DIFC Foundation Setup Services by Juriszone
Juriszone offers seamless DIFC (Dubai International Financial Centre) Foundation setup services, blending local expertise with global standards to deliver tailored solutions. Our services cater to high-net-worth individuals (HNWIs) looking for advanced asset protection, wealth management, and succession planning within DIFC’s renowned legal framework. By adhering to DIFC regulations and international compliance standards, we ensure that your foundation is structured with precision and confidentiality. Whether preserving family wealth for generations or creating a secure base for global investments, our dedicated team delivers excellence to protect and grow your legacy.
What is a DIFC Foundation?
A DIFC Foundation is a legal entity established under DIFC Law No. 3 of 2018 in the Dubai
International Financial Centre. It combines aspects of trusts and companies, offering a flexible
structure for wealth management, succession planning, and charitable endeavors. It ensures strong
governance, confidentiality, and multi-generational legacy preservation.
Key Features of DIFC Foundations
Exceptional Flexibility
Adaptable to various needs, including wealth preservation, charitable activities, and corporate structuring.
Governance and Control:
Founders can customize the management, governance, and control to fit their specific needs.
Creditor and Divorce Protection:
Assets are shielded from potential claims in creditor actions or divorce proceedings.
Perpetual Existence
A DIFC Foundation continues to exist beyond the founder’s lifetime, ensuring the sustained impact of their philanthropic or asset management goals.
High Security
Assets are legally separate from the founder, offering strong protection against claims.
- Ease of Establishment: The setup process is simple and efficient, making it accessible to a wide range of individuals and entities.
Confidentiality
Founders and beneficiaries remain private, with names not disclosed on public documents.
- Wide range of Applications: Useful for private wealth management, legacy planning, charitable purposes, and corporate structuring.
Appeal to High-Net-Worth Individuals
DIFC Foundations are attractive to high-net-worth individuals who need strong asset protection and privacy. They offer a solid framework for legacy planning and governance, helping families protect their wealth. This platform empowers affluent families and businesses to create lasting legacies, highlighting DIFC’s dedication to excellence and growth. By setting up a foundation in DIFC, individuals and families can protect their wealth and meet their complex needs. DIFC Foundations stands as a model for forward-thinking wealth management and legacy preservation.
Significance of DIFC as a Financial Hub
- Common Law Jurisdiction: DIFC operates under a common law system, unlike the civil law system of the UAE. This makes it an ideal environment for financial services, with strong legal and regulatory oversight.
- Facilitating Trade and Investment: For over 20 years, DIFC has been a key player in trade and investment across the MEASA region. It connects fast-growing markets with major economies in Asia, Europe, and the Americas through Dubai.
- Economic and Business Ecosystem: DIFC is home to over 4,300 registered companies and 36,000 professionals, creating a vibrant business environment with world-class facilities for both business and lifestyle.
Benefits of Establishing a Foundation in DIFC
Establishing a foundation in the Dubai International Financial Centre (DIFC) offers several unique advantages that make it an attractive option for individuals and corporations looking to manage and protect their assets effectively. Here are the primary reasons why setting up a foundation in DIFC is beneficial:
1. Legal Framework and Flexibility
Distinct Legal Personality: DIFC Foundations have a distinct legal personality, allowing them to enter into contracts and arrangements directly, similar to incorporated entities.
Redomiciliation: Foundations can be redomiciled (migrated) in and out of the DIFC, offering flexibility for international clients.
Governance Amendments: The governance structure of a foundation can be amended once established, providing adaptability to changing needs.
Strategic Location: Operating within the DIFC provides access to a strategic financial hub in the Middle East, Africa, and South Asia region.
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2. Asset Management and Protection
Asset Protection: Assets held in a DIFC Foundation are legally separate from the founder, making them less accessible to creditors and claimants.
Diverse Asset Holding: Foundations can hold a variety of assets, including real estate, shares, bank accounts, and aviation assets, from anywhere in the world, as long as it is legally permissible.
Limited Public Disclosure: There is limited public disclosure with no individuals’ names on the DIFC public register, ensuring privacy and confidentiality.
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3. Simplified Administration
No Physical Office Requirement: Foundations can use the address of a corporate service provider in the DIFC, eliminating the need for a physical office.
No Residency Requirement: There is no requirement for the founder or foundation’s officers to be based in the UAE or maintain residency in the UAE. All foundation roles can be filled by individuals or corporate bodies.
Minimal Initial Asset Commitment: The commitment of initial assets can be as little as USD 100, making it accessible for a wide range of founders.
No Annual Returns: There is no requirement for filing annual returns, accounts, or audits, simplifying the administrative burden.
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4. Financial and Reporting Obligations
Accounting Requirements: Foundations must prepare annual accounts in accordance with accepted international financial reporting standards. However, there is no requirement for audits.
Tax Efficiency: DIFC provides a favorable tax environment with no taxes on income, capital gains, or inheritance for assets held within its jurisdiction. This makes DIFC Foundations a highly tax efficient option for investors and families with assets in multiple jurisdictions.
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5. Purpose and Objectives
Versatile Objectives: A foundation can be established for charitable purposes or to benefit specific persons or classes. The objects must be certain, reasonable, and lawful.
Philanthropic Activities: DIFC Foundations can be established for both charitable and noncharitable purposes. This flexibility allows individuals to support causes close to their hearts or manage specific assets effectively, aligning with their personal or corporate values.
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6. Succession Planning
Clear Succession Plans: Founders can specify their preferences for the distribution of assets upon their passing. This ensures that the distribution follows the founder’s wishes and the conditions outlined in the foundation’s charter and bylaws, providing a clear and legally robust structure for succession planning.
Perpetual Existence: A DIFC Foundation continues to exist beyond the founder’s lifetime, ensuring the sustained impact of their philanthropic or asset management goals. This perpetual existence is particularly beneficial for long-term succession and legacy planning.
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7. Legal and Regulatory Advantages
Favorable Legal Environment: The DIFC operates under its own civil and commercial laws based on the common law system, providing a robust and transparent legal environment. The proceedings in DIFC Courts are conducted in English, ensuring familiarity and ease for international clients.
0% Tax Rate: The DIFC offers a 0% tax rate on corporate income and profits, 100% foreign ownership, and no restrictions on foreign exchange or capital repatriation.
Sustainable Growth and Trust: The confidentiality and legal framework of DIFC Foundations foster an environment conducive to sustainable growth and trust.
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8. Additional Features
Commitment of Initial Assets: Foundations can be set up with an initial commitment of as little as USD 100.
No Physical Office Requirement: Foundations can use the address of a corporate service provider registered in the DIFC.
No Requirement for Annual Returns: There is no requirement for filing annual returns, accounts, or audits.
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Steps to Form Foundation in DIFC
1. Initial Preparation
Define Purpose and Objectives: Clearly outline the foundation’s purpose and objectives.
Name Selection: Choose a name for the foundation that complies with DIFC naming conventions.
2. Collate Required Documents
KYC Documentation: Gather detailed Know Your Customer (KYC) information for the founder, council members, and guardian.
Charter and By-Laws: Prepare the foundation’s Charter and By-Laws.
3. Establish a Governance Structure
Founders and Council Members: Identify at least one founder and a minimum of two council members.
Guardian: Appoint a guardian if the foundation has a charitable or specified non-charitable object.
4. Registered Office
Office Location: Ensure the foundation has a registered office within the DIFC or take an NOC from a corporate service provider registered in the DIFC.
5. Initial Submission
Submit Application: Submit the application forms to the DIFC Registrar of Companies.
Supporting Documents: Provide additional documents such as certified passport copies and a certificate of incorporation for body corporate founders.
6. DIFC Review and Clarifications
Regulatory Review: DIFC authorities will review the submitted documents.
Compliance Check: Ensure all documents comply with DIFC regulations.
7. Final Approvals
Approval and Registration: Once the review is complete and all requirements are met, the DIFC will approve the foundation, and it will be officially registered.
8. Post Registration Requirements
Bank Account: Open a bank account for the foundation if required.
Annual Accounts: Prepare annual accounts in accordance with international financial reporting standards and file them with the Registrar or provide them to the registered agent within 30 days of approval.
What are the essential documents required for setting up a DIFC foundation
Here is the list of documents and requirements to set up a DIFC foundation.
1. Submit the application form.
2. Draft the Charter, including:
- Foundation name
- Objects
- Initial capital
- Duration (if limited)
- Founders’ declaration for Council compliance
3. Prepare Bylaws detailing:
- Council functions
- Appointment and removal procedures
- Decision-making processes
4. Provide certified passport copies for:
- Individual founders
- Council members
- Guardians (if applicable)
5. Submit incorporation certificates for corporate founders or non-DIFC Council members.
6. Include notarized Power of Attorney if founders delegate Charter signing.
7. Upload signed appointment declarations for Council members.
8. Obtain government approval for exclusively charitable foundations.
9. Secure a DIFC registered office through:
- Leasing
- Sharing with an affiliate
- Appointing a Registered Agent
10. Provide Registered Agent consent (if applicable).
11. Submit Ultimate Beneficial Owner data.
12. Include an affiliate consent letter if sharing office space.
13. Upload two years of audited financial statements for transferred foundations.
These requirements ensure DIFC compliance and smooth foundation establishment. Gather all documents before submission of application.
How long does it typically take to register a DIFC foundation
The DIFC foundation registration takes 5 to 10 business days if all documents are in order and there are no delays from the DIFC Registrar.
In some cases, the timeline may vary
- Due to the foundation’s structure.
- Application and documents submitted incorrectly.
- Delay in gathering the necessary and valid documents.
DIFC Establishment Categories:
- New Foundation: A foundation newly created under DIFC law.
- Recognized Foreign Foundation: An existing foreign foundation recognized to operate in DIFC.
- Transfer of Foreign Foundation to DIFC: A foreign foundation that transfers its jurisdiction to DIFC.
Purpose based Categories:
- Charitable Foundation: Focuses on charitable and philanthropic purposes and public benefit.
- Private Foundation (Private Interest Foundation): Typically serves private interests, often for wealth management or family purposes.
Governance and Management Structure of DIFC Foundations
Foundation Registration Criteria
- Agent: Appointment of a DIFC-registered agent is mandatory.
- Initial Capital: Minimum initial capital requirement must be fulfilled.
- Office Location: A registered office within DIFC is compulsory.
- Compliance: All foundations must adhere to DIFC Foundation Law No. 3 of 2018.
Administrative Requirements
- Office Maintenance: Maintain a registered office in DIFC.
- Record Keeping: Retain necessary documentation.
- Communication Protocols: Ensure effective communication with stakeholders and beneficiaries.
- Beneficiary Management: Update and manage beneficiary records as required.
Council Members and Responsibilities
- Membership: A minimum of two council members (individuals or corporations) is required.
- Restrictions: Council members cannot serve as guardians simultaneously.
- Key Duties:
- Maintain accurate financial records.
- Implement foundation objectives.
- Manage assets and ensure compliance with the foundation’s charter and bylaws.
- Report regularly to stakeholders and make key decisions on foundation matters.
Guardian Role and Requirements
- Charitable Foundations: Guardian appointment is mandatory.
- Private Foundations: Guardian appointment is optional.
- Key Responsibilities:
- Oversee council activities and ensure compliance with objectives.
- Protect beneficiary interests with independent supervision.
- Guardians cannot be council members or beneficiaries.
Documentation and Reporting Requirements
- Initial Documentation:
- Foundation charter and bylaws.
- KYC documents for all involved parties.
- Corporate documentation (if applicable).
- Ongoing Reporting:
- Annual financial statements.
- Minutes from council meetings.
- Updates on changes to structure or beneficiaries.
- Compliance and audit reports.
Compliance and Legal Framework
- Adherence to Laws:
- DIFC Foundation Law.
- DIFC Companies Law.
- Anti-Money Laundering (AML) regulations.
- Data protection requirements.
- Penalties for Non-Compliance:
- Monetary fines.
- Potential suspension of foundation.
- Legal consequences.
Operational Structure
- Hierarchy: Founder(s), Guardian, Council, Registered Agent.
- Limitations:
- No commercial activities outside defined objectives.
- Restricted to foundation-specific purposes.
- Constraints on asset management.
Risk Management and Controls
- Internal Systems: Implementation of internal control systems and compliance reviews.
- Risk Protocols: Regular risk assessments and audits (if required).
- Succession Planning: Established protocols for continuity.
DIFC Establishment Categories
- New Foundation: A foundation created under DIFC law. It is established for various purposes, including wealth management, asset protection, and philanthropic activities.
- Recognized Foreign Foundation: An existing foreign foundation recognized to operate in DIFC. It must be registered in another jurisdiction and can operate in DIFC as a branch. It requires a registered agent in DIFC and must adhere to DIFC regulations.
- Transfer of Foreign Foundation to DIFC: A foreign foundation that transfers its jurisdiction to DIFC. This process involves meeting DIFC requirements and obtaining a certificate of continuance, allowing the foundation to operate under DIFC law.
Purpose Based Categories
- Charitable Foundation: Focuses on charitable purposes and public benefit. It supports philanthropic activities and projects that provide community benefits.
- Private Foundation (Private Interest Foundation): Serves private interests, often used for wealth management or family purposes. It provides asset protection, succession planning, and privacy for family wealth.
Compliance and Regulatory Requirements for DIFC Foundations
- Accounting and Reporting: Foundations must keep accurate accounting records. Annual accounts must be approved by the council and submitted to the Registrar or provided to the Registered Agent.
- Data Protection: Foundations must inform the Commissioner of Data Protection whether they process personal data and comply with data protection regulations.
Operational Restrictions
- Commercial Activities: Foundations may not engage in commercial activities, except those necessary for achieving their objectives.
Penalties and Fines
- Noncompliance: Fines are imposed for failing to notify the Registrar of changes in the council or registered agent, failing to maintain accounts, or providing misleading information.
Additional Requirements
- Registered Agent: A Registered Agent may be appointed to assist with compliance and regulatory obligations.
- Ultimate Beneficial Owners (UBOs): Foundations must disclose UBO data, identifying individuals with significant control or influence over the foundation.
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.