Tax law

Relocating your residence to the UAE

The topic of tax law for Europeans in the UAE is particularly relevant for people who are permanently leaving Europe or already live in the UAE. Of particular importance is the aspect of exit taxation and how European tax law affects people who relocate their residence abroad. Here are the key points:

Exit taxation

Exit taxation (§ 6 AStG – Foreign Tax Act) affects people who:

Hold at least 1% in a corporation (such as a GmbH or AG), directly or indirectly, and
Relocate their residence or habitual abode from Europe to a non-European country.

The provision aims to ensure that increases in value of shareholdings that arose in Europe are taxed, even if the sale takes place abroad at a later date.

Key aspects:

Deemed disposal: Exit taxation assumes a deemed disposal of the shares at the time of departure. Income tax is due on the resulting gain.
Payment in instalments: Under certain conditions, the tax can be paid in instalments over 7 years.
Deferral: If the move is to an EU/EEA country, the tax may be deferred interest-free under certain circumstances. However, the UAE is not an EU/EEA country, which is why such a deferral is generally not possible.
Avoidance: There are legal strategies to avoid or reduce the tax burden, e.g. through prior restructurings or the sale of shares before departure.

Double taxation agreement (DTA)

Tax residence

Income from Germany

Tax exemption in the UAE

Practical tips for Europeans in the UAE

Your experts for tax law in Dubai and the Gulf states

Nyikolaj Szmolenkov -

Tax advisor

European citizens moving to the UAE benefit from tax freedom, but must carefully review the European tax consequences, in particular exit taxation. Strategic planning and professional advice are essential to minimise tax disadvantages.

Christian Bauer

Tax advisor

Tax and business consulting, from asset coordination and accounting through to succession planning, also gladly in cooperation with your advisors. Decades of experience from successful work and constantly new, including technical, possibilities are combined appropriately to achieve the most sensible consulting outcome – fast – clear – practical.