Many investors have made good gains on crypto. If you are one of them, you might be looking to cash out some in order to rebalance your portfolio. Dubai offers great tax benefits to crypto investors.
 

Dubai has currently zero percent personal income tax. This means that if you are a tax resident in Dubai, no matter how much gains you make, there is zero personal income tax!

Whether you actively trade or hodl; there are zero percent taxes on capital gains, on business income and on salary. Your gross income figure matches the net figure!

Most other tax authorities treat gains from crypto currencies with a capital gains tax. Moreover, they often require extensive record keeping and tracking of your transactions. Not in Dubai!
 

It is important to understand that tax laws focus on facts. Most personal taxes are levied based on the residency situation of the taxed person.

The Tax Authority of the country you are currently living in most likely has the right to tax your income, based on the local tax laws.

Each country has their own laws to determine tax residency. They look at things such as the amount of days you spend there, if you own a house, or if you have economic or social ties. If you wish to benefit from low Dubai crypto taxes, you simply have to migrate from your current place of residence to Dubai.
 

When the facts change, so do the tax laws that apply to you. By factually migrating you can change your tax residency.

The only real question is: what do you need to do to no longer be a tax resident according to your current country’s rules? In some cases, there could be an exit tax. But in most cases it is surprisingly easy.
 

Dubai is one of the emirates of the UAE. The UAE are a first class country. With great infrastructure, warm pleasant weather, and home to a skilled and multicultural workforce. It is a great place to live and do business. It is modern and clean, and everybody speaks English.

Dubai has a favourable tax system of zero corporation tax and zero income tax, and there are no capital control restrictions. You can send and receive as much as you please.

Moreover, Dubai has a well-established regulatory framework for cryptos. Cryptos are legal here. What this means is that Dubai is the only country for crypto investors that is easy to move to with legal certainty, no income taxes, and no reporting requirements.
 

Every country has requirements for people to become a resident. This could be an investment in real estate, getting a job, or starting a business.

The most straightforward method for an investor to become a resident in Dubai is to register a company in one of the Free Zones. Free Zone companies can rent office space in the UAE, and based on this office space your company is entitled to apply for residency visas for you, your family, and your employees (if you have any). That means it gives you the right to stay in the UAE. In addition, there are affordable office solutions called flexi-desks.

After you have moved to Dubai, you become subjected to Dubai tax and reporting requirements on your personal holdings.
 

Simple really. You have to begin by setting up a free zone entity with the correct trade activity. There are many activities possible. If you do consulting work, you can start a consulting company. If you are a software developer, you can start a software development company. You can also start a trading or holding company for your assets. More on that below.

In any case, you have to set up a company to obtain residency; so you have to choose something. You will be the shareholder and manager of this company. Once the company is established, you can apply for a residency visa with the company as sponsor.

Since there is zero corporation and income tax in UAE, there are no reporting requirements of your personal investments in crypto to any authority in the UAE. The only catch is that you have to renew the company every year and pay the appropriate licensing fee. Therefore, you should maintain any obligations regarding the visa. 

It takes roughly a month to get the company and your residency visa running after the correct documents are filed to the free zone authorities.
 

It is important to note that Dubai is a modern financial centre. They adhere to the all regulatory standards. This means that you cannot just start any crypto business you want without a license.

We get many people looking to set-up a personal holding company. At the time of writing, there is one free zone that offers a solution; the Dubai Multi Commodity Centre, or DMCC.

The DMCC offers a Crypto currency trading license (solely for own funds not third party). The name is “Proprietary Trading in Crypto-commodities”. It will not be possible to combine such activity with other activities. This could be a good solution for Americans.

There is a second activity offered by the DMCC called “Distributed Ledger Technology Services”. This activity includes support services to the industry, such as providing database management solutions, software management, and other ancillary services for distributed ledger technologies.

Other finance related activities, such as offering, issuing or promoting Crypto Assets, conducting Crypto Custody Services, operating a Crypto Fundraising Platform, and operating a Crypto Asset Exchange fall under the more stringent oversight by the Securities and Commodities Authority (SCA). Such activities are subject to strict oversight and capital requirements.
 

It is important to note that there is no law that forces you to set-up a holding company for your crypto. You can set-up a regular company, and then invest in crypto in your own name.

You can think about starting a software development.

It is worth mentioning that residence permits for Dubai are regulated at the federal level; as such, you can also start a company in another emirate and still live in Dubai. The free zones in other Emirates are often cheaper, faster, and require less paperwork as compared to  the ones in Dubai.
 

An additional downside is that banks have to follow strict Anti Money Laundering legislation. This means that getting a business bank account for crypto companies will take time.

Our office is a bank introducer to many banks in UAE as well as Electronic Money Institutions. Our aim is to find the appropriate bank that works for your best interest. Bank account opening in the UAE can take up to two to three months.

It is worth noting that when you set-up a business in Dubai, you need to open a business account. You should also set-up a personal bank account for local expenses.

Besides that, you are not obliged to use exchanges or banks inside the country. You likely will be able to keep using your favourite crypto exchange and international banking solutions.
 

In particular cases, an existing country could request a tax residency certificate; this is official proof issued by the authorities confirming you are a tax resident in a particular country.

The instructions from the Ministry of finance of the UAE are clear: you cannot obtain a personal tax residency certificate from the UAE unless you have spent at least 183 days there.

If you need a tax residency certificate of the UAE to your name you have to abide by this rule. However, no crypto investor ever considered relocating to Dubai a punishment.

Dubai and the UAE is a growing hotspot for crypto meetings and ongoing exhibitions. It is home to Expo 2020 so this year is going to be extra busy. More people, more meetings, more opportunities and business going on.

Relocating to Dubai may be just the push you needed. It is a safe place to be and recently it proved itself by dealing effectively with COVID-19.
 

Our service offering ranges from advising/consultancy, incorporation, residency and subsequently banking, accounting, legal services and any additional services required.

Remember that just like everywhere else; discussing crypto with the wrong bank or free zone employee could result in many questions. Bank employees dealing with foreign investors usually do not work in the front office. Dubai is a networking place and through the right agent, you will talk to the right people.

This saves you a lot of time. Time that you can spend on different things such as managing your investments. Opportunity cost, basic economics.
  

Contact us for a free consultation! We bring a depth of experience to our work and dealings with clients. Our executives consist of chartered accountants, lawyers, financial advisers, tax specialists, administrators and company secretaries.