Introduction to DIFC Foundation
A DIFC Foundation, established under DIFC Law No. 3 of 2018, is a distinct legal entity with no shareholders. A council appointed by the founder governs it and operates under its Charter and By-laws.
The foundation can own property, enter into contracts, and act independently of the founder’s estate. This separation supports asset protection, succession planning, and privacy.
A DIFC Foundation must have at least one founder and two council members. If it has charitable or specific non-charitable purposes, a guardian is also required. The foundation must maintain a registered office within the DIFC and cannot engage in trading unless it is directly related to its stated purpose.
DIFC Foundations are ideal for protecting assets, managing wealth, ensuring privacy, and planning succession. Their ability to hold UAE real estate directly, offer tax efficiency, and operate under a trusted common law framework makes them a preferred solution for global families and businesses.
Overview of DIFC Foundation
| Feature | Details |
|---|---|
| Governing Law | DIFC Law No. 3 of 2018 |
| Legal Status | Separate legal entity — can hold assets, sue, be sued, enter contracts |
| Minimum Founder(s) | 1 (individual aged 18+ or body corporate) |
| Minimum Council Members | 2 (individuals or corporates) |
| Guardian Required? | Only if foundation has charitable or specified non-charitable objects |
| Registered Office | Within DIFC — leased premises, affiliate shared office (consent required), or Registered Agent address |
| Confidentiality | Only name and registered office are public; founders, council, beneficiaries remain private |
| Real Estate Ownership | Permitted under MoU with Dubai Land Department |
| Tax Treatment | 0% corporate tax unless opted-in; no inheritance tax; tax transparency possible |
| Setup Timeline | 5–10 business days with complete documentation |
| Typical Fees | $350 license fee; $750 DP fee (if applicable); $618–$656 Establishment Card (optional) |
| Annual Filings | Confirmation Statement; DP Return; CRS/FATCA if applicable |
Key Features and Benefits of a DIFC Foundation
Asset Protection
Assets are legally ring-fenced from the founder’s personal estate and liabilities.
Succession Efficiency
Clear governance documents allow seamless, multi-generational wealth transfer.
Confidentiality
Only the foundation’s name and registered office are public; all other information remains private.
Tax Efficiency
No corporate tax or inheritance tax by default; optional tax transparency under UAE rules.
Dubai Real Estate Eligibility
May hold Dubai freehold property under the MoU with Dubai Land Department.
Perpetual Existence
Foundations continue indefinitely unless formally dissolved.
Redomiciliation Flexibility
Ability to migrate into or out of DIFC without liquidation.
Trusted Legal Framework
DIFC applies English common law principles, familiar to international families.
Flexible Governance
Founders can customize governance structures to suit complex family or business needs.
What Constitutes a DIFC Foundation?
A DIFC Foundation is a distinct legal entity that exists independently of its founder. The legal separation ensures that assets owned by the foundation are protected from the founder’s personal liabilities.
Foundations cannot engage in commercial trading unless directly related to their stated purpose, ensuring that they remain focused on asset holding and governance.
Minimum structural requirements include:
- At least one founder (individual aged 18+ or a corporate entity).
- Two council members (individuals or corporates).
- Guardian appointment required only for charitable or specified objectives.
- Registered office maintained within DIFC.
Types of DIFC Foundations
DIFC Foundations offer flexibility to accommodate various objectives, including wealth management, succession planning, and philanthropic endeavors.
1. New DIFC Foundation
Established directly under DIFC Law No. 3 of 2018, a New DIFC Foundation is suitable for individuals or entities seeking to create a foundation within the DIFC jurisdiction.
2. Recognized Foreign Foundation
A foreign foundation established outside the DIFC can apply for recognition within the DIFC. This allows the foundation to operate under DIFC’s legal framework without relocating its domicile.
3. Transferred Foreign Foundation
Foundations established in other jurisdictions have the option to transfer their domicile to the DIFC, continuing their existence as a DIFC Foundation. This process involves obtaining a Certificate of Continuance and ensures seamless migration under the DIFC’s legal system.
4. By Purpose
- Private Foundation: Primarily used for private wealth management, asset protection, and succession planning.
- Charitable Foundation: Established to pursue philanthropic objectives. Such foundations are required to appoint a Guardian to oversee their activities, ensuring alignment with their stated charitable purposes.
Why DIFC Foundations Are Ideal for Asset Protection, Succession Planning, and Family Governance?
DIFC Foundations offer a unified solution for high-net-worth individuals and families seeking to protect wealth, manage succession, and ensure efficient governance across generations.
Comprehensive Asset Protection
Assets transferred into the foundation are legally owned by the foundation itself, not the founder. This protects them from claims, litigation, or liabilities connected to the founder personally.
DIFC’s legal environment — an independent common law jurisdiction with internationally respected courts — reinforces this protection and ensures fair dispute resolution.
Consolidated Asset Management
DIFC Foundations enable consolidation of real estate, securities, intellectual property, private equity, and other holdings within one structure, simplifying oversight and management.
Succession Planning Built-In
The foundation’s Charter and By-laws formalize the founder’s intentions, offering:
- Perpetual existence, ensuring continuity
- Avoidance of probate delays
- Flexibility to override statutory inheritance laws
- Efficient transfer of global assets
Strong Family Governance Framework
Defined roles for founder, council, guardian, and beneficiaries minimize conflict and provide clarity. The option to appoint an independent guardian offers additional protection for the founder’s legacy.
Privacy and Confidentiality
DIFC ensures discretion: only the foundation’s name and registered office are public. Founders, council members, and beneficiaries remain confidential, a key advantage for those valuing privacy.
International Recognition and Control
DIFC Foundations are globally recognized due to their common law basis. Founders retain significant control over governance through reserved powers and appointment rights defined in the Charter and By-laws.
Setting up a DIFC Foundation
Setting up a DIFC Foundation involves a structured process that ensures full regulatory compliance while providing flexibility for founders to tailor the structure to their objectives.
1. Define the Purpose and Objects
- Select the foundation’s purpose: private wealth management, charitable objects, or other non-charitable objectives.
- Specify whether it will benefit named individuals, categories of persons, or charitable causes.
1
2. Choose a Name
- Search for an available name via the DIFC portal. Up to three names can be submitted.
- A name can be reserved for 90 days at no additional cost.
- If the chosen name matches an existing entity, consent or evidence of relationship must be provided.
2
3. Appoint Key Roles
The foundation’s Charter and By-laws formalize the founder’s intentions, offering:
- Founder: Minimum one founder (individual aged 18+ or corporate entity).
- Council Members: At least two individuals or corporates.
- Guardian: Mandatory only for charitable or specified non-charitable foundations.
- Authorized Signatories: Minimum of one, maximum of ten individuals listed on the license.
3
4. Determine the Registered Office
- A registered address within DIFC is required.
- Options include leasing office space, sharing an affiliate’s office with consent, or using a Registered Agent’s address.
4
5. Prepare Core Documentation
- Charter: Defines the foundation’s structure, objectives, and governance.
- By-laws: Required if no Registered Agent is appointed.
- Founder Documents: Certified passport copies, CVs (if no LinkedIn profile), and incorporation documents for corporate founders.
- Contributor Details: If contributors differ from founders, documentation on their identity and assets must be provided.
- UBO Declaration: Ultimate Beneficial Owners must be disclosed with proof of identity and CVs where applicable.
5
6. Provide Financial Documentation
- Source of Wealth Evidence: Recent bank statements (6 months) for individuals, or financial statements (2 years) for corporates funding the foundation.
6
7. Complete Compliance Checks
- Fit and Proper Questionnaire: Required for key individuals to assess suitability for operating a DIFC Foundation.
- Data Protection Notification: Indicate whether personal data will be processed; submission required within six months of license issuance.
7
8. Submit Application and Review
- Carefully review the entire application before submission, as edits are not allowed after submission.
- DIFC authorities may request clarifications or additional documentation.
- Expected timeline: 5 to 10 business days for approval if all documents are complete.
8
9. Post-Registration Requirements
- Maintain accurate records at the registered office.
- Appoint a compliance contact, communications contact, emergency contact, and senior management representative.
- Ensure annual filings and statutory obligations are met promptly.
9
Understanding Roles within a DIFC Foundation
Founder Role and Powers
The founder is the person or corporate entity who creates the foundation and defines its objectives. Through the Charter and By-laws, the founder shapes how the foundation will operate.
There’s no minimum asset requirement, allowing broad accessibility. The founder may also appoint themselves as a beneficiary, meaning they can retain influence over the foundation’s management while benefiting from its assets and distributions.
Council Requirements
The council is the foundation’s governing body, responsible for ensuring that all activities align with the foundation’s purpose.
- Minimum of two council members required
- Members can be individuals (aged 18+) or corporate entities
- Council members must act in line with the foundation’s Charter and By-laws and serve fiduciary duties to protect beneficiaries’ interests
- A founder may serve as a council member but cannot act as guardian at the same time
Guardian Role
A guardian is optional unless the foundation has charitable or specified non-charitable purposes, in which case appointment is mandatory.
The guardian ensures the council complies with the founder’s intentions and protects the integrity of the foundation’s operations. This role may be fulfilled by an individual or a corporation.
Qualified Recipients and Beneficiaries
Qualified recipients are the individuals, families, charities, or other entities designated to benefit from the foundation.
Founders have significant flexibility to define beneficiaries by name, category, or class, supporting tailored estate planning. This allows strategic distribution to align with family values, philanthropic goals, or business continuity plans.
Default Recipient Concept
A default recipient ensures that foundation assets are properly distributed if no qualified recipients exist at the time of winding up.
This safeguard guarantees that residual assets are not left unallocated, maintaining clarity and certainty during dissolution.
Naming and Registered Office Requirements
1. Naming Conventions
The foundation’s name must include the word “Foundation” and comply with DIFC naming rules.
Names suggesting association with UAE government entities or containing sensitive words like “Dubai” or “UAE” require specific approval. The DIFC portal provides an option to reserve a name for 90 days.
2. Registered Office Options
The foundation must maintain a registered address within DIFC at all times.
Options include:
- Leasing office premises directly within DIFC
- Sharing space with an affiliated DIFC entity (requires formal consent)
- Using the licensed address of a registered agent
The registered office serves as the official point of contact for legal, administrative, and compliance correspondence.
Essential Documentation Requirements
For Individual Parties:
- Certified passport copies for founders, council members, guardians, and any contributors
- Current CVs or LinkedIn profiles showing relevant professional background
- Signed appointment declarations confirming acceptance of positions (e.g., council members)
For Corporate Parties:
- Certificate of Incorporation (not older than six months) for any corporate founder, council member, or contributor
- Board resolutions approving participation and designating authorized signatories
- Authorized signatory documentation verifying identity and authority to act on behalf of the company
UBO Disclosure Obligations:
The Ultimate Beneficial Owners (UBOs) of the foundation must be clearly disclosed as part of regulatory compliance.
A UBO is defined as any individual who ultimately owns, controls, or has significant influence over the foundation or its governing bodies.
Disclosure must include:
- Full identification documentation for each UBO
- Professional background details
- Clear documentation of their control or influence over the foundation
Source of Wealth Evidence:
Founders and contributors must provide credible evidence regarding the origin of funds used to capitalize the foundation.
Required evidence may include:
- Bank statements covering at least six months for individuals
- Two years of audited financial statements for corporate contributors
- Documentation supporting other sources of wealth where applicable (e.g., sale of assets, inheritance) with accessible public records or documentation as appropriate
Regulatory Vetting Process:
All key parties — founders, council members, guardians, contributors, and authorized signatories — must complete the Fit & Proper Questionnaire, a standard DIFC requirement designed to assess competence, integrity, and suitability.
This process ensures that only qualified individuals or entities manage DIFC Foundations and that foundations meet international governance standards.
Statutory Filings and Annual Compliance
DIFC Foundations must adhere to ongoing compliance obligations that maintain their legal standing and reputation.
Annual Confirmation Statement
Each foundation must file an Annual Confirmation Statement within 30 days of its incorporation anniversary.
This filing confirms key information, including:
- Current registered office address
- Names of council members, guardians (if any), and other key parties
Data Protection Return
Where a foundation processes personal data, it must submit an annual Data Protection Return to the DIFC Commissioner of Data Protection.
This ensures compliance with DIFC’s data privacy regulations and reinforces its reputation as a trusted jurisdiction.
CRS/FATCA Reporting Obligations
Depending on the foundation’s activities and its beneficiaries’ tax residency, reporting under the Common Reporting Standard (CRS) and Foreign Account Tax Compliance Act (FATCA) may apply.
Foundations should review these requirements annually to determine if reporting obligations are triggered.
Financial Statements and Accounting
By default, DIFC Foundations must prepare financial statements in accordance with International Financial Reporting Standards (IFRS).
Alternative accounting standards may be permitted where justified, but approval from the Registrar is required.
Key requirement:
- Financial statements must be approved by the council and filed with the DIFC Registrar within 30 days of approval, ensuring proper governance and transparency.
Registered Office Maintenance
A DIFC Foundation must maintain a valid registered office address within the DIFC at all times.
Any changes to this address must be reported promptly to the Registrar of Companies to ensure accurate records.
Frequently Asked Questions
DIFC Foundations can be structured to be Shariah-compliant by adhering to Islamic finance principles. This involves appointing a Shariah advisor, ensuring foundation objectives align with Islamic values, and avoiding activities prohibited under Shariah, such as interest-bearing transactions. To maintain compliance, foundations must follow guidance from recognized Shariah standards.
To hold digital assets in a DIFC Foundation, the foundation must ensure compliance with DIFC regulations, including maintaining accurate records of ownership and transactions. Proper governance structures, adherence to anti-money laundering (AML) and counter-terrorism financing (CTF) standards, and the appointment of officers with expertise in digital asset management are also essential requirements.
In case of deadlock between Council Members of a DIFC Foundation, the foundation’s charter or bylaws typically outline resolution mechanisms. These may include appointing a tie-breaking officer, referring the matter to arbitration, or seeking intervention from DIFC Courts if necessary. Clear governance provisions help prevent prolonged operational disruptions.
Foundation disputes in DIFC Courts are handled according to the DIFC Courts’ jurisdiction and procedural rules. Parties typically engage in mediation or arbitration before court proceedings. The court evaluates the foundation’s charter and relevant laws to resolve conflicts. The process ensures impartiality and adherence to DIFC legal standards.
To remove uncooperative or incapacitated Council Members in a DIFC Foundation, the bylaws must establish clear removal procedures. Common steps include providing notice, conducting a council vote, or seeking DIFC Court intervention if disputes arise. Proper documentation and compliance with governance rules are essential.
FATCA and CRS reporting requirements affect DIFC Foundations by requiring compliance with international tax transparency rules. Foundations must register with relevant tax authorities, report financial accounts of U.S. persons or other reportable entities, and maintain accurate records. Non-compliance risks legal penalties and reputational damage.