Introduction
Investing in real estate in Dubai is popular – both for personal use and for rental. But behind the attractive return, there are also tax and legal concerns. In 2025, important legislative changes will have been made that will have an impact on foreign investors.
- New rules on ownership through offshore structures
Where previously a lot of real estate was bought through offshore entities (e.g. from BVI or Cyprus), Dubai now encourages the use of:
- Local Free Zone companies (such as JAFZA Offshore or RAK ICC)
- Foundations of Trusts with Trustee of Honour in the UAE
These structures offer benefits such as protection, succession, and access to bank accounts. At the same time, foreign offshore companies are subject to stricter requirements.
- Mandatory registration with Dubai Land Department
Since 2025, registration of the ultimate beneficial owners (UBOs) with the Dubai Land Department has been mandatory for all real estate structures. Not registering means risk of fines and legal uncertainty.
- Tax on sale or transfer
Although Dubai does not have a capital gains tax, a transfer tax of 4% does apply. New in 2025:
- In the case of transfer within a family, trust or foundation, a reduced rate of 0.5% applies
- When transferring to an offshore entity outside the UAE, an additional 1% levy applies
- Real estate rental: tax liability or not?
Renting out real estate is subject to the VAT scheme of 5% in Dubai. This tax only applies to commercial real estate. The following applies to residential real estate:
- No VAT on long-term rental (> 6 months)
- Exemption for rental to natural persons
Please note: corporate structures must file annual returns, even if no tax is due.
- Conclusion: Structuring is crucial
The changes in real estate regulation confirm one thing: Dubai continues to invest in transparency and compliance. For those who have their affairs in order, this offers more security and opportunities. Therefore, make sure you have a well-structured purchase, with legal and tax guidance.
