Dubai – the land of unlimited opportunities, cheap taxes and recently the celebrity hotspot during the covid pandemic.
Thanks to the wave of influencer emigration, Dubai is more in the focus of aspiring emigrants than ever before. Influencers like the Harrisons, Fiona Erdmann, Sami Slimani or Georgina Fleur live in Dubai and show Dubai from its most beautiful side, attracting more and more expats and tourists.
Dubai – the city that is currently on everyone’s lips.
Emigrating to Dubai: the ultimate luxurious desert metropolis with summer temperatures all year round, and a 0% tax regime? The dream of the rich and beautiful?
At least, that’s the impression of Dubai hat is currently doing the rounds. But can Dubai really deliver on all its apparent promises? Are there really only advantages, or does the city also have a catch?
Let’s explore these questions together, and immerse ourselves in the life and culture of Dubai.
Basic information about Dubai
Before we start, let me give you some basic info about Dubai.
The geographical location of Dubai
The United Arab Emirates, and thus also Dubai, are located outside the EU, on the Asian continent. The UAE borders on Saudi Arabia and Oman, and it lies to the south of Iran, from which it is separated by the Persian Gulf.
Dubai is an emirate of the United Arab Emirates (UAE)
Dubai is the largest city in the United Arab Emirates (UAE), and it is the capital of the Emirate of Dubai.
The United Arab Emirates (UAE)
The United Arab Emirates (UAE), which is situated on the Persian Gulf, has a total of seven emirates. The term emirate is used to describe the domain of an emir, and historically, it is a province administered by a prince. In the meantime, there are also emirates that are considered states.
The word emir, in turn, translates as “ruler”, “prince” or “governor.” The term originally meant the commander of a group of Muslim soldiers who took the place of the governor after conquests, and sought recognition from the caliph. A caliph used to be considered the ruler of the entire Islamic empire, which is why the dominion was also called a caliph . Meanwhile, a caliph is a ruler of an independent Islamic state. The emir, on the other hand, is a commander or prince whose dominion is called an emirate.
The capital of the United Arab Emirates is Abu Dhabi.
Dubai is located about 140 km from Abu Dhabi and can be reached in 1.5 hours, by a train, that runs every 20 minutes.
The seven emirates of the UAE
The seven emirates of the United Arab Emirates are
- Abu Dhabi (the capital)
- Dubai
- Sharjah
- Ajman
- Umm Al Qaiwain
- Ras Al Khaimah
- Fujairah
A short overview of the 7 emirates of the UAE
Now I’ve digressed a bit. However, I think it is important to have a little knowledge of the history of Dubai. From now on, we will focus on Dubai again.
Do you want to emigrate to Dubai, tax-free, without making any mistakes?
Flight connection Germany – Dubai
Several planes fly from Germany to Dubai every day. Although the pure flight time from Dubai to Germany is 6 h 15 min, the flight time is often higher due to the lack of direct connections. Honestly, though, I have to note here that this condition could also be due to covid.
Anyway, if you book early, you can find flights from as little as EUR 280. For example, I looked today (01.03) for early November, a good six months ahead.
Screenshot (from Germany to Dubai)
Quota of foreigners in Dubai
Dubai has flourished in recent years. Largely due to the tax advantages, more and more foreigners have emigrated to the country, so that the number of foreigners is now almost 90%. 60% of the total population comes from South Asia.
A total of more than 3 million people live in Dubai. Over 90% of the population of the Emirate of Dubai live in the city of the same name.
According to auswandern-info.com, 15,026 Germans officially emigrated to the UAE between 2008 and 2017, of whom 11,576 have returned to Germany. In other words, almost 77% of emigrants turned their backs on Dubai within 10 years. Why? Please read on for more information.
Economy
Dubai is considered a very wealthy region. The abundance of oil and liberal economic policies have allowed the emirate to experience extraordinary growth. In the meantime, the sale of crude oil only accounts for around 50%. Dubai is also a transshipment centre for gold and diamonds.
Dubai is best known for its spectacular construction projects, almost all of which were privately financed.
The Burj Khalifa, which has adorned the city since 2010, is a kind of landmark. At a height of 828 m, the skyscraper is by far the tallest building in the world. The skyscraper is the focal point of downtown Dubai, and it contains the world’s largest shopping mall. Dubai has more than 200 skyscrapers that are over 150 m high, and 20 of them are taller than 300 m.
Dubai also has a leading commercial port in the southern Gulf.
Although Dubai enjoyed tremendous economic growth until 2008, this trend has changed since the financial crisis: The construction boom slowed down and the realisation of the finite nature of oil supplies also led to tension. Since then, Dubai has focused on tourism..
Leisure Activities
In addition to the huge humber of construction projects, there are many amusement parks that provide recreational opportunities. The Dubai Mall Fountain Show water features, with 6,000 lights, or a ride on the “Abra” water cab on Burj Lake, are also worth a visit. Of course, dune and camel safaris are also a must on the to-do list for Dubai.
Luxury in Dubai
So it is not without reason that Dubai is one of the most visited cities in the world, and that it has the highest tourism revenue in the world.
However, Dubai doesn’t only atract tourists, but also wealthy people from all over the world. Yes, Dubai is wealthy and luxurious. Actually, Dubai is a real luxury paradise that leaves nothing to be desired. Dubai’s modern architecture, luxurious hotels, huge shopping malls and pompous fountains are a great attraction.
Dubai – a city of superlatives. In Dubai, anything seems possible.
Life in Dubai
If you are considering Dubai as a business and corporate location, then you should also consider factors such as the climate, the official language, religion and culture.
I’ll also briefly touch on how the cost of living compares to Germany.
The climate in Dubai
The Arabian peninsula of Dubai has an arid, subtropical climate, i.e. a desert climate. That means it is extremely hot and dry. As you can see from the climate table below, the average maximum temperature is 40° C and at night, the average low is 30° C. The water temperature in the Persian Gulf ranges from a warm 22 °to 32° C.
But when exactly is the best time to travel in Dubai?
The best time to visit Dubai as a tourist is in “winter”. No that they really have a proper winter in Dubai, because for us Europeans, even the “winter temperatures” in Dubai are on a summer level.
So for us, pleasant temperatures prevail from November to April, which is also the main tourist season.
In the summer, on the other hand, it’s so hot that you quickly want to escape back into an air-conditioned mall. Of course, this also varies from person to person.
Source: https://www.reise-klima.de/klima/dubai
The official language in Dubai
The official language of the emirate and the city is Arabic. Nevertheless, one is not lost in Dubai: many residents speak English, so you can communicate well in the world language. Also, don’t forget that Dubai has a high percentage of foreigners, whose common denominator is the English language. Nevertheless, one should be prepared to learn Arabic and to accept the Islamic culture.
The religion in Dubai
Dubai is a Muslim country. Although Christians, Hindus and Buddhists also live there, they are in the minority, with a total share of 25%. The emirate of Dubai is the only one that has a Hindu temple and a Sikh Gurudwara.
The culture in Dubai
If you are interested in Islamic culture, Dubai is the place to be. Old tradition meets modernity. There are museums where you can find the roots of the culture.
Of course, in Dubai, as in any other country, you will have to adapt to the culture of the country. In concrete terms, this means that you must, for example, refrain from wearing short clothing when visiting a mosque.
Another important aspect is Ramadan. During the period of Ramadan (mostly from mid-April to mid-May), different rules apply: you are not allowed to eat or drink in public. Buying chewing gum is also prohibited.
The currency in Dubai
In Dubai, as in the other emirates, the Dirham (abbreviation: AED, Dh, Dhs or DM) is the official currency. EUR 1,000 equals AED 4,028.48.
Jurisdiction and rules in Dubai
Yes! Jurisprudence. This is a difficult subject in Dubai, which is why I will list the most important laws and rules that apply, without comment.
Jurisprudence in Dubai is based on Sharia law. Sharia describes “the totality of all religious and legal norms, mechanisms for establishing norms, and interpretive rules of Islam.”(Source).
In concrete terms, this means, for example, that the exchange of caresses and kisses in Dubai can be punished by imprisonment, fines or deportation. Likewise, extramarital sex is punishable by law.
Unless you are married to your partner, cohabitation with your partner is also punishable.
Stricter rules also apply on the subway, where eating and drinking are prohibited, as is chewing gum.
Swearing in public and carrying alcohol are also considered a punishable offense.
Security in Dubai
Even if there is a certain skepticism about Muslim countries, you can still walk through the streets without fear.
Cost of living (incl. apartment) in Dubai
Of course, it’s always hard to make a blanket statement about the cost of living because it varies, depending on your personal lifestyle. Nonetheless, I did a little research and came across the following information:
a 2-room apartment costs between AED 100,000 and 140,000, or EUR 22,615 and 31,661 per year, which works out at EUR 1,884 to 2,638 a month. Then there are additional costs of AED 1,200 to 5,000, i.e.EUR 271 to 1,130 a month.
The cost of a school ranges from AED 20,000 to 40,000, depending on the school.
According to auswandern-info, one needs approx. EUR 3,993.42 AED 17.793,51) to maintain the standard of living we are used to in Germany with a monthly income of EUR 3,700 (source).
Although consumer prices are 8.53% lower than in Berlin, high rents mean that total consumer prices are almost 8% higher than in Germany.
Restaurant prices are also higher than in Germany.
It is also interesting to note that electrical appliances are cheaper than in Germany, because import duties are low. Cars are also very cheap, due to the low import duties. Not only the purchase, but also the maintenance of a car is inexpensive in Dubai – fuel prices are comparatively low.
The table below shows you different indices: the cost of living indices for Dubai, Berlin and Abu Dhabi.
Own illustration, based on: https://www.numbeo.com/cost-of-living/rankings_current.jsp
Entering Dubai
What do you need to consider when entering Dubai? Is there anything else you need to be aware of? How does the search for an apartment work? A brief overview.
Entering Dubai
To enter Dubai you need a passport, but no visa, because this is issued automatically upon entry. You can find more detailed entry requirements here: https://www.auswaertiges-amt.de/de/aussenpolitik
Tourist Visa
There is a tourist visa that is issued upon entry. It is valid for 90 days and can be extended once for 30 days.
Travelling to Dubai during covid
Tourists can also currently enter Dubai with foreign medical insurance and a negative Covid-19 PCR test no more than 96 hours old. The result must be printed in English and Arabic.
Residence permit in Dubai: residence visa
In order to live in Dubai, you need a residence visa. There are three ways you can get a residence permit.
- As an employee (residence visa)
- By buying property (minimum value > 1 million) plus proof of income (investor’s visa)
- Establishment of/participation in a company (investor’s visa)
When establishing a company in Dubai, you will incur costs of approximately EUR 4,000 in incorporation fees and another EUR 4,000 in annual costs.
Dubai Work Visa
In Dubai, you can apply for a work visa for AED 200 per year. The prerequisite for this is an invitation from a company. Workers with a permanent job receive a residence and work permit.
According to auswanderlust.de, you must also have your school or university degree certificate legalised at the UAE embassy and undergo a medical examination. Additionally, proof of health insurance must be provided.
Such a residence permit is usually valid for 3 years, and it is renewable. An unlimited residence permit is almost impossible to obtain in the UAE. It is only possible through an influential employer, for example. Also, persons 60 years of age or older will no longer be issued work permits.
Work in Dubai
The high proportion of foreigners already suggests it: the labour market in Dubai has a lot to offer. Although it is officially stated that UAE workers are preferred, your chances are good on the job market. Especially professionals and academics, such as doctors, nurses, pharmacists, engineers, IT specialists and managers, have good chances.
A working week in Dubai is 5 days or 48 hours. The lunch break is usually between 2 and 5 pm. Friday and Saturday are the official weekend in Dubai.
Overall, salaries are lower than in Germany, despite the fact that employees in Dubai only pay 5% social security contributions – regardless of how much money they earn.
Emigrating to Dubai – what you need to know
Since Germany and the UAE do not have a social security agreement and Dubai or the United Arab Emirates do not have a statutory pension scheme, private provision must be made if you decide to move there. Since there is no statutory insurance system in the UAE (exception: Emirate of Abu Dhabi,) emigrants should take out an expatriate health insurance.
Living in Dubai
First of all, it is important to note that – as already mentioned above – you may only live with a partner if you are married.
With regard to the search for housing, there is also a major difference compared to Germany: the difference relates to the timing of the search for accommodation. Because in Dubai, the search for an apartment is one thing above all: short-term. It is rather unusual to rent an apartment months in advance. In Dubai, you look at several apartments and usually decide immediately after viewing one, whether you want to move in or not.
Taxation in Dubai
In this chapter, you will get an overview of all the tax benefits in Dubai.
The reason why Dubai is the emigration destination of many wealthy entrepreneurs and individuals is (most likely) also due to the lucrative tax model or the prevailing tax exemption in Dubai. UPDATE: as of June 2023, Dubai will levy taxes of 9% – more on this in Chapter 5.
No income tax is levied in Dubai – so any type of income, such as salary, pension or investment income, is tax free. There is also no wealth tax in Dubai. Likewise, no tax has to be paid on real estate ownership, and no real estate gains taxes are levied. Only a transfer fee of 4% has to be paid. Inheritance and gift taxes do not have to be paid either. For a long time, there was no VAT, but since 2018, VAT of 5% has been charged.
Notes: The 0% tax rule will no longer apply as of June 2023 – more on this in Chapter 5.
Do you want to emigrate to Dubai, tax-free, without making any mistakes?
The hitches regarding Dubai - Update (April 2023)
Dubai – the city that lures with luxury, low prices and tax exemption.
At least, that’s how it seems at first glance. But as the saying goes: not all that glitters is gold.
So let’s shed some light on the disadvantages of Dubai.
Tax exemption always and everywhere?
Yes and no – that’s not quite true.
If you have read through the article, you may be thinking: Man, that’s super, what a paradise. I will be establishing a company in Dubai shortly, and I won’t have to pay tax on my income. Then I’ll have a lot of money in my account that I can spend at home in Germany, while I live like a king in France..
Well, then I’m afraid I have to disappoint you at this point. It’s not that simple.
April 2023 update
The United Arab Emirates is introducing taxes for companies for the first time. The law is scheduled to take effect in June 2023. This news is probably hitting many entrepreneurs hard, because Dubai is so attractive for them, not least because of the 0% tax.
This news represents a significant change for all entrepreneurs and self-employed people living in Dubai or planning to emigrate to Dubai.However, private individuals should not be lulled into a sense of security either.
Why? Here are the key points of the new provision.
From June 2023, entrepreneurs who have registered their business in Dubai will have to pay the statutory tax rate of 9% on income greater thanUAE 375,000 (USD 102,000 or EUR 90,007).
The Ministry of Finance has announced that the United Arab Emirates willintroduce a federal corporate income tax on company profits for the first time. Corporate income tax will be levied on the “adjusted net accounting profit” of the company.
According to the Ministry’s statement, individuals will not be taxed on their income from employment, real estate, equity investments or other personal income that is not related to a trade or business in the UAE. The tax is currently not applied to foreign investors who do not do business in the country.
This may sound reassuring to you at first. But who’s to say Dubai won’t introduce taxation of individuals in the years to come? From my +20 years of experience, I’ve learned one thing: states plan years in advance and always phase in new changes, and they always let out the information a little at a time. They wait until we have “digested” the news, and then they come around the corner with new laws. Just the statement by the Minister of State for Foreign Trade, Dr. Thani Al Zeyoudi “The issue (income tax) is not up for discussion at all at the moment” leads me to believe that it is only a matter of time before individuals will also be taxed in Dubai. Source
The end of the start-up era
The threshold for taxation of about EUR 90,000 in profit per year is nevertheless quite low, but it has a negative impact, especially on smaller companies with high costs for the establishment and continuation of the company. Especially as a rising company with growth ambitions, it is important to settle in an environment where firstly, there is planning security and secondly, there is a business-friendly tax regime.
So it makes perfect sense, as a small to medium sized company, to question the long-term establishment in Dubai. Also, under the aspect that companies in the free zones are indirectly taxed as well.
How should entrepreneurs or companies proceed?
Well, I recommend an evaluation of your current situation.
- What does Dubai, as a location, bring you in the long term?
- What are the disadvantages of being located in Dubai?
- Is planning security guaranteed?
- What costs will you incur?
- What alternatives are there?
The points mentioned are, of course, highly individual and should be clarified with your international tax advisor. Please be careful of the conflict of interest here as well, depending on where your tax advisor is located!
Nonetheless, I will now briefly refer to the last point. Because one possible alternative is clearly Malta.
The alternative to Dubai: Malta
Not only because Malta is within the EU and English is the official language. Malta has an effective tax rate of 5% and it will remain so. The Prime Minister, Robert Abela, recently communicated quite clearly in his speech for the election campaign (this year there are elections in Malta): nothing will change in Malta’s lucrative tax policy. So in Malta:
- 5% effective tax on the profit of legal entities through the 6/7 rule
- For royalties and interest rates, the refund is often 5/7, so the final tax rate here is 10%
In addition, Maltese residents can benefit from an extensive network of double taxation treaties that protect them from being taxed more than once on the same income in different countries. In the absence of a DTA, Malta has a relief system.
If you would like to evaluate the Malta alternative for yourself in a non-binding conversation, I invite you to request a callback using the contact form below:
You can find more info about Malta here:
Setting up a Company in Malta – All Information on Malta Limited Incorporation in 2024
Establishing a Malta Limited promises low taxes in a thriving environment. I want to explain candidly: For whom does a company in Malta make sense, what does the tax office say, and how do you structure it correctly.
Living in Malta – The most important info about emigrating (2024)
How to proceed if you want to emigrate to Malta. What do you need to consider? What mistakes should be avoided? I have clarified all of that in my comprehensive post on emigrating to Malta.
The taxes in Dubai and other countries
Currently, there is no double taxation agreement with the United Arab Emirates. In concrete terms, this means that you may become liable for tax in Germany under certain circumstances. You are probably wondering what those circumstances are. Let me give you an example.
For example, if you earn rental income in Germany, or if you reside mostly in Germany, the German tax office may require you to pay taxes on your income from the Emirates.
There is only one thing that can help against this: to emigrate completely to Dubai and to really move the centre of your life to Dubai.
For such a setup to last beyond that, you must be able to prove that your place of business is in Dubai. That means that you need your own premises as well as staff and a business address on site, and basically everything that is necessary for a business. You also need to actively manage your business from Dubai.
If you are thinking to yourself, that it’s not a problem for you, please read on, because there are other restrictions.
Dubai is outside the EU.
You are turning your back on the EU. That also means turning your back on the benefits of the EU. You’ve probably already forgotten, but living in the EU brings a number of advantages: from the single currency, to the social sphere, such as social security systems or basic health care in an EU host country, to the free internal market that allows free trade across national borders. The advantages of the EU represent corresponding disadvantages outside the EU.
The distance to Germany
In addition, of course, the distance to your home country: Germany. In Dubai, you will be very far away from your family. You should be aware of this. Flying to Germany for a short time will not be so easy.
Social security agreement
Pension rights are also retained within the EU. A social security agreement even preserves pension rights between the EU and America. No such social security agreement exists between Dubai and Germany..
And besides that, emigration involves a lot of bureaucracy. A move outside the EU is also associated with additional hurdles, such as applying for a visa, which can take up to 6 months. Also, a move to Dubai from Germany, is not easy, and it is associated with an extreme effort, so that mostly the solution “sell everything” is chosen.
In addition, you must be aware that after a certain period of time, certain claims may expire, such as, for example: the entitlement to a reduction in earning capacity or Unemployment Benefit I.
Perhaps also an interesting point: according to wmn, internet celebrities who emigrate to Dubai must sign a contract stating that they may not speak ill of Dubai in any form (source: https://www.wmn.de/buzz/diese-influencer-sind-bereits-in-dubai-id57991). Perhaps that does not concern you directly, but I did not want to deprive you of that information.
Do you want to emigrate to Dubai, tax-free, without making any mistakes?
Conclusion
I hope that my information has given you a good overview of Dubai, and that you can form your own opinion. Nevertheless, I would like to share my personal opinion with you in this section.
As you read above, while there area number of advantages in Dubai, there are also a number of disadvantages that you must not forget.
For me personally, Dubai would not be an option as a business and residential location, as I feel very comfortable and safe within the European culture. Arab culture may have its merits, but the strict regulations would make me and my family feel uncomfortable. Even though Malta gets very warm in the summer, Dubai is a lot hotter.
Therefore, from entrepreneur to entrepreneur, I would advise you to look at other alternatives besides Dubai, such as Malta.
Malta is within the EU, it isn’t far from Germany and it is not listed on any black or grey list, despite an effective tax rate of 5%. In addition, Malta has a very good Mediterranean climate. Since the official language is English, the bureaucratic effort is less than in some other so-called tax havens, where you sometimes have to hire translators.
If you want to learn more about Malta, I recommend this article on moving to Malta.
