In recent years, Dubai has emerged as one of the world’s premier destinations for wealthy families seeking to establish family offices. For European investors looking to effectively manage and grow their wealth, Dubai offers a unique blend of strategic location, tax efficiency, robust financial infrastructure, and a business-friendly regulatory environment.
This blog guide takes European families through the essentials of setting up their family office in Dubai.
Let’s get started with Dubai family office setup for European investors –
Dubai Family Office: What Is It And Its Purposes
A family office in Dubai, UAE, is a private organization created especially to handle the financial matters of a wealthy family, including governance, philanthropy, estate and succession planning, asset management, investment supervision, and tax optimization.
Two primary categories of family offices exist:
Single-Family Offices (SFOs): These offices are solely focused on managing the investments, legal framework, and wealth preservation and succession of a single family.
Multi-Family Offices (MFOs): In order to provide economies of scale and a wider range of advisory services, Multi-Family Offices (MFOs) oversee the financial preservation and growth of families.
Depending on the size of the family, the complexity of the assets, and the governance choices, European investors may choose to establish an SFO or an MFO in Dubai.
Why Is It Beneficial for European Investors?
Here are some of the top benefits of Dubai family office setup for European investors:
- A family office in Dubai provides no inheritance or personal taxes, preserving money to the fullest.
- A friendly tax environment
- English common law-based legal systems, particularly in the DIFC.
- Availability of advanced international banks and financial services.
- Protections for privacy with little need for disclosure.
- Options for several jurisdictions, such as DMCC, DWTC, and DIFC free zones.
- Support services such as governance, legacy planning specialists, and family wealth centers.
These are some popular and common benefits of establishing a family office for seamless wealth management services, estate planning, or money preservation and growth.
Selecting the Right Jurisdiction in Dubai
Dubai provides a number of jurisdictions that are ideal for family office settings, including mainland company alternatives and free zones that permit 100% foreign ownership and tax exemptions. To open a family office, you have to choose a suitable jurisdiction. The primary jurisdictions that investors choose are:
The DIFC, or Dubai International Financial Center
- One of the top financial free zones with a separate regulatory agency (DFSA)
- Strong legal system founded on English common law
- Dubai Financial Services Authority offers a complete environment for governance, financial planning, and wealth management.
- Appropriate for single-family offices or a multi-family office with defined licensing protocols
DMCC, or Dubai Multi Commodities Center
- Numerous free zones with adaptable opportunities enable family offices for company creation
- Expanding family office cluster with incentives and strategic infrastructure
The World Trade Center in Dubai (DWTC)
- A new free zone that is a hub for families to receive world-class assistance. It helps family offices seeking long-term stability and investor-friendly regulations.
- Attractive to families with broader economic interests, it permits partial non-family ownership. This makes it ideal for the growth of family wealth management or transfers.
- When selecting a country, European investors should consider their operational preferences, regulatory requirements, and strategic priorities.
Legal Entity and Business Structure Options
It is important to choose a reliable legal entity or business structure for governance, liability, and tax planning. Some of these essential structures include:
Free Zones: Free Zone Companies (FZCOs) or Free Zone Establishments (FZEs) are common in free zones and permit complete foreign ownership. This spreads confidence among family offices seeking a solid foundation.
Limited Liability Company (LLC): Frequently utilized by mainland businesses that need local partners.
Foundations: Trusts or foundations are popular for succession planning and asset protection, particularly in the DIFC.
In order to choose structures that are in line with long-term goals, asset classes, and governance needs, families frequently hire legal and tax counsel.
Steps for Dubai Family Office Setup for European Investors
Here is a comprehensive guide for an easy family office setup –
Describe The Goals And Needs Of The Family
Start by outlining the family’s succession plans, investment strategy, risk tolerance, wealth management objectives, and operational scope. The choice of jurisdiction and office structure is guided by this foundation. Also, you have to determine or outline the range of services you will provide.
Consult with Expert Advisors
Speak with tax experts to understand corporate tax, legal counsel, and company setup consultants who are knowledgeable in Dubai and EU cross-border laws. Under their direction, compliance, effective setup, access to global market, and optimal structuring are guaranteed.
Select the Legal Entity and Jurisdiction
For setting up family offices, decide on a legal form (like FZE) and jurisdiction (like DIFC) based on the needs that have been identified and the advice of experts. The procedure can be streamlined by interacting with the licensing authorities early on. It helps families work in a world-class infrastructure in Dubai. Dubai provides access to different jurisdictions so you can choose the one that suits you best.
Create An Operational And Governance Framework
Create decision-making frameworks, risk management procedures, corporate governance policies, and reporting systems that are suited to the family’s tastes.
Personnel and Office Configuration
Find office space in the jurisdiction of your choice to further establish the concept of a family office. While some families use the addresses of corporate service providers, owning or renting office premises is typically necessary for DIFC. Hire knowledgeable staff with backgrounds in the robust legal framework, financial ecosystem, administration, investing, compliance, and asset management.
Continuous Reporting and Compliance
Respect know-your-customer (KYC) and anti-money laundering (AML) laws, keep accurate financial and operational records, and submit to audits on a regular basis as needed.
Regulatory Considerations
The regulations in Dubai differ depending on the free zone. For Multi-Family Offices in particular, the DIFC requires registration under the Family Arrangements Regulations, which are supervised by the DFSA. Simplified, less onerous regulations are advantageous for single-family offices.
The regulatory frameworks of DMCC and DWTC permit more adaptable family office activities while maintaining standards for governance and financial compliance.
When setting up their offices, European investors must also take into account cross-border tax duties and reporting requirements under EU legislation.
Why European Investors Choose Dubai As Their Destination For Family Offices?
Families from Europe are drawn to Dubai for reasons other than tax optimization:
- Political and economic stability, combined with sustained government support and a tax-efficient environment, for long-term financial expansion.
- Robust privacy safeguards, in contrast to several European jurisdictions.
- Access to a global network of experts with expertise in managing the wealth transfer of multiple families.
- Lifestyle advantages such as family member residence possibilities, healthcare, education, and security. Also, the great benefit of no personal income tax.
- Access to further profitable developing markets in Asia, Africa, and the Middle East. These are reasons why Dubai has become a hot spot for incredible investment opportunities.
Conclusion
One of the most alluring locations in the world for setting up a family office is Dubai, which is available to European investors. Families and business entities can create custom family offices that support their particular objectives and guarantee their legacy lives on by carefully choosing their jurisdiction, legal structure, and consulting with knowledgeable consultants.
When planning to establish a family business in Dubai, let Xpert Advisory be your guide! While you focus on your business setup, we play a pivotal role in streamlining the legalities for you. Establishing a family office in Dubai is a long-term plan for wealth creation and preservation, not just a structural change. We help families match their objectives with the prospects in Dubai. Are you prepared to consider your options? Let’s connect!
FAQs
Can One Own 100% of a Business In Dubai?
Yes. Most business activities allow 100% foreign ownership in businesses. Some sectors, however, may require an Emirati partner.
Is It Possible For Non-Family Members To Own And Run A Dubai Family Office?
Single-family offices in the Dubai World Trade Centre (DWTC) may have up to 49% non-family ownership, making it an ideal spot to establish a business here.
How Much Time Does It Take To Get A Family Office License In The DIFC in Dubai?
In DIFC, the license procedure often takes seven to ten working days.
