As the UAE's corporate and tax rules becoming stricter, real estate investors need to know how VAT and corporation tax affect enterprises that own, rent, or sell real estate.
We have helped over 3,000 clients at CSPZone set up property-holding organizations that are legal, tax-compliant, and beneficial to investors. This book will help you understand how taxes influence your LLC or holding company, whether you own, rent, or sell real estate in the United Arab Emirates.
In general, a real estate holding company is an offshore holding structure, a free zone corporation, or a Limited Liability Company (LLC) that only owns and manages real estate.
These organizations are used by both domestic and foreign investors because they offer:
The UAE has a 5% VAT, although the way real estate deals are handled depends on the type of property and the deal:
If your LLC owns the property but doesn't rent it out or manage it, and you want to sell it later, VAT may still apply. This depends on:
CSPZone looks at each situation to decide when to file and if VAT registration is needed.
As of June 2023, all businesses in the UAE, even passive holding entities, must file for corporate tax, even if they don't produce any money.
You have to pay corporate tax on both rental revenue and profits from sales.
Companies who work in free zones might not be able to buy the property, but only if:
"I bought real estate with my LLC. I'm not renting it. In two years, I'll make money by selling it."
Yes. If you sell the property for a profit through your LLC, even if it wasn't rented, you have to pay taxes on that money as business income under UAE corporate tax law.
Important: Even passive holding corporations have to pay corporate tax unless they meet certain free zone standards.
To make sure your real estate firm stays fully compliant, you need to perform the following:
CSPZone helps you handle all of your business's registrations, filings, and translations so that it is secure and compliant from the start.
Things to Avoid Making Mistakes
Investor: A UK citizen who bought an office space in Business Bay under an LLC
Error: Sold the unit for AED 2.5 million without paying VAT
FTA audit found: The company owed AED 125,000 in VAT and had to pay an AED 10,000 fine
CSPZone answer: Voluntary disclosure was made, VAT was registered retroactively, and plans were made for future transactions to lower the risk of it happening again.
It makes sense to buy and hold real estate through a UAE LLC, but only if you know what your tax obligations will be ahead of time. If you lease, sell, or just hold property, your business may need to register with the FTA for Corporate Tax and maybe VAT, depending on the type of property and how you make money.
At CSPZone, we offer more than just help you start a business. We give complete legal, tax, and compliance guidance to real estate investors who want to feel safe and at ease.
Contact CSPZone right now to set up a meeting to talk about how to set up an LLC, register with the DLD, pay VAT, and follow the rules for corporate taxes.
Professionals should keep your money safe.
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