Personal Taxation

Income tax

The UAE does not impose personal income tax, inheritance tax or gift tax, which remains a key factor behind its appeal to high net worth individuals (HNWIs), family offices and international investors.

Gifts and inheritance tax

The UAE does not impose gift or inheritance tax. However, transfers of real estate by way of gift remain subject to applicable land registration and transfer fees imposed by the relevant emirate.

Taxation of real estate

While the UAE does not impose inheritance or gift taxes, property transfer fees apply to real estate transactions, with the specific rate depending on the emirate. For example, the standard transfer fee is generally 4% of the property value in Dubai, whereas Abu Dhabi applies a 2% property registration fee.

In addition, VAT implications may arise depending on the nature of the property. The first supply of a newly constructed residential property is generally zero-rated for VAT purposes, while subsequent sales and leases of these residential properties are generally exempt from VAT. By contrast, sales and leases of commercial properties are generally subject to VAT at the standard rate of 5%.

Individuals carrying on a business activity

Federal Decree-Law No 47 of 2022 (the “Corporate Tax Law”) introduced a federal corporate tax regime, effective for financial years commencing on or after 1 June 2023.

An individual carrying on a business or business activity becomes subject to corporate tax where annual turnover exceeds AED1 million. Cabinet Decision No 49 of 2023 excludes certain categories of income from business activities, including wages, personal investment income and certain real estate investment income where no commercial licence is required.

Freelancers

Freelancers operating in the UAE are generally subject to the same corporate tax rules as other individuals carrying on a business. Holding a freelance permit or professional licence does not automatically create corporate tax liability. Tax applies where business activity exists and annual turnover exceeds AED1 million.

Corporate Taxation

Corporate tax also applies to legal entities established in the UAE. Resident entities are generally taxed on worldwide income, while non-resident entities may be taxed on income attributable to a permanent establishment in the UAE and certain categories of UAE-source income or nexus.

Generally corporate tax applies at:

• 0% on taxable income up to AED375,000 for each Tax Period; and
• 9% on taxable income exceeding AED375,000 for each Tax Period.

Mainland and free zones

The corporate tax regime applies both to the mainland and free zones. Free zone companies do not automatically benefit from preferential treatment. Only qualifying free zone persons (QFZPs) may apply a 0% corporate tax rate on qualifying income if statutory conditions are met.

Value Added Tax (VAT)

VAT is generally levied at the standard rate of 5% on the supply and import of goods and services.

Businesses are required to register for VAT where the value of taxable supplies and imports exceeded AED375,000 during the previous 12 months or where it is expected to exceed that threshold within the following 30 days. Voluntary registration is available where taxable supplies, taxable expenses or both exceed AED187,500.

Individuals are generally not required to register for VAT unless they independently carry on a taxable business activity that exceeds the mandatory registration threshold. Accordingly, most employees and private investors remain outside the scope of the VAT regime.

Pillar Two

The UAE has been implementing the OECD Pillar Two rules from 2025. Multinational enterprise groups with annual consolidated revenue of at least EUR750 million in at least two of the four financial years immediately preceding the relevant financial year, are subject to a domestic minimum top-up tax.

Partnerships

Incorporated partnerships are subject to corporate tax as companies. Unincorporated partnerships are generally treated as fiscally transparent, with tax liabilities arising at the partner level.

The unincorporated partnership regime may also apply to foundations established in the Abu Dhabi Global Market (ADGM) and Dubai International Financial Centre (DIFC). Where a family foundation meets the conditions specified in Article 17(1) of the Corporate Tax Law, it may benefit from tax-neutral treatment.

Investment funds

Certain qualifying investment funds and real estate investment trusts (REITs) may also benefit from a 0% corporate tax rate or tax-transparent treatment, subject to the statutory conditions.

Single family offices

Family offices generally do not qualify for tax-transparent treatment under Article 17 of the Corporate Tax Law. Where established as juridical persons, they are treated as resident taxable persons and are subject to corporate tax.

Where a family office is a free zone person, it may benefit from a 0% corporate tax rate on qualifying income – eg, wealth and investment management services, or fund management services – that are subject to the regulatory oversight of a competent authority in the UAE.

Individuals

Transfers between close family members may benefit from exemptions from property transfer fees. For example, in Dubai, qualifying gifts of property between spouses or other first-degree relatives (mother, father or children), or to companies may be subject to a reduced transfer fee of 0.125%, subject to applicable minimum fees.

Participation Exemption

The UAE Corporate Tax Law also provides a participation exemption for qualifying dividends and capital gains derived from qualifying shareholdings, subject to the conditions prescribed by the Corporate Tax Law.

The UAE’s main tax planning opportunities arise from the absence of personal income tax, capital gains tax, inheritance tax, gift tax and wealth tax.

Planning focuses on maintaining genuine UAE tax residence and ensuring income remains outside UAE corporate tax where possible.

Family foundations, trusts and QFZP structures remain important tools for succession and wealth planning, subject to substance requirements and anti-abuse rules.

The participation exemption may allow qualifying holding structures to receive dividends and realise certain capital gains without paying UAE corporate tax.

The UAE treaty network may improve cross-border efficiency, although controlled foreign corporation (CFC), attribution, citizenship-based taxation rules and Pillar Two considerations remain relevant.

The UAE does not impose a separate personal exit tax, as stated in 1.1. Tax Regimes.

Pre-immigration planning is therefore mainly driven by the individual’s former jurisdiction and by the assets that remain outside the UAE. Some jurisdictions do not rely only on physical presence or current tax residence. They may continue to tax certain persons or assets by reference to citizenship, domicile, the location of assets, the residence of heirs or beneficiaries, or specific anti-exit rules. Spain and France are common examples of jurisdictions where inheritance, gift or wealth-related tax exposure may survive relocation, particularly where local assets, heirs, beneficiaries or prior residence links remain relevant.

Assets and structures should therefore be reviewed before the move. This includes real estate, rental income, investment portfolios, shares in private companies, trusts, foundations and assets with future capital gains exposure. Where possible, dividends, transfers, disposals, gifts or the establishment of UAE holding companies, family offices or foundations should be considered before, or at least concurrently with, personal relocation. Moving first and restructuring later may reduce planning options and trigger tax consequences in the former jurisdiction.

Company-level planning should also be checked. If the client uses a foreign or UAE holding company, the place of effective management, signing authority, board composition, substance and possible change of corporate domicile should be reviewed before relocation. A personal move to the UAE should not inadvertently move corporate tax residence or create management-and-control issues elsewhere.

Immigration and Tax Residence

Immigration residence and tax residence must be distinguished. A UAE residence visa does not automatically make an individual UAE tax resident. Tax residence is tested separately, including by reference to the usual or principal place of residence, the centre of personal and financial interests, physical presence for at least 183 days, or, in specified cases, the 90-day test.

Residence and Relocation Planning

Citizenship is not the ordinary planning route. UAE nationality remains difficult to obtain and discretionary. For most clients, residence planning is more realistic, including employment, investment, real estate ownership, Golden Residence, Green Residence, entrepreneur routes, and talent or specialised professional categories.

Relocation planning should also include administrative costs: entry permits, residence visas, renewals, cancellations, Emirates ID, change of status and related government fees. These are not taxes in the strict sense, but they affect the cost and timing of relocation.

The UAE does not impose personal income tax, annual property tax or wealth tax on real estate ownership. The tax treatment mainly depends on whether the property is owned by an individual or a company.

Non-Residents – Individuals

Rental income from personally owned real estate is typically not subject to UAE corporate tax where the activity qualifies as passive real estate investment. This applies where the individual is not carrying on the activity through a commercial licence and no licence is required for that activity. As a result, a foreign individual may own and rent out UAE property without creating a UAE tax liability on the rental income.

Non-Residents – Companies

A non-resident company that derives income from UAE immovable property may create a UAE corporate tax nexus. Income from such property is treated as UAE-sourced income and may be subject to corporate tax, even where the company is incorporated outside the UAE.

Municipality Charges

Although the UAE does not impose an annual property tax, certain municipality charges apply. For example, in Dubai, a municipality housing fee is charged at 5% of the annual rental value. For residential property, this cost is generally borne by the tenant and collected through Dubai Electricity and Water Authority (DEWA) bills. For commercial property, the municipality fee is generally payable by the owner.

VAT Considerations

See 1.1 Tax Regimes.

The UAE tax system has undergone continuous development, including the introduction of corporate tax in 2022 and the implementation of international tax standards such as the OECD Pillar Two framework.

Moreover, the existing tax regime remains in a phase of practical implementation. In particular, the tax regime continues to develop through administrative guidance issued by the Federal Tax Authority.

However, at present, no material changes to taxes have been announced.

The UAE participates in the OECD Common Reporting Standard (CRS) automatic exchange of information, has implemented the US Foreign Account Tax Compliance Act (FATCA) through an intergovernmental agreement with the United States, and has adopted various OECD Base Erosion and Profit Shifting (BEPS) measures.

The UAE will implement the OECD’s updated Common Reporting Standard (CRS 2.0) from 1 January 2027, with first information exchanges scheduled for 2028. The revised framework expands reporting obligations to cover additional financial products, including certain electronic money products and central bank digital currencies, and aligns its implementation with the OECD’s Crypto-Asset Reporting Framework (CARF), extending international tax transparency to crypto-assets and other digital financial assets.

While CRS 2.0 expands the automatic exchange of information, CARF establishes a separate reporting framework requiring crypto-asset service providers to collect and report information on customers’ crypto-asset transactions to the relevant tax authorities for subsequent automatic exchange between participating jurisdictions.

Beneficial ownership transparency is reinforced through requirements for companies to identify, maintain and, where required, submit information on their ultimate beneficial owners (UBOs). However, the UAE does not currently maintain a fully public beneficial ownership register.

The UAE has not implemented the EU DAC6 reporting regime, as it is not a member of the European Union. However, transactions involving EU intermediaries or taxpayers may still give rise to DAC6 reporting obligations outside the UAE.

UAE private wealth is often connected to founder-led family businesses, large family groups and assets held across several jurisdictions. Founders may be willing to transfer economic value but reluctant to surrender voting control, particularly where only some family members participate in the business. This makes staged succession, separate voting and economic rights, and clear entry, employment and dividend policies especially useful.

The Federal Family Business Law gives statutory recognition to family charters, family councils and family offices, and permits differentiated share rights. A charter can record the family’s values and governance principles, but the articles of association prevail if the two conflict. Terms intended to be enforceable – such as transfer restrictions, voting arrangements and valuation mechanisms – should therefore also appear in the constitutional or ownership documents.

Succession planning in the UAE must be asset-specific rather than based on a single assumption about residence. Under the Civil Transactions Law effective from 1 June 2026, succession is generally governed by the law of the deceased’s nationality at death. A will may designate the law governing its substantive and formal validity, but UAE law applies to a foreigner’s will concerning UAE immovable property, and special personal-status legislation may also apply.

A practical plan should map each asset, its situs, the competent court, the applicable marital-property and forced-heirship rules, and any foreign estate or inheritance tax. UAE and foreign wills should be co-ordinated so that one does not revoke the other. For non-Muslims, a registered UAE will can materially reduce uncertainty. Foundations, trusts and holding companies may assist with continuity, but only after testing their tax, reporting and controlled-entity treatment in every relevant jurisdiction.

For estates governed by the Muslim Personal Status Law, testamentary freedom is limited. After funeral expenses and debts, a will generally operates within one third of the estate; a disposition exceeding that limit is dependent on the heirs’ approval, while the balance passes to the prescribed heirs. The law also provides a mandatory will, within the statutory limit, for qualifying descendants of a child who predeceased the testator.

There are consensual alternatives. After death, competent heirs may document an al-takharuj arrangement under which one or more heirs relinquish all or part of their shares for agreed consideration. Genuine lifetime gifts and properly constituted ownership structures may also alter what falls into the estate, but they must be completed in substance and should not prejudice creditors or rely on nominal ownership.

Non-Muslims may leave their UAE estate to any chosen beneficiary. In the absence of a registered will, the federal civil regime generally allocates one half to the surviving spouse and the other half equally among the children.

The UAE does not apply a general community-property regime. Under the Muslim Personal Status Law, each spouse has an independent financial estate and may deal with property registered solely in their name without the other spouse’s consent. Jointly owned property remains subject to ordinary co-ownership rules. Where one spouse can prove a material contribution to developing the other spouse’s property or business, the court may recognise a corresponding entitlement.

Prenuptial and postnuptial arrangements are generally treated as contractual arrangements, particularly under the non-Muslim civil marriage regime, which expressly allows spouses to agree financial terms for the marriage and its termination. To improve enforceability, the agreement should be clear, voluntary, properly executed, based on adequate disclosure and consistent with mandatory law and UAE public order. It should also be reflected in title records, shareholder documents and foreign planning where relevant; the agreement alone does not transfer legal title or bind third parties.

A lifetime gift or transfer on death does not produce an automatic UAE tax-basis step-up to market value. As stated in 1.1 Tax Regime, for private assets outside a business, basis is often not immediately relevant. Where the asset is held in a taxable business or company, its carrying value and tax basis is determined under the applicable accounting and corporate tax rules, and related-party dealings must satisfy the arm’s length principle.

Registration, trustee, free zone or corporate-transfer fees may still apply. Clients should retain acquisition documents and obtain a contemporaneous valuation, since a later disposal may be taxed in another jurisdiction by reference to historic cost rather than the value at the date of gift or death.

Transfers of assets to the younger generation do not trigger UAE tax consequences, as the UAE does not impose inheritance tax, gift tax or personal income tax. Therefore, succession planning is primarily focused on ownership continuity, preservation of family wealth and orderly transfer of control.

In practice, families use a combination of lifetime gifts, holding companies, foundations, trusts and wills.

Holding companies allow consolidation of operating and investment assets and transfer of control at the holding level. UAE free zone holding companies may benefit from the 0% corporate tax rate on qualifying income, subject to applicable conditions.

Foundations and trusts, particularly in the ADGM and DIFC, are commonly used to hold family wealth and establish governance frameworks beyond the founding generation. Depending on their legal form and activities, they may be treated as tax transparent for UAE corporate tax purposes.

Wills remain an important tool for expatriate families to ensure certainty over the distribution of UAE-situs assets and reduce succession disputes.

The regulation of digital assets in the UAE is fragmented across federal legislation and free zone-specific frameworks.

The UAE succession rules may apply to digital assets, regardless of whether the owner is a UAE national, resident or foreign investor.

In the mainland, virtual assets are regulated primarily by the Securities and Commodities Authority (SCA). Separate regulatory frameworks apply within the financial free zones, including the Financial Services Regulatory Authority (FSRA) in the ADGM and the Dubai Financial Services Authority (DFSA) in the DIFC. In Dubai outside the DIFC, virtual asset activities are regulated by the Virtual Assets Regulatory Authority (VARA). While neither the mainland UAE nor ADGM currently provides a dedicated succession regime for digital assets, the DIFC courts launched a digital assets will, allowing individuals to choose beneficiaries for certain digital assets through a dedicated non-custodial wallet structure. The owner retains full control over the assets during their lifetime, with the assets passing to the chosen beneficiaries upon death in accordance with the registered will and DIFC probate procedures.

As part of the DIFC’s digital succession framework, its courts also offer tejouri, a secure digital vault for storing documents, records and other legacy information. Unlike the digital assets will, the tejouri does not hold cryptocurrencies, NFTs or other digital assets. Instead, it may be used to store supporting estate planning documents and records, while digital assets remain under the owner’s control through the non-custodial wallet structure used by the DIFC digital assets will framework.

No specific succession regime exists for digital accounts and online services. Access to email accounts, cloud storage platforms and social media profiles is generally governed by the contractual terms of the relevant service provider.

In the UAE, cross-border tax and estate planning for HNWIs commonly relies on DIFC and ADGM trusts and foundations, together with Ras Al Khaimah International Corporate Centre (RAK ICC) foundations, SPVs and holding companies.

DIFC and ADGM foundations are the leading private wealth vehicles, offering legal personality, succession control, founder powers and asset-holding flexibility. RAK ICC foundations provide a more cost-effective alternative. Trusts remain relevant, particularly for common-law families, with DIFC and ADGM trusts available, although offshore trusts (Jersey, Guernsey and BVI) are still widely used for international assets. Waqf structures (Islamic endowments) remain important for Muslim families seeking a Sharia-based succession and philanthropic vehicle. Supporting structures include SPVs, family offices, registered wills and Family Companies Law arrangements.

As the UAE has no personal income, gift, estate or capital gains tax, these structures are primarily used for succession planning, asset protection, governance and incapacity planning. Key limitations include onshore enforcement risks, uncertainty around Sharia-based heirship challenges, creditor claw-back rules, sham risks from excessive founder control, foreign tax treatment issues and governance costs.

Recent reforms, including the corporate tax framework, family foundation transparency rules, Dubai Law No 2 of 2025 and wider succession reforms, have strengthened the UAE planning environment, although significant areas remain untested.

The market continues to shift towards UAE-based foundations, family offices and multi-generational structures, driven by HNWI migration and succession needs, while disputes involving these structures are expected to increase.

Trusts are fully recognised and respected in the common-law free zones, the DIFC and ADGM, which have modern trust statutes, specialist courts and “firewall” provisions that prevent foreign forced heirship or heirship judgments from being enforced where they conflict with local trust law.

Federally, the UAE has introduced an onshore civil law-style trust regime through Federal Decree Law No 19 of 2020 on Trusts, updated by Federal Decree Law No 31 of 2023, which for the first time embeds the trust concept into the mainland legal system. However, commentary notes that this framework is still relatively new and largely untested for sophisticated cross-border succession planning, so most high-end structures continue to rely on DIFC/ADGM trusts with onshore assets held via an SPV or foundation.

In the DIFC, express trusts are governed by DIFC Trust Law No 4 of 2018, which codifies trustee duties of loyalty, proper purpose, prudence and avoidance of unauthorised profits; corporate trustees often operate under DFSA financial services licences and must also comply with UAE AML/CFT legislation.

ADGM trusts fall under the ADGM Trusts (Special Provisions) Regulations 2016, which impose statutory fiduciary duties on trustees and foundation council members and sit within a regulated Company Service Provider (CSP) framework for non exempt SPVs and foundations.

Practical limitations also remain around the interaction with mandatory Sharia inheritance rules for Muslim settlors and the willingness of onshore courts to uphold distributions that significantly depart from fixed shares, making careful choice of governing law, jurisdiction and asset holding chain essential.

The UAE tax implications for a fiduciary or beneficiary of a foreign trust or foundation depend primarily on the classification of the structure under UAE Corporate Tax Law.

Where a foreign trust or foundation is treated as a taxable person (ie, a non-transparent entity), any UAE-sourced income is taxed at the level of the entity itself. In such cases, a fiduciary acting in that capacity does not generally have a separate UAE tax liability, and distributions to beneficiaries are typically not subject to further UAE corporate taxation at the beneficiary level, subject to the specific nature of the income and applicable rules.

Alternatively, where a foreign trust or foundation is treated as fiscally transparent (eg, as an unincorporated partnership for UAE corporate tax purposes), the tax attributes of the structure are attributed to its beneficiaries or participants. In such cases, a UAE tax resident fiduciary or beneficiary may be required to account for their proportional share of income derived from UAE sources.

For natural persons as beneficiaries, corporate tax applies only where the individual is conducting a business activity. Corporations as beneficiaries are within the scope of UAE corporate tax by default, provided they are incorporated in the UAE or effectively managed and controlled from the UAE, subject to limited exemptions and special regimes (including qualifying free zone regimes and exempt persons).

A UAE citizen or resident receiving distributions from a foreign trust, foundation or similar structure generally has no UAE tax exposure. The UAE does not impose personal income tax, wealth tax or tax on capital receipts, and individual investment income is outside the scope of corporate tax. Any tax exposure typically arises in another jurisdiction, where settlor, beneficiary or controlled-entity rules may continue to apply after relocation to the UAE.

A fiduciary role raises two principal issues. First, a foreign foundation or other legal entity may become subject to UAE corporate tax if it is effectively managed and controlled from the UAE. A UAE-resident council member, trustee or director making strategic decisions from the UAE may create UAE tax residence or permanent establishment risks. For common-law trusts, the analysis is different, as they are generally treated as fiscally transparent, with the focus on the trustee and beneficiaries.

Second, remuneration received for fiduciary services may create UAE corporate tax exposure where the activity is conducted as a business, while unpaid family roles generally do not.

In practice, families manage these issues through careful structuring. Foreign foundations and trusts may, where conditions are met, obtain transparent treatment, allowing income to be attributed to beneficiaries rather than the structure itself. Families also consider beneficiary relocation, the location of management and professional fiduciary arrangements, while addressing foreign tax rules and reporting obligations. A common approach is to use UAE foundations for regional assets and offshore trusts for international assets where they provide greater legal certainty.

The dominant asset protection structure in the UAE is the family foundation – DIFC and ADGM foundations as premium options, with RAK ICC foundations as a cost-effective alternative. Foundations are commonly used as the central vehicle for holding family wealth and business interests.

Asset protection is prospective only. Transfers made when insolvent or in anticipation of creditor claims may be vulnerable to challenge under fraudulent disposition provisions and onshore claw-back rules. Free zone protections are not absolute: mainland UAE assets may still be vulnerable to claims before onshore courts.

Key risks include sham or alter-ego challenges where founders retain excessive practical control, despite reserved powers being permitted by law, as well as the unresolved interaction between foundation structures and Sharia-based heirship claims. Effective structures require genuine governance, including proper administration, records, accounts, councils and ongoing compliance.

Tax outcomes require careful structuring, including maintaining foundation transparency requirements and considering foreign tax treatment. For cross-border families, the common approach is a hybrid model: UAE foundations for regional assets, combined with offshore trusts where deeper case law and international asset protection are preferred.

Family business shares are commonly transferred during the founder’s lifetime into DIFC, ADGM or RAK ICC foundations, with succession governed by the foundation’s charter and by-laws rather than inheritance. This preserves ownership continuity and avoids fragmentation, with larger families increasingly using branch structures under a master foundation to accommodate separate interests.

A complementary approach is corporate restructuring, with operating businesses consolidated under holding vehicles and economic rights separated from control through different share classes. The UAE Family Companies Law (Federal Decree-Law No 37/2022) provides additional onshore tools, including transfer restrictions, buy-back mechanisms and recognition of family charters.

Supporting measures include family waqf structures, registered wills, lifetime gifting and insurance-based equalisation between active and non-active family members.

Governance is central to succession planning, with families commonly adopting constitutions, shareholders’ agreements and family councils addressing employment, transfers, exits and dispute resolution. Ultimately, the success of any structure depends on effective governance and family alignment.

UAE law does not generally impose a transfer tax on lifetime or death transfers of partial interests in entities, and there is no standalone UAE discounting regime for lack of marketability or control.

Discount concepts may, however, arise in related contexts. Dubai’s 4% Dubai Land Department (DLD) transfer fee applies to the value of real property rather than a partial entity interest, and no discounting practice applies. Under corporate tax transfer pricing rules, related-party transactions must reflect arm’s length market value. Minority and marketability discounts may also arise in shareholder exits, buy-outs, contractual valuation mechanisms or court-ordered valuations in inheritance or divorce proceedings, depending on the applicable valuation standard, governing documents or expert methodology. For cross-border families, discount planning remains primarily relevant under foreign gift, estate or succession tax regimes.

Rapid Growth

The rapid growth of DIFC foundations and family entities has created a significant future disputes pipeline. Structures established quickly, often with limited governance and substantial founder control, are increasingly vulnerable to sham, alter-ego and claw-back challenges.

Transition of Wealth

The current generational transition of Gulf and expatriate family wealth is a further driver. Informal governance arrangements, undocumented family understandings and founder-centric control frequently conflict with succession expectations, resulting in disputes over founder intent and asset ownership. A key issue is the challenge by heirs to lifetime transfers into foundations and trusts, including allegations of incapacity, ineffective transfer or attempts to circumvent forced heirship principles.

Multiple Jurisdictions

The evolving jurisdictional landscape adds further complexity. DIFC/ADGM versus onshore forum disputes are increasingly central, given the different legal frameworks and remedies available. Typical claims include challenges to wealth structures, fiduciary breach and removal proceedings, shareholder deadlock, matrimonial tracing, estate disputes and parallel criminal complaints for breach of trust. Multi-jurisdictional structures also create enforcement challenges across multiple legal systems.

Durability

The DIFC and ADGM courts are therefore developing a growing contentious trusts and foundations practice. The durability of UAE wealth structures will ultimately depend not only on statutory protection, but also on robust governance, genuine separation of control and properly documented succession arrangements.

Differences in Approach and Law Between the Free Zone and Mainland Courts

Free zone courts

The DIFC and ADGM courts (common law) apply a broad equitable toolkit aimed at enforcing fiduciary loyalty and preventing misuse of position. Remedies include equitable compensation to restore the trust, foundation or estate to the position it would have occupied had there not been a breach; account of profits/disgorgement, requiring fiduciaries to surrender unauthorised gains even without proven loss; and proprietary remedies, including tracing and constructive trusts, which may allow recovery of assets and priority over unsecured creditors. Courts may also grant protective relief, including injunctions, freezing orders, disclosure orders, receivership, rescission of tainted transactions and removal of fiduciaries. Punitive damages are not part of the DIFC/ADGM approach; deterrence is achieved through disgorgement, proprietary remedies and costs consequences.

Mainland courts

UAE mainland courts (civil law) follow a compensatory model. Damages cover actual loss and lost profit that are the direct and natural consequence of the wrong, with moral damages available in recognised cases. Punitive damages are not available, as compensation is intended to restore rather than punish. Restitutionary claims for unjust enrichment may recover benefits obtained without legal basis, but remain harm-based rather than loyalty-driven.

The practical distinction is that free zone remedies protect fiduciary fidelity, while mainland remedies focus on reparation of proven harm. This remedial gap makes governing law and forum selection a central consideration in fiduciary structuring and disputes.

In the UAE, professional fiduciaries – trust companies, council members, CSPs and registered agents – are central to DIFC, ADGM and RAK ICC trusts and foundations, most administered by licensed providers. In the ADGM, anyone acting as a CSP must be licensed and comply with prudential, conduct and AML/CFT standards; the DIFC applies similar expectations, with DFSA-regulated trustees and codified duties.

Trust services are regulated: the DIFC requires a Category 3B DFSA licence to act as trustee, with FSRA equivalents in the ADGM. Trident, Sovereign, JTC, Hawksford and Ocorian operate alongside regional firms. Every foundation needs a registered agent, and CSPs supply council members, supervised as designated non-financial businesses and professions (DNFBPs) for AML purposes. Families can use a private trust company (PTC), exempt from licensing if it serves one family. The DIFC Family Wealth Centre and ADGM equivalents have made single-family offices mainstream; however, multi-family offices require licensing. Onshore trusteeship remains embryonic, and waqf administration runs through emirate awqaf authorities.

These professional fiduciaries are held to a higher standard than lay trustees or council members, on three levels:

• First, the duty of care scales with professional status: under ADGM’s Trustee Act 2000, and similarly in the DIFC, professional trustees are judged against professional competence, while lay trustees are judged against reasonable-person prudence.
• Second, exoneration clauses are construed strictly against professional trustees, and the statutory floor – no exclusion of fraud, wilful misconduct or gross negligence – bites hardest on professional conduct.
• Third, licensed fiduciaries face a regulatory overlay lay fiduciaries never see: fitness-and-propriety requirements, minimum capital, client-asset and conflicts rules, AML/CFT obligations, audits, and DFSA/FSRA enforcement (fines, licence action, public censure) independent of any beneficiary claim. While a family trustee faces a lawsuit, a licensed fiduciary faces a lawsuit and a regulator. Across RAK ICC foundations, council members, guardians and registered agents are expected to meet fiduciary-style governance standards, even where not prudentially regulated.

In the DIFC and ADGM, trusts and foundations have separate legal personality or separate trust property, so fiduciaries are not generally liable for the entity’s liabilities – though a trustee contracts personally with third parties, subject to indemnity from trust assets and any recourse-limitation clause. Personal liability or veil-piercing is exceptional, requiring bad faith, wilful default, gross negligence, misappropriation, or fraud/evasion of obligations; genuine structures with real governance are rarely pierced, while late, pressured or founder-controlled “pocket” structures typically fail via claw-back or sham findings rather than classic piercing.

The most important doctrine is sham/alter ego: where a founder retains de facto control and never genuinely relinquishes the assets, the DIFC/ADGM courts can look through the structure – as in Jamaru Group Holding v Jasmine, where the DIFC court pierced a company’s veil used to claw-back marital gifts.

Both regimes also void fraudulent transfers to defraud creditors; onshore, actio pauliana-type rules and bankruptcy claw-back do similar work, and Sharia rules on terminal-illness gifts (marad al-mawt) and forced heirship can unwind onshore planning. Free zone firewalls protect the structure within the zone, but onshore assets (mainland real estate, bank accounts) remain exposed – which is the real enforcement gap. Exoneration and indemnity clauses plus D&O-style insurance are permitted but never excuse fraud or reckless breaches; in the DIFC, gross negligence is non-excludable. Risk is further managed by delegating investment and custody to licensed professionals under Trustee Act-style delegation, anti-Bartlett clauses relieving oversight of underlying operating companies, reserved founder powers, protectors, Beddoe-type court directions, and beneficiary consent.

Common Law, Civil Law and Sharia Law

In the UAE, fiduciary investment standards are most developed in the common-law free zones. DIFC trustees are governed by DIFC Trust Law No 4 of 2018, requiring them to act honestly, in good faith and for proper purposes, and to exercise the care, diligence and skill of a prudent professional when investing another’s assets; the ADGM Trusts framework imposes an equivalent prudent-investor obligation. Onshore, the Trust Law (Federal Decree-Law No 31 of 2023) requires trustees to manage property with the care of a “reasonable person”, act loyally, avoid conflicts, segregate assets and account to beneficiaries, under SCA and court supervision – though case law giving it content is still thin. Court-appointed guardians face a conservative, procedurally-driven custodial standard rather than an investment theory: court approval for major dispositions, inventories and periodic accounts simply block risky reinvestment. A waqf nazir (administrator appointed to oversee a waqf), under Federal Law No 5 of 2018 and the emirate waqf authorities, must preserve the endowed corpus through Sharia-compliant investment under supervisory oversight – again prudence enforced by supervision.

Regulated entities

Federal Decree-Law No 10 of 2025 (the UAE’s federal AML/CFT and counter-proliferation financing law) sets no separate prudent-investor rule, but shapes how fiduciaries handle assets: those qualifying as financial institutions, DNFBPs or virtual asset service providers (VASPs) are “regulated entities” that must apply risk-based KYC, source-of-funds checks, and monitoring and sanctions screening, and avoid criminal proceeds, sanctioned counterparties or unlicensed virtual-asset activity, risking personal and institutional liability. Cabinet Resolution No 134 of 2025, the law’s executive regulation, converts this into binding detail – risk-based due diligence, UBO identification, proliferation-financing duties, new DNFBP categories, and record-keeping/reporting duties shaping asset allocation and counterparty choices.

Foundation laws and rules

For foundations, the DIFC Foundations Law No 3 of 2018 and ADGM Foundations Regulations 2017 make council members fiduciaries bound to act honestly, with due care and in the foundation’s best interests under its charter and investment policy. Professional fiduciaries face a regulatory overlay: DIFC/ADGM trust service providers and asset managers must be DFSA/FSRA-licensed and meet conduct-of-business standards (suitability, asset segregation, risk disclosure), with the SCA performing an equivalent onshore role for licensed managers and, increasingly, for registered trustees – so investment conduct is examined by a regulator, not just by beneficiaries, adding competence duties. Three distinct legal mechanisms sustain prudence:

• default duties, including a default duty to diversify, applying automatically unless the instrument varies them;
• liability, since beneficiaries can sue in the DIFC/ADGM courts for surcharge, account or removal, with exculpation never excusing fraud, wilful misconduct or (in the DIFC) gross negligence, leaving a floor of accountability that always remains; and
• supervision by courts, waqf authorities or financial regulators.

The freedom to contract out – retaining a concentrated family business, disapplying diversification, anti-Bartlett clauses – is deliberate, and redirects rather than removes the good-faith and care obligations

The UAE does not prescribe a single investment theory across all jurisdictions. The DIFC and ADGM trust frameworks broadly reflect modern portfolio theory principles, with prudence assessed by reference to the portfolio as a whole. Accordingly, a concentrated or higher-risk holding may be acceptable where it fits the overall investment strategy.

Trustees are generally expected to diversify, unless the trust instrument or the purposes of the trust justify retaining such assets, which is common in family business structures. The onshore UAE framework does not generally impose a statutory diversification duty, relying instead on prudent asset management and capital preservation.

Trusts and foundations may hold operating businesses, usually through a holding structure rather than by conducting business directly.

Domicile, immigration residence, tax residence and citizenship are separate concepts. Under UAE internal law, domicile has a more limited planning role than in common-law systems: personal status and succession questions often turn on nationality and the location of assets. For clients from domicile-based tax systems, moving to the UAE does not, in itself, end foreign estate or inheritance tax exposure.

Immigration residence requires a valid visa basis, such as employment or company sponsorship, family sponsorship, property ownership, retirement residence, remote-work residence, Green Residence or Golden Residence. These are renewable residence statuses, not permanent residence.

Tax residence is tested separately. A UAE residence visa, including a Golden Visa, does not automatically establish UAE tax residence. Domestic residence may arise through the centre of personal and financial interests, 183-day presence, or the qualified 90-day test. For treaty relief and tax residence certificates, the 183-day standard is often the more practical benchmark.

UAE citizenship is primarily acquired by descent. Naturalisation and exceptional grants remain discretionary and nomination based.

The UAE does not operate a conventional citizenship-by-investment programme. There is no fixed investment amount, application portal, form or residence period that gives an individual an entitlement to nationality.

Exceptional citizenship may be granted by nomination. Since the 2021 amendments to the Nationality Law, it is possible for selected investors, doctors, specialists, scientists, inventors, creative talents and other exceptional persons to be nominated by competent federal or local authorities. The process is discretionary and should be viewed as a strategic talent-attraction mechanism, not a private wealth migration product.

Ordinary naturalisation is also limited. It generally requires up to 30 years of lawful residence, Arabic proficiency, lawful income, good conduct and, in most cases, renunciation of prior nationality. Even where formal conditions are met, approval remains discretionary.

For most private clients, Golden Residence is the practical route. It may be available through real estate investment of at least AED2 million, business investment, entrepreneurship, specialised professional status or exceptional talent. It provides renewable long-term residence and family sponsorship, but not a UAE passport, political rights or automatic tax residence.

The UAE has no labelled special-needs trust, but planning tools can be tailored for minors and vulnerable adults. Guardianship is governed by personal-status law (Federal Decree-Law No 41 of 2024) and, for non-Muslims, civil family-law frameworks, letting parents appoint guardians via the DIFC/ADGM or onshore wills. The courts appoint guardians for incapacitated adults. People of Determination have rights under Federal Law No 29 of 2006 and Emiratis get assistance under Federal Decree-Law No 23 of 2024. However, expat families have no state safety net; provision is entirely private.

DIFC/ADGM trusts and foundations can name minors or disabled beneficiaries, with discretionary, spendthrift-style distributions (where the trustee controls distributions to protect the assets from a beneficiary’s poor financial decisions) and professional trustees effectively acting as protective trusts. Onshore trusts now exist under Federal Decree-Law No 31 of 2023, registrable with the SCA, but the framework is young and little used – most advisers still prefer to route through the DIFC/ADGM, where courts and precedent are established. A family waqf under Federal Law No 5 of 2018 offers a Sharia-native alternative, sidestepping the one-third cap for Muslim heirs. A bare bequest instead lands in court-supervised guardianship, so wills typically pour assets into the foundation rather than bequeath outright, further funded by life insurance written in trust for lifelong care; and bank guardianship accounts for minors remain custody arrangements, not true planning vehicles. A key Muslim-specific constraint is that a disabled heir still takes their forced-heirship share outright at majority, so only lifetime transfers into a waqf or foundation can impose managed, protected provision beyond the one-third discretionary portion. Court guardianship remains the restrictive default for anything left unplanned.

The appointment of a tutor, trustee or similar representative for a minor’s property or for an adult lacking capacity generally involves the personal-status or estate court and continuing judicial supervision. For minor children, however, the father, and then the paternal grandfather, is generally the guardian by operation of law. A father may nominate a tutor for a minor, and the court may appoint the mother or another suitable person where there is no automatic guardian, a dispute arises, or a guardian must be replaced. For an adult who is legally incapacitated, prodigal or of impaired judgment, the court appoints the appropriate trustee.

The representative must preserve the protected person’s assets, provide periodic accounts and obtain court permission for specified transactions, particularly disposals, conflicts of interest and other material acts. The court may review the administration and remove or replace the representative. Personal custody of a child should be distinguished from authority to manage the child’s property, as the two roles may be held by different persons.

An ordinary UAE power of attorney is not a lasting power of attorney: under the Civil Transactions Law, agency terminates on the principal’s death or loss of legal capacity, subject to a narrow statutory exception. It should therefore not be the sole incapacity-planning tool.

If capacity is lost, the family may need to apply to a court for an interdiction order and the appointment of a guardian or trustee. Bank accounts and assets may be frozen until the order is issued, and major transactions usually require court approval. The Mental Health Law improved procedural protections but did not create a UAE equivalent of a lasting power of attorney.

Planning should be layered while the client has capacity. It may include limited operational powers of attorney, alternate bank and company signatories, successor directors, alternate signatories or replacement foundation council members, clearly defined reserved powers, liquidity arrangements, an asset and liabilities record, and documented medical preferences, where accepted by the relevant provider. Foreign durable powers may remain useful for foreign assets, but their recognition and practical acceptance in the UAE should be checked in advance. For significant UAE assets, a DIFC, ADGM or RAK ICC foundation may help preserve continuity because the foundation, rather than the incapacitated individual, owns the assets.

The UAE approach to longer-life planning differs for UAE nationals and expatriates. For UAE nationals, federal legislation protects senior Emiratis’ independence in property, financial affairs, residence and healthcare decisions. Pension reform under Federal Decree-Law No 57 of 2023 also aims to support General Pension and Social Security Authority (GPSSA) sustainability for new entrants through higher contributions and longer service requirements.

For expatriates, retirement and long-term care depend more on private arrangements. End-of-service gratuity remains important, but employers may opt into the alternative Savings Scheme, where contributions are invested in approved funds; the DIFC Employee Workplace Savings (DEWS) plan provides a similar funded model. Financial-literacy initiatives and private savings products, including employer or pension-style savings plans, are also becoming more relevant.

Private-client planning should cover longevity, medical and care costs, liquidity, health insurance, retirement visa and Golden Residence options, pensions, investments, insurance and beneficiary arrangements. A will and incapacity plan should be completed before capacity declines. As the UAE has no general lasting power of attorney regime, ordinary powers of attorney should not be relied on for incapacity. Wills, DIFC/ADGM foundations, offshore trusts and corporate succession arrangements should therefore be considered in advance.

Children Born out of Wedlock

A child born outside a valid marriage is legally affiliated to the mother by proof of birth and inherits from her in accordance with the ordinary rules of succession. Paternity may be established in the circumstances prescribed by the Personal Status Law No 41 of 2024, including through acknowledgment, proof and scientific methods. For non-Muslims, once legal parentage is established, the child may be recognised for succession purposes under the relevant civil personal status framework. For Muslims, where legal paternity has not been established, a child born out of wedlock generally does not inherit intestate from the biological father, although testamentary provision may be made within the applicable limits. Therefore, the child will generally have no intestate succession rights against the biological father. Testamentary provision therefore remains an important planning tool, particularly where legal parentage has not been recognised.

Adopted Children

The UAE does not recognise adoption. Instead, the law provides for guardianship arrangements, which impose duties of care but do not make the child a legal heir of the guardian. Although Article 14(3) of Federal Decree-Law No 41 of 2022 contemplates the possibility of further regulation concerning adoption, no implementing framework has yet been introduced. A non-Muslim who elects their national succession law, or who uses a DIFC or ADGM will or foundation, can nevertheless include an adopted child fully in the estate plan.

Surrogacy

Surrogacy occupies a developing area of UAE law. Federal Decree-Law No 17 of 2023 removed the express statutory prohibition previously contained in the assisted reproduction legislation. However, it did not introduce a comprehensive federal framework governing surrogacy. Subsequently, Abu Dhabi introduced regulatory standards addressing gestational surrogacy, making it the first emirate to establish a formal regulatory pathway in this area.

From a succession perspective, the legal position remains a grey area. The Abu Dhabi framework contemplates the recognition of intended parents as legal parents. However, there are no detailed regulations covering the inheritance rights of surrogate children.

Posthumously Conceived Children

The position of posthumously conceived children is still developing. The Personal Status Law No 41 of 2024 allows the establishment of parentage where a child is born within a defined period after the end of a standing marriage contract. However, there are no detailed regulations covering the rights of posthumously conceived children.

Same-sex marriages and any other forms of registered partnerships between individuals of the same sex are illegal and prohibited. Same-sex sexual relations are also criminal under UAE law and may give rise to criminal liability.

Consequently, such relationships do not give rise to spousal rights and obligations, including for tax and succession implications. A same-sex marriage lawfully concluded abroad is not recognised under UAE law and does not produce legal effects for the purposes of succession, property ownership or immigration status.

In practice, succession planning is typically addressed through a combination of private wealth structuring tools, including registered wills, DIFC or ADGM foundations and, where appropriate, other ownership and contractual arrangements. Depending on the asset profile, additional measures may include beneficiary designations under life insurance policies and offshore holding structures to reduce reliance on the statutory succession regime.

Unmarried couples (including cohabiting partners) are not treated as a legally recognised family unit. Cohabitation, regardless of the duration or stability of the relationship, does not in itself give rise to spousal or equivalent legal rights and obligations. In particular, cohabitation does not create maintenance obligations, inheritance rights or any presumption of shared ownership of assets acquired during the relationship.

For tax purposes, cohabiting partners are treated as separate individuals and are taxed independently on their own income. They do not benefit from certain spousal privileges, including reduced registration fees applicable to qualifying transfers of Dubai real estate between spouses and first-degree relatives, or the ability to sponsor each other’s residence visas.

From a succession planning perspective, unmarried partners do not have automatic inheritance rights equivalent to those of a spouse. In the absence of a valid will, inheritance is determined strictly in accordance with Federal Decree-Law No 41 of 2022 for non-Muslims and Personal Status Law No 41 of 2024 for Muslims. For non-Muslims, a registered will may be used to leave the entire estate to an unmarried partner. For Muslims, a will may generally leave up to one third of the estate to a person who is not a legal heir, subject to Sharia principles.

Therefore, individuals may implement succession and asset planning through a combination of mechanisms, including a valid will, beneficiary nominations, contractual arrangements governing property and financial matters during their lifetime and, where appropriate, wealth structuring vehicles such as DIFC or ADGM foundations.

Due to the absence of personal income tax and the introduction of a 9% corporate tax, charitable planning in the UAE is primarily relevant for corporate tax efficiency.

Qualifying Public Benefit Entities (QPBEs)

Entities may apply to the Ministry of Community Development to be included in Cabinet Decision No 37 of 2023 and obtain the status of a Qualifying Public Benefit Entity (QPBE), which is exempt from corporate tax.

To qualify, an entity must be:

• established and operated exclusively for public benefit purposes; or
• operated as a professional entity or chamber of commerce exclusively for the promotion of social welfare or public benefit.

In addition, the entity must meet the conditions under Article 9 of the Corporate Tax Law.

Tax Relief for Donors

For corporate tax purposes, a company may claim a deduction for donations only where the donation is made directly to an entity listed in Cabinet Decision No 37 of 2023. Therefore, donations, grants, or gifts made to organisations that are not QPBEs are not deductible for corporate tax purposes.

Waqf

UAE law also recognises waqf (Islamic endowment) structures as a versatile legal tool that can serve charitable, familial, or combined purposes. Unlike a direct donation, a waqf is primarily used for asset preservation, long-term governance, and succession planning rather than tax-deduction benefits.

The structure of charitable organisations holds considerable importance in the UAE for both corporate tax efficiency and estate planning. Charities can be set up in a variety of legal forms, including as a public benefit association, a waqf or a free zone foundation (DIFC/ADGM/RAK ICC).

Public associations are member-based non-profit organisations licensed by the relevant authorities. A waqf allows individuals or entities to dedicate assets or income for charitable, family, or mixed purposes, providing long-term asset preservation. Free zone foundations offer flexible structures with an independent legal personality and are preferred for private and cross-border philanthropy.