Tax Residency Certificate in Dubai

The Tax Residency Certificate is an important document for expats and investors in Dubai. It certifies that a person or legal entity is resident in Dubai for tax purposes. This certificate is often required to avoid double taxation and to take advantage of tax benefits. In this article, you will learn everything you need to know about the tax residency certificate, why it is important and how to apply for it.

Why is the tax residence certificate important?

The tax residence certificate plays a key role for individuals and companies that operate internationally or earn income in several countries. It offers the following advantages:

• Avoidance of double taxation: the certificate helps to ensure that tax liability in Dubai is not additionally burdened by taxes in other countries.
• Tax benefits: Many countries have double taxation agreements (DTAs) with the UAE that offer tax benefits for residents.
• Facilitation of investments: Investors can more easily invest in foreign markets through the certificate.

Who needs a tax residence certificate?

The tax residency certificate is often required by the following groups:

• Expats living in Dubai and earning income in other countries.
• Companies that operate internationally and wish to benefit from tax incentives.
• Individuals who own property abroad and want to benefit from tax advantages there.

How to apply for a tax residency certificate?

Applying for a tax residency certificate in Dubai is usually done through the Dubai Economic Department or the UAE Fizikal Authority. The process includes the following steps:

1. Collecting the necessary documents: This includes proof of residential address, proof of income and a copy of passport.
2. Submission of the application: The application form must be completed and submitted along with the required documents.
3. Wait for processing time: Depending on the processing capacity, it may take a few days to weeks for the certificate to be issued.

Costs of the tax residence certificate

The cost of applying for a tax residency certificate can vary, but is generally between AED 500 and AED 1,000, depending on the authority to which the application is submitted.

Illustrative example on the topic: Tax residency certificate

Imagine Mr Müller is a German expat living in Dubai and is still liable to pay tax on rental income in his home country. In order to optimise his tax burden, he applies for a tax residence certificate in Dubai. Once this certificate has been issued, he can deduct part of his income earned in Germany from his tax bill. Mr Müller thus benefits twice: from Germany’s very attractive tax treaty and from tax residency in Dubai. This example shows how important a tax residency certificate can be for international investors and expats.

Conclusion

The tax residence certificate is a crucial document for anyone working internationally or living in Dubai. It not only provides legal certainty in terms of tax residency, but also opens up numerous opportunities for tax optimisation. Anyone living or doing business in Dubai should consider applying for this certificate to take advantage of the many benefits it offers.

For more information on related topics, please also visit our articles on the property market and land registry.