In recent years, Dubai has firmly positioned itself as a global magnet for wealth and prestige, evolving into a powerhouse for family offices. With its world-class financial ecosystem, the emirate is now home to family offices overseeing assets exceeding a staggering $1 trillion. This meteoric rise of family offices in Dubai has been fueled by an influx of high-net-worth individuals (HNWIs) and ultra-high-net-worth individuals (UHNWIs) who recognize Dubai’s unique blend of opportunity, stability, and luxury.

But what makes Dubai the ultimate destination for family offices? Let’s explore.

Why setting up family offices in Dubai is the Go-To option for UHNWIs?

Strategic Location and Global Connectivity

Situated at the crossroads of Europe, Asia, and Africa, Dubai is a natural gateway between the East and the West. This geographic advantage is further enhanced by world-class transportation infrastructure, including Dubai International Airport (DXB), one of the busiest in the world, and Emirates Airlines, renowned for its global reach and premium services. For UHNWIs who often need seamless travel, Dubai offers unmatched connectivity to major cities worldwide.

Tax-Friendly Environment

The tax regime is one of its most significant draws for UHNWIs and family offices in Dubai. The absence of personal income tax and capital gains tax makes it an attractive destination for wealth preservation. Corporate tax benefits are also available, particularly for businesses operating in Free Zones like Dubai International Financial Centre (DIFC), which offer 0% tax on profits for specific periods. Coupled with transparent regulations and a pro-business government, Dubai is a hub for wealth optimization.

World-Class Infrastructure

Dubai is synonymous with modernity and innovation. Its skyline, adorned with architectural wonders like the Burj Khalifa and the Burj Al Arab, speaks volumes about its ambition. Exclusive neighborhoods such as Palm Jumeirah, Emirates Hills, and Downtown Dubai offer luxury living at its finest. Family offices in Dubai can enjoy access to these amenities, including five-star hotels, gourmet dining, and high-end shopping experiences, all within a safe and well-maintained urban landscape.

Business and Investment Opportunities

As a global business hub, Dubai presents opportunities for investment and entrepreneurship. Sectors like real estate, technology, finance, and renewable energy are thriving, providing fertile ground for UHNWIs to grow their wealth. Financial free zones like the DIFC robust regulatory frameworks for family offices in Dubai, ensuring a secure environment for business and wealth management.

Safety and Quality of Life

One of Dubai’s most appealing traits is its safety. Consistently ranked among the safest cities globally, Dubai provides UHNWIs with peace of mind. The city also boasts a high quality of life, with world-class healthcare, prestigious educational institutions, and a variety of cultural and recreational activities. Political and economic stability further enhances the appeal for family offices in Dubai as a secure place to live and invest.

Growing Ecosystem for Wealth Management

Dubai has become a hub for wealth management services, catering specifically to UHNWIs. Leading global banks, financial advisors, and family offices have established a presence in the city, offering services such as succession planning, estate management, and philanthropic consulting. This growing ecosystem ensures that UHNWIs have access to specialized services tailored to their unique needs.

Vibrant Cultural and Social Scene

Despite its reputation as a business hub, Dubai offers a rich cultural and social environment. The city hosts numerous art exhibitions, international film festivals, and exclusive networking events. Its cosmopolitan nature, with over 200 nationalities residing here, makes it an inclusive space where family offices in Dubai can feel at home while enjoying a vibrant social life.

Ease of Residency and Citizenship Options

Dubai’s residency and citizenship policies are another significant advantage. The introduction of the Golden Visa program has made it easier for investors, entrepreneurs, and high-net-worth individuals to secure long-term residency. Property-linked residency options also provide a straightforward pathway for family businesses looking to establish a foothold in the city.

How to Set Up a Family Offices in Dubai for Wealth Management and Legacy Planning?

Setting up a family office in Dubai offers UHNWIs a formal, regulated framework for efficient wealth management, governance, and legacy planning. The DIFC is often the ideal choice, providing numerous advantages and a robust infrastructure tailored to the needs of family offices. The first step is deciding whether to establish a Single or Multi Family Office and ensuring compliance with DIFC’s regulatory requirements, including the $50 million USD minimum net asset threshold. A DIFC Corporate Services Provider can be your partner in understanding the application process and handling due diligence. While a family office is ideal for those with complex asset structures, larger families, or those needing centralized governance, simpler structures like DIFC Foundations or Prescribed Companies may better suit families with less complex needs. Ultimately, the choice depends on the family’s objectives and financial situation.

MS: Your Guide to Establishing Family Offices in Dubai International Financial Centre

At MS, we specialize in helping UHNWIs establish and manage family offices within the DIFC. With a deep understanding of local regulations and a strong network of trusted partners, we guide clients through the setup process, ensuring compliance with DIFC’s requirements. Whether you’re opting for a Single or Multi Family Office or considering simpler structures like DIFC Foundations or Prescribed companies, MS provides tailored solutions to optimize wealth management, governance, and legacy planning for your family’s long-term success.

The UAE Ministry of Finance has just unveiled crucial updates with Ministerial Decision No. (261) of 2024, transforming the tax landscape for family foundations, unincorporated partnerships, and foreign partnerships. These changes, effective from June 1, 2023, are designed to provide greater tax flexibility, simplify compliance, and better align with global standards. If your business operates in any of these sectors, these updates are set to streamline your tax processes and enhance financial benefits—here’s what you need to know!

New Breakthroughs for Family Foundations: What are the Latest Updates?

1. Treatment of Family Foundations as Unincorporated Partnerships

One of the most important updates for family foundations is the ability to have their income treated as if it were directly earned by the founder or the foundation’s council members. Previously, only the rental and investment income generated by the foundation could be treated as exempt income, akin to how individuals manage their wealth. However, the new regulation extends this tax treatment to juridical persons wholly owned by family foundations, such as Single Family Offices (SFOs).

This means that family foundations and their wholly owned entities can now benefit from the same tax exemptions available to individuals. Income generated by such juridical entities (for example, rental income or investment returns) will be deemed to be earned directly by the foundation’s founders or council members, ensuring that the tax benefits remain in place. This change simplifies the wealth management process, aligning the treatment of family foundations with that of individuals and making it easier to manage assets under the foundation.

2. Family Foundation Entities Can Apply for Tax Transparent Status

The decision now allows juridical persons within a family foundation to apply for tax transparent status under the UAE Corporate Tax framework. This is particularly important as it allows family foundations to benefit from additional tax advantages, similar to other transparent entities, while maintaining flexibility in how they manage assets.

In practical terms, this means that family foundations holding significant assets in the UAE can now gain clearer and more predictable tax treatment, without needing to go through complicated verification processes for each individual asset holder or member. For families with large estates or complex business interests, this change offers significant benefits in terms of tax planning and structuring.

3. Aligning with UAE Corporate Tax Framework

The updated regulation further strengthens the role of family foundations within the UAE’s Corporate Tax framework by enabling family foundations to receive the same treatment as unincorporated partnerships. This alignment is vital for those seeking tax advantages while maintaining family wealth. Foundations with beneficiaries, especially those involving public benefit entities, can now ensure that their wealth management strategies align with broader UAE tax policy, while still preserving the tax benefits that have traditionally been available to such entities.

Additionally, family foundations can now more easily navigate the legal and tax structures that govern their operations. The tax transparency provision for foundations ensures that their income is not subject to the complex taxation processes that might apply to other business entities, making it easier for them to operate across multiple jurisdictions.

4. Impact on Succession Planning and Wealth Management

Family foundations are an essential part of succession planning in many wealth management strategies. With the new amendments, family foundations can now focus more on long-term wealth preservation without being encumbered by complex tax filings or compliance obligations. This facilitates smoother generational transitions and can ensure that family wealth is preserved and distributed according to the foundation’s goals and values.

The option for family foundations to apply for tax transparent status further enhances their ability to be a central vehicle for estate planning and asset protection, ensuring that wealth is managed efficiently while benefiting from favorable tax treatment.

Key Updates for Unincorporated Partnerships and Foreign Partnerships

Alongside the family foundation changes, unincorporated partnerships and foreign partnerships in the UAE also benefit from the revisions to Ministerial Decision No. 261 of 2024. These updates simplify tax reporting and compliance requirements, making it easier for both domestic and international partnerships to operate within the UAE’s tax framework.

1. Unincorporated Partnerships: Simplified Compliance

Under the previous regulations, unincorporated partnerships were required to notify the Federal Tax Authority (FTA) within 20 business days of any changes in the partnership structure—such as the addition of new partners or the departure of existing ones. This requirement has been removed. Instead, unincorporated partnerships are now required to report any changes to their partnership structure during the annual tax return filing process. This streamlined approach reduces administrative burdens and simplifies the compliance process for businesses operating as unincorporated partnerships.

2. Tax Treatment of Foreign Partnerships

Foreign partnerships, which are partnerships based outside the UAE, now benefit from the UAE’s corporate tax system under specific conditions. If a foreign partnership is recognized as tax transparent in its home jurisdiction, it can apply for tax transparent status in the UAE. This eliminates the need for individual partners to verify their tax status separately with the FTA. Instead, they can operate under the assumption that the partnership itself is tax transparent, provided they submit an annual declaration confirming their compliance.

This change provides greater ease of doing business in the UAE for international partnerships, aligning the UAE tax framework with global standards, and reducing the administrative burden on foreign businesses. By simplifying the tax verification process, the UAE becomes a more attractive destination for foreign partnerships, making it easier to navigate the regulatory landscape.

3. Extension of Tax Transparent Status to Juridical Persons in Foreign Partnerships

In a significant development, juridical persons (legal entities) that are part of foreign partnerships can now also apply for tax transparent status. This applies to foreign partnerships that own assets or generate income through their UAE operations, such as foreign entities with investments or rental properties. The ability to classify juridical persons as tax transparent simplifies tax reporting for foreign businesses and provides them with the same benefits enjoyed by unincorporated partnerships.

For international businesses operating in the UAE, this update reduces the complexity of tax filings and ensures that they can benefit from a more straightforward tax structure, fostering greater international business activity in the region.

Why These Changes Matter for Family Foundations, Unincorporated, and Foreign Partnerships

• These updates provide greater flexibility and simplified compliance for entities under the UAE’s Corporate Tax framework. Family foundations, unincorporated partnerships, and foreign partnerships can now operate more efficiently while benefiting from the UAE’s tax advantages.
• For family foundations, the option to be treated as unincorporated partnerships and apply for tax transparency boosts wealth management and succession planning.

Unincorporated partnerships benefit from the removal of the FTA notification requirement, streamlining tax reporting and reducing administrative burdens. Foreign partnerships gain easier operations in the UAE through tax transparency, aligning with global standards.

For families managing wealth and succession planning in the UAE, the latest tax reforms bring much-needed clarity and relief. MOF Decision simplifies compliance and enhances tax transparency for family foundations, ensuring your legacy remains intact. Whether you are setting up a foundation in the DIFC, ADGM, or RAK ICC, this is indeed a game changer.

With easier reporting for partnerships and clear guidelines for tax-transparent structures, family foundations now have the tools to steer the UAE’s tax landscape with confidence.

At MS, we specialize in guiding family offices and foundations through this evolution, providing tailored support to align with your long-term goals. Let us help secure your family’s future while embracing the opportunities this new framework offers.

Family businesses are the lifeblood of economies worldwide, silently powering up to 90% of global GDP and driving employment for millions. From bustling family-owned shops to sprawling multigenerational corporations, these businesses are a testament to legacy and resilience. The largest 500 family enterprises globally bring in a staggering $8 trillion in revenue, expanding at nearly double the pace of advanced economies and providing jobs for over 24 million people, according to the 2023 EY and University of St. Gallen Global Family Business Index. 

In the Middle East, family businesses are a vital economic force, particularly in the UAE, where they represent 90% of private enterprises and employ 80% of the workforce. Recognizing their critical role, Dubai has emerged as a dynamic financial hub, uniquely positioned to support these businesses. Home to the Dubai International Financial Centre (DIFC), Dubai offers a specialized environment designed to cater to the needs of family enterprises. The DIFC serves as a premier destination for families seeking to enhance their governance, preserve their wealth, and ensure their legacies endure through generations. 

While family businesses play a crucial role in the economy, preserving and growing family wealth through generations poses distinct challenges. Families often find themselves grappling with the complexities of governance, succession planning, and regulatory compliance, all while striving to maintain a unified vision for their legacy. Through initiatives like the DIFC Family Wealth Centre (DFWC) empowering family businesses to safeguard their legacies. By providing expert guidance and structured frameworks, the DIFC helps families tackle these complexities, ensuring smooth transitions and fostering harmony, so they can continue to flourish for generations to come. 

DIFC Family Wealth Centre: Supporting Family Wealth Preservation and Governance 

The DIFC has recognized these unique challenges, launching the DIFC Family Wealth Centre (DFWC) to cater to family businesses and high-net-worth families. It offers a sophisticated framework that accommodates the requirements of family offices while ensuring flexibility and confidentiality. 

The DFWC offers a suite of regulations and frameworks tailored for family offices and multi-family offices, such as the Family Arrangements Regulations that came into effect in January 2023. These regulations permit the establishment of a Family Business Register and create specific provisions for family arrangements. Notably, DIFC family offices are not required to register as designated non-financial businesses or professions (DNFBPs) with the Dubai Financial Services Authority (DFSA), granting families more freedom to manage their affairs. 

DIFC Family Wealth Centre actively engages with family businesses through executive programs, workshops, and mentoring services, enhancing family governance and succession planning. Families benefit from high-level networking opportunities, exclusive forums, and access to DIFC’s Global Family Offices Club, which fosters valuable connections. 

Confidentiality and Discretion: DIFC’s Private Family Registry 

DIFC emphasizes confidentiality, critical for family offices that manage extensive private wealth. Facilities like the Private Family Registry and DIFC Privacy Vault protect sensitive family information. Additionally, DIFC does not require family offices to disclose Ultimate Beneficial Ownership (UBO), which reduces the risk of database leaks and ensures that family matters remain private. 

Operating under English common law principles, DIFC is a jurisdiction known for legal stability, transparency, and effective dispute resolution. These features make it a preferred choice for families looking for reliable governance solutions to manage and protect their wealth. 

Single and Multi-Family Offices in DIFC Family Wealth Centre 

DIFC supports both Single-Family Offices and Multi-Family Offices, offering distinct frameworks tailored to the needs of different family structures. A Single-Family Office within DIFC provides comprehensive, centralized governance for one family, managing wealth, assets, and lifestyle needs, without the need for DFSA authorizations for non-financial services. 

In contrast, DIFC’s Multi-Family Office framework serves families seeking a shared resource model, allowing them to access more extensive advisory services and enjoy cost efficiencies. However, this setup requires DFSA approval when financial services are extended across multiple families, ensuring adherence to regulatory standards. 

Foundations and Prescribed Companies vs. DIFC Family Wealth Centre 

For families with straightforward asset structures or minimal administrative requirements, the DIFC presents alternative structuring tools like DIFC Foundations and Prescribed Companies. These options offer flexibility in governance and confidentiality, making them suitable for families aiming to preserve wealth without a formal family office. Conversely, the DIFC Family Wealth Centre serves those needing a more comprehensive approach to governance and wealth management, providing essential resources for families with intricate financial landscapes. 

For families with a long-term vision, DIFC’s blend of regulatory robustness, confidentiality, and a supportive family wealth ecosystem offers an unmatched environment for safeguarding and growing family assets across generations. As family businesses look to the future, DIFC stands ready to provide the structures, guidance, and resources that empower family offices to thrive amidst a rapidly evolving global landscape. 

MS: Your Partner for Family Business Success 

At MS, we understand that family businesses are the backbone of economies, particularly in the Middle East. As these enterprises go through the complexities of wealth preservation, governance, and succession planning, our team provides tailored strategies that empower families to thrive amidst evolving market dynamics. With a keen insight into Dubai’s regulatory landscape and resources like the DIFC Family Wealth Centre, we help family businesses enhance governance and ensure smooth transitions. Partner with us to transform challenges into opportunities, safeguarding your legacy and ensuring that your enterprise not only endures but flourishes for generations to come.