Trust in the United Arab Emirates

This article explains how to protect your own assets and business in the UAE by using the completely confidential instrument, the Arabian trust.

A trust is a recognized instrument verified by decades of using; it provides confidentiality and security of the ownership rights. The trust legislation was established long ago in classic jurisdictions of Great Britain and Europe. Nevertheless, in recent years these jurisdictions began to lose their relevance and may not guarantee anonymity of owners due to stricter requirements on data discosure, as well as due to open registers. A trust in the UAE, on the contrary, is guaranteed and highly reliable instrument to provide one’s anonymity.

Benefits of the Arabian trust in the UAE

A trust in the United Arab Emirates is a unique instrument for solving different business tasks, as well as tasks of beneficiaries.

Within the applicable legislative framework of the Arab Emirates, a trust in the UAE may be used with the following purposes:

  • To provide confidentiality.All owners of assets are provided full anonymity at the state level. Any information is completely closed for the third parties.
  • To protect investors and assets.Complete confidentiality of trusts allows protecting business and assets of its owners. Meanwhile, owners may effectively manage their businesses.
  • For guaranteed and tax-free inheritance.Using a trust, it is possible to execute inheritance of assets for certain persons on the part of an owner.
  • For collective investing.Possibility to accumulate assets in one fund being under management of a trust, so that to guarantee their investing.
  • To protect from high taxes.A trust structure in the Arab Emirates, if established properly, allows greatly saving on payment of mandatory taxes.

Feel free to contact us at [email protected] to learn about the possibilities of the Arabian trust in the UAE for the investor.

What should one know about a trust in the UAE?

The Arabian trust implies classic trust relations applicable within the framework of the UAE legislation, which is based on the Shariah principles. From the legal point, the Arabian trust is created through signing a pool of  agreements and contracts that rely upon the commercial law of the UAE and are approved in the court of Dubai.

In the Arabian trust, just as in European, there are:

  • founder (nominee shareholder);
  • beneficiary (beneficial owner);
  • trustee (manager – nominal director who executes orders of a final beneficiary).

The United Arab Emirates are the country supporting all international norms of data disclosure, which make them a full-fledged member of all international agreements, as well as provides stability of the local economy. It should be noted that such exchange only refers to non-residents in the emirates. Considering that each member of the established trusts is a resident (investors may obtain this status), then trust structures are reliable protected from automatic exchange of data. Courts of the Arab Emirates which execute trust relations are not subjects that participate in automatic exchange of data.

It should also be noted that, according to the applicable laws, taxation in the Arab Emirates is on the zero level (on the federal level only 5% VAT rate is applied).

Types of Arabian trusts in the UAE

Depending on purposes and tasks of investors, the following types of Arabian trusts are found in the UAE:

Trust of joint ownership (fixed trust). In such a case, a beneficiary of an Arabian trust is hidden behind a legal entity registered in the UAE, is one of shareholders, and is present in the structure as one of final owners. Beneficiary relations are defined by:

  • actual control of company management on the basis of constitutive agreements;
  • pledge of shares;
  • agreement on distribution of assets.

For anonymity, a beneficiary and a final owner must be covered with a status of tax resident of the Arab Emirates.

Tax residence of the UAE with obtaining a visa of the UAE! 

Trust with 100% nominal ownership (discretional trust). A beneficiary of an Arabian trust as a final owner is not enlisted by any structure – founders of a trust, which makes positions of a beneficiary protected from claims of any parties. A final beneficiary defines distribution of assets on the basis of decisions taken by him. An ownership right is defined by pledge of shares and agreement between parties.

Feel free to contact us right now to learn which model of an Arabian trust will be perfect for you.