higher costs: 8,000-25,000 euros/year license.
- Real office required (no flex desk only).
- For some strategic sectors: local agent still required (51% rule).
- 9% Corporate Tax on profit > 95k euros (0% not possible).
Free zone — most popular route
Advantages
- 100% foreign ownership always.
- Cheaper: 4,000-15,000 euros/year license.
- Virtual office possible (save costs).
- QFZP status: 0% Corporate Tax on qualifying income.
- 40+ free zones with specializations (IFZA cheapest, DMCC trade, DAFZA logistics, Silicon Oasis tech).
- Quick to set up (1-4 week license).
Disadvantages
- No direct local UAE-mainland sales (requires distributor).
- Visa quota limited per free zone license.
- QFZP conditions strict (5% rule mainland trade).
- Bank onboarding is sometimes more difficult than mainland.
Offshore — holding only
Advantages
- Very cheap (1,500-4,000 euros/year).
- No office required.
- No local presence.
- Shareholder confidentiality.
- Suitable for pure holding function.
Disadvantages
- No visa possible.
- No local trade UAE.
- No UAE bank account (often).
- No substance — high risk of NL reclassification.
- VAT registration not possible.
- Under heightened anti-abuse attention (OECD, EU).
Comparison Table
| Aspect | Mainland | Free zone | Offshore |
|---|---|---|---|
| Property | 100% (most sectors) | 100% | 100% |
| Local UAE trade | Yes | Limited (5% rule) | No |
| Visa possible | Yes | Yes | No |
| Costs/year | 8-25k euros | 4-15k euros | 1.5-4k euros |
| Office | Required | Virtual possible | Not required |
| Corporate Tax | 9% | 0-9% (QFZP) | 9% (if CT-sensitive) |
| Substance NL risk | Low | Resourse | High |
| Setup time | 4-12 weeks | 2-8 weeks | 1-3 weeks |
When which form?
Mainland works for
- F&B and retail in the UAE.
- Construction, contracting.
- Local services (consultancy for UAE companies).
- Distribution of international brands in the UAE.
- E-commerce aimed at UAE consumers.
Free zone works for
- Online services and SaaS (international).
- Consultancy with clients outside the UAE.
- Import/export.
- International trade.
- Holding-operating company combinations.
- Tech and innovation.
Offshore works for
- Pure holding of international investments.
- IP holder without operational activity.
- Specific wealth planning objectives.
- (But: high NL risk – with caution).
Floor and Pim's choices
Floor (IT consultancy, international clients): IFZA free zone LLC, virtual office, employment visa. 12,000 euros/year all-in license + office.
Pim (real estate investor, UAE real estate portfolio): Dubai mainland LLC for property management, plus personal real estate purchases under an investor visa. Mainland residency is required to actively manage UAE real estate.
Honest recommendation
For 80% of Dutch entrepreneurs: free zone. International activity, cheaper, possibly 0% Corporate Tax via QFZP. For those who truly operate locally in the UAE: mainland despite higher costs. Avoid offshore unless a pure holding company with solid legal backing — otherwise, Dutch risks are too great. Which specific free zone: depends on industry and budget (see separate post).
For other topics: freezone licenses, establishing a mainland , and offshore company.
Frequently Asked Questions
Mainland: local UAE trade possible, most expensive. Free zone: international, possible 0% corporate tax via QFZP, cheaper. Offshore: holding company only, no visa, no substance, high Dutch risk.
Free zone in 80% of cases: cheaper, quick to set up, possibly 0% Corporate Tax, ideal for international activity. Mainland for a genuine local UAE market. Avoid offshore unless a pure holding company with legal backing.
Since 2021 possible in most sectors – previously a 51% local partner was required. Strategic sectors (defense, oil, some financial) are still subject to the 51% rule. For SMEs: 100% ownership is standard.
QFZP status (0% Corporate Tax): max 5% of income from non-qualifying sources (such as UAE mainland trade). Above 5%: the entire company loses QFZP status, all income is subject to 9% corporate tax. Strict – prevents mainland spillover.
Rarely for Dutch SMEs. No visa, no substance, high Dutch reclassification risk (ATAD, place of establishment fiction). Only for pure holding companies with strong legal substantiation and conscious choice risk.
Mainland: 8-25k euro/year license. Free zone: 4-15k. Offshore: 1.5-4k. Plus office, visas, consultants – mainland total first year 25-60k, free zone 15-40k, offshore 5-10k. Ongoing costs lower than the first year.
Strongest filter: will you be selling to UAE mainland customers? Yes → mainland. No, international → free zone. Only a holding company without activity → offshore (with caution). Plus, take budget and long-term plans into account.
