Jurisdictions for Single Family Offices in the Dubai
  • March 16, 2023

The UAE accomplished, as an entrepreneurial haven always been picked as one of the investment centres of Family Offices and family businesses. Comprehensive investment-friendly strategies open a gateway to international family businesses and HNW (high net-worth) investors to relocate, establish and plan structures to hold family assets.

Family enterprises are the driving force of the economy, with an account of 90 per cent of private enterprises owned by family entrepreneurs. 

 

The UAE aims to increase the contribution of family businesses to AED 1.17 trillion by 2032. Recently, the UAE government has launched 'Thabat', an initiative to promote the growth of family-owned businesses and entrepreneurial projects, creating an integrated system for family offices. The 'Thabat' programme supports family businesses to expand and diversify into diverse business sectors outside traditional fields, such as artificial intelligence(AI), biotechnology, research, renewable technology and space sciences. 

 

Various fee zones provide a platform to support wealth management, asset management, accounting, and back-office support, allowing individuals to form a Single Family Office (SFO) or several family enterprises under a single licence with Multiple Family Office (MFO) business setups in the UAE. 

 

Single-Family Offices

Dubai has always been a pre-eminent jurisdiction for entrepreneurs and multinationals. However, with recent legislative developments for family offices, it has firmly positioned itself as the jurisdiction for Single-family offices in UAE.

 

Single Family Office can be established as a Free Zone Company (FZE or FZCO), an offshore private entity that manages the investments and assets of a single multi-generational family. SFO firms offer a wide range of services, including financial planning, estate planning and tax preparation, investment management, accounting and payroll, legal management, financial governance, and family coordination. These services are tailored to the needs and preferences of the family and are designed to achieve their long-term financial goals.

 

Unlike multi-family offices, which provide wealth management services to multiple clients, a single-family office is dedicated exclusively to managing the assets and investments of one family.

 

Jurisdictions for Single Family Offices in the Dubai

 

1. Dubai International Financial Centre (DIFC)

The DIFC has had a financial-free zone since 2004 to support the needs of HNWIs with family office planning in the UAE. It is the first to implement a legal framework for Single Family Offices (SFO) with a legal system and court. The SFO regulations in the DIFC serve the family-run institutions to manage their private wealth, succession and management. 

 

Recently, under the new regulatory framework, DIFC opened its global DIFC Family Wealth Centre (DFWC) to enable UHNWIs and families to manage their businesses through succession and legacy planning and support them under the UAE Family Business Law (UAE Decree-Law No. 37 of 2022)

 

The latest framework of Family Arrangement Regulations for family business structures offers comprehensive guidelines for entities holding family assets and operating in or from DIFC. In DIFC, a single-family office can be established with a minimum share capital of USD 50,000 or liquid assets of USD 10 million.

 

Structure of SFO in DIFC

1. DIFC SFO must be owned by an individual family member(s)

2. No personal tax or capital gain tax

3. Non-family members are allowed to serve as board members

4. 100% foreign ownership and zero income tax

5. No restrictions on capital repatriation

 

2.  Dubai Multi-Commodities Centre (DMCC)

The Dubai Multi Commodities Center (DMCC) is one of the fastest-growing UAE Free Zones with a specific service licence for Single Family Offices. As a leading business hub with world-class services and infrastructure, DMCC offers an easy setup process to manage the family wealth through corporate succession planning with confidential financial baking service at a low capital. Single Family Offices under DMCC follow a setup process with the below requirements such as, 

1. Capital requirement a minimum of USD 1 million in liquid assets is required.

2. Minimum AED 50,000 per SFO or AED 10,000 per shareholder

3. Proof of relation of family members 

4. Business plan with all family businesses, trusts and assets.

 

Structure of SFO in DMCC

1. SFO can be established by an individual family, which includes family members who are direct descendants of a parent (their spouses). 

2. At least one family member must be assigned as a board member or legal representative.

3. External family members can be staffed for various positions.

4. 100 % Foreign Ownership and zero income tax.

 

3. Dubai World Trade Centre Authority (DWTCA)

The Dubai World Trade Centre provides a regulated ecosystem for family offices, providing a secure business environment with internationally-acclaimed legislative policies. With the implementation of new regulations for wealthy families to set up their holding companies, DWTCA offers a platform to manage their private wealth and financial structures with flexible offshore jurisdictions. 

 

Single-family offices can be established ad s Free Zone Establishment (FZE) or Free Zone Company (FZCO) with specific licences under flexible criteria such as a capital requirement of a minimum of AED 500,000 (USD 136,000) in liquid assets. 

 

Structure of SFO in DWTCA

1. Providing flexibility for non-family members to control up to 49% of the SFO

2. There is no limit to the number of generations in a family

3. Non-family members can be hired to provide Professional and Administrative Services for the SFO.

4. 100 % Foreign Ownership and zero income tax

 

4. Abu Dhabi Global Market (ADGM)

The Abu Dhabi Global Market (ADGM) is an international financial centre and independent jurisdiction offering a comprehensive suite of solutions and structures to effectively manage family wealth from local, regional, and international markets. 

Single Family Offices in ADGM can benefit from various wealth management and investment services, including concierge work, accounting, corporate governance issues and administration. 

 

ADGM Holding Companies and Special Purpose Vehicles (SPVs) are effective tools for structuring family interests, protecting assets, and ensuring tax efficiency. Additionally, ADGM's Trusts regime and Foundations regime enhance the offerings for Family Offices, catering to diverse requirements.  

 

The financial services and activities are overseen by the Financial Services Regulatory Authority (FSRA) within ADGM, which ensures compliance with international standards and the Common law legal system. ADGM SFOs can be directly or indirectly wholly owned by one person or a group of individuals. 

 

Structure of SFO in ADGM

1. No taxes on personal income, dividends or capital gains

2. 100% foreign ownership

3. No minimum capital requirement

4. No minimum investable funds are required

5. Non-family members can act as a board of directors

6. SFOs must have an office or a Register Agent within the ADGM

7. Restricted to the asset management of a single family

8. Cannot offer its shares for sale to the public

 

How can Ascent Partners help?

Ascent Partners is a boutique consultancy providing bespoke, end-to-end corporate services ranging from company formation to accounting, bookkeeping, and compliance services for entrepreneurs looking to set up their next venture in the UAE. We work alongside to strategise, startup, and scale businesses in the UAE and the broader region.

 

With a combined experience of 50+ years, our expert consultants provide reliable and unparalleled guidance throughout all strategic phases of a business' evolution.