Are you thinking of settle in Dubai to work, invest or buy a property? Understanding the how the local tax system works and its links with France are essential to avoid any unpleasant surprises.
In Dubai, expats enjoy a major benefit: there is no income tax. However, certain taxes do apply, such as VAT and corporation tax.
Between the absence of income tax, the introduction of corporation tax and the France–UAE double taxation agreement, there are several important rules you need to be aware of. In this article, you will find out:
- how the tax system works in Dubai for expatriates; ;
- what the exceptions are (VAT, corporation tax, free zones); ;
- what is set out in the tax treaty between France and the United Arab Emirates; ;
- what tax obligations may still apply in France; ;
- a clear “before and after moving abroad” comparison.
Ready to find out how to get the most out of your living abroad in Dubai, whilst ensuring you meet your tax obligations? Follow our guide!
Understanding the tax system in Dubai
Taxation in Dubai is a great option for expats. Find out why!
1. No income tax
In Dubai, there is no no personal income tax. This means that you receive your full salary, with no monthly tax deductions.
It’s one of the emirate’s main attractions!
Expatriates keep 100 % of their income, which often makes living and investing more cost-effective than in Europe.
2. VAT and other local taxes
Even with no income tax, there are certain taxes in Dubai.
VAT is 5 % on most goods and services. It remains considerably lower than in many European countries.
There are also special taxes known as excise duties, levied on products such as alcohol, tobacco and sugary drinks. These taxes are intended to limit their consumption.
Finally, certain local taxes apply, for example on hotel accommodation or restaurants. This helps to fund public services.
3. Corporation tax
Since 2023, Dubai has been implementing a corporation tax of 9 %. It applies to annual profits in excess of 375,000 AED (approximately 95,000 €).
The small businesses or start-ups They therefore remain protected below this threshold. This is a way of encouraging entrepreneurship whilst bringing Dubai into line with international standards.
Companies based in free zones may be eligible for tax relief, subject to certain conditions.
4. Free zones and tax incentives
Free trade zones are areas created to attract foreign investors. They often offer a corporation tax exemption, sometimes up to 50 years. Companies can repatriate 100 % of their profits without restrictions.
They also enable the wholly foreign-owned, whereas in the rest of the country, a local partner is sometimes required.
Each free zone has its own rules and target sectors: technology, finance, logistics, healthcare, etc.
The France–United Arab Emirates Tax Treaty
Let’s now look at why the Tax Treaty between France and the United Arab Emirates is crucial for the French expatriates.
1. Purpose and operation of the agreement
The tax treaty between France and the United Arab Emirates has a simple aim: avoid double taxation. You do not pay tax twice, in France and in Dubai.
It clearly sets out which country can tax your income, pensions or dividends. This protects your finances and makes the process simpler for you.
This provides crucial reassurance for French expatriates, as it clarifies your tax obligations.
2. Relevant income and benefits
The agreement covers several types of income: wages, pensions, dividends, interest, royalties, property income and business profits.
For the salaries earned in Dubai, they are not subject to tax in France. You therefore benefit fully from the absence of income tax in the Emirates.
Private pensions generally follow the same principle, but some state pensions remain taxable in France.
Where dividends or interest are concerned, the treaty sometimes limits or waives withholding tax. This prevents the same income from being taxed twice.
3. How to avoid double taxation
To avoid double taxation, we must refer to the tax treaty between France and the Emirates.
In practice, your income from Dubai is not taxed in France. However, you must still declare it on your tax return, purely for information purposes.
The tax authorities then apply a tax credit equal to the French tax that would have been due. This means you are not taxed twice.
The most important thing is to keep your supporting documents: your employment contract, payslips and proof of tax residence in Dubai.
Your tax obligations in France following your move to Dubai
Living in Dubai does not necessarily exempt one from all obligations in France.
1. Determining your tax residence
The key is to know where you are a tax resident. In France, this depends on several criteria set by the authorities. You are considered a French tax resident if:
- your main fireplace (family, usual place of residence) remains in France,
- you go more than 183 days a year in France,
- or if your main sources of income come from France.
If none of these criteria are met, you are, in principle, tax resident in Dubai. This enables you to benefit from the tax treaty.
2. Tax returns and foreign accounts
This is a key point to bear in mind to avoid any nasty surprises!
Even as an expat in Dubai, you sometimes have to to file a tax return in France. It all depends on your tax residence.
- If you’re still French tax resident, you must declare all your worldwide income, even that earned in Dubai.
- If you are a non-resident, you only need to declare your income from French sources (rental income, state pensions, French dividends, etc.).
Furthermore, the law requires that declare your foreign bank accounts, including those opened in Dubai. Failure to do so results in heavy fines.
3. IFI and exit tax
Here’s what you need to know:
- IFI (Property Wealth Tax) : If you are not a tax resident, you are only required to pay this tax in France on your property located in France (houses, flats, land). Your property in Dubai is not included in the calculation.
- Exit tax : This applies to those moving abroad with a significant stake in a company (at least €800,000 or 50 % of the share capital). The French tax authorities expect to levy tax on unrealised capital gains. Fortunately, in many cases, the tax is deferred as long as you do not sell your shares.
These two rules are important for wealthy expatriates and investors.
France vs Dubai: before and after moving abroad
Here is a clear comparison:
- In France (before moving abroad) :
- Progressive income tax (up to 45 %).
- Significant social security contributions.
- VAT at 20 %.
- IFI may be available if you have a substantial property portfolio.
- Progressive income tax (up to 45 %).
- In Dubai (after living abroad) :
- Zero income tax.
- Reduced VAT rate at 5 %.
- No IFI on local property.
- Corporate tax applies only to companies with a turnover exceeding 375,000 AED.
The result is that in Dubai, your income is largely preserved, your tax burden is significantly reduced, and property investment is more attractive.
Practical advice for French expats in Dubai
Here are some simple and useful tips for French expats in Dubai:
- Clearly establish your tax residence to avoid any dispute between France and Dubai.
- Keep all your supporting documents (contracts, payslips, proof of residence).
- Declare your foreign accounts to the French authorities, even if you are no longer a tax resident.
- Carry out a wealth review before leaving, to plan for the IFI or exit tax.
- Make use of the tax treaty between France and the UAE to avoid double taxation.
- Choose property in Dubai to take advantage of the fact that there is no wealth tax or inheritance tax.
- Seek advice from a tax specialist : every situation is unique and requires a bespoke strategy.
Ready to make the most of your tax exile in Dubai?
You’ve reached the end of this article. You now have everything you need to optimise your tax planning whilst living in Dubai.
You now know that Dubai offers a unique tax regime, with no income tax, but with certain exceptions such as VAT or corporation tax. You have also learnt about the importance of the France–UAE tax treaty and the tax obligations you may face in France, even after you leave.
Finally, the “before and after” comparison has given you a clear picture of the difference between the tax systems in France and Dubai.
In summary, to move to the United Arab Emirates can present a genuine opportunity for tax optimisation, but requires thorough preparation and a full understanding of your rights and obligations.
Why not take the next step? Whether it’s to invest, buy a property Whether you’re setting up your business in Dubai, it’s essential to have expert support.
The team at Dubai Property is on hand to advise you, ensure your transactions are carried out safely and help you find the ideal property to suit your plans.
→ Contact our experts today and move forward with confidence in your plans to move to Dubai !
