An Overview
Why Set Up a Foundation in Dubai?
Setting up a foundation in Dubai or the UAE offers a flexible way to manage wealth, protect assets, and plan for the future. Whether for charitable or private purposes, Juriszone provides expert guidance through every step, ensuring compliance with local laws and offering benefits like asset protection and tax advantages. This allows clients to efficiently achieve their financial and personal goals.
- Personalized Approach
- Transparent Process
- Local Knowledge
Trusted by 10K+ Clients
Foundation Setup Services Provided By Us
Our Comprehensive Foundation Setup Services
Consultation
1
Receive expert advice on UAE foundation laws and regulations.
Documentation Preparation
2
Get assistance with all necessary paperwork and filings.
Licensing & Registration
3
Quick and easy process for obtaining required licenses
Governance Setup
4
Benefit from guidance on establishing a governance structure.
Why Choose Us?
Expertise
Leverage our years of experience in UAE foundation establishment.
Personalized Solutions
Benefit from a customized approach designed to meet your specific philanthropic goals.
End-to-End Support
Enjoy comprehensive assistance from the initial concept to full operation.
What
What is a Foundation?
In the UAE, a foundation is an independent legal entity that combines features of both corporations and trusts. It is commonly used for wealth management, asset protection, and succession planning. Here’s a breakdown of its structure and functions:
Structure
An Overview Of The UAE Foundation’s Structure
Founder
This is the individual or entity that initiates the foundation by providing the initial endowment and transferring assets to the foundation. The founder establishes strategic objectives and appoints the guardian.
Foundation
Acts as the central fiduciary entity, authorized to hold and manage the endowment. It ensures the stewardship of assets and distributes profits to beneficiaries according to its mission.
Default Beneficiary
Responsible for distributing the remaining endowment if there are no longer any beneficiaries.
Beneficiaries
Receive distributions from the foundation’s profits, as determined by the guardian.
Council Members
Function like a board of directors, managing the foundation’s operations. They make decisions on asset management and distributions.
Guardian (Optional)
Oversees council members to ensure alignment with the foundation’s purpose and legal obligations. The guardian also names beneficiaries and designees.
Assets
Include bank accounts, real estate, company shares, and other investments managed by the foundation.
Registered Agent
Handles administrative tasks, including compliance with local laws, documentation, and communication with regulatory bodies.
Types Of Foundation
Types of Foundations You Can Establish
1. Charitable
It is setup for charitable purposes and philanthropic activities, such as education, poverty alleviation, healthcare, or environmental protection. They receive donations from individuals, corporations, and other entities. They must have a clear charitable purpose outlined in the foundation’s charter or deed.
2. Non-Charitable
A private foundation or a family foundation is a legal entity for preserving and distributing wealth over generations. It benefits interests of individuals, families, or groups whose members and business are located in both common law and civil law jurisdictions.
They can be established for asset protection, wealth management, succession and inheritance planning, or a combination of reasons. It can be an alternative to will.
Additionally, private foundations can also undertake philanthropic activities enabling families to give back through a system.
Legal and Functional Characteristics
Independent Legal Entity
A foundation can enter into contracts, hold bank accounts, and be involved in legal proceedings, unlike a trust which is not a separate legal entity.
Foundation Charter and By-Laws
A standard charter can be used, but it can also be tailored to meet specific client requirements, ensuring flexibility in governance and operations.
Asset Protection
By transferring legal ownership of assets to the foundation, founders can protect assets from personal liability and creditors.
Versatility
Foundations can be used for various purposes, including financial restructuring, succession planning, and charitable activities.
Advantages of Establishing a Trust in the UAE
A trust in the UAE is highly beneficial to the settlor and the beneficiaries in the following ways:
1. Asset Protection
- UAE trusts offer protection against potential creditor claims, legal judgements, family disputes, political risks, and other unforeseen liabilities, helping safeguard them for the beneficiaries. Not being a legal entity, a trust cannot be sued or take any legal action.
1
2. Succession Planning
- Trusts help you plan the succession and inheritance of your assets, ensuring a smooth transfer of wealth to future generations, often without a probate process.
- While establishing the trust, you can specify the asset distribution terms, ensuring correct distribution even after your death.
2
3. Maintaining Confidentiality
- UAE regulations ensure a high level of privacy in trusts by ensuring the confidentiality of the assets added to the trust, the distribution arrangement, and the details of the beneficiaries and trustees.
- The AGDM and DIFC offer a robust framework for trusts based on English common law.
3
4. Flexibility
- When establishing a trust in the UAE, you can define the beneficiaries, wealth distribution, and duration of the trust, among other things.
4
5. Tax Considerations
- The UAE is a tax-friendly jurisdiction which doesn’t impose any tax on income or capital gains for trusts.
5
6. Lifestyle Perks
- With the golden visa, you and your family have access to good healthcare and schools in the UAE. They add to the high quality of life in the country.
- Also, you can save money on taxes since the UAE doesn’t impose personal income tax or capital gains tax.
6
- UAE trusts offer protection against potential creditor claims, legal judgements, family disputes, political risks, and other unforeseen liabilities, helping safeguard them for the beneficiaries. Not being a legal entity, a trust cannot be sued or take any legal action.
- Trusts help you plan the succession and inheritance of your assets, ensuring a smooth transfer of wealth to future generations, often without a probate process.
- While establishing the trust, you can specify the asset distribution terms, ensuring correct distribution even after your death.
- UAE regulations ensure a high level of privacy in trusts by ensuring the confidentiality of the assets added to the trust, the distribution arrangement, and the details of the beneficiaries and trustees.
- The AGDM and DIFC offer a robust framework for trusts based on English common law.
- When establishing a trust in the UAE, you can define the beneficiaries, wealth distribution, and duration of the trust, among other things.
- The UAE is a tax-friendly jurisdiction which doesn’t impose any tax on income or capital gains for trusts.
- With the golden visa, you and your family have access to good healthcare and schools in the UAE. They add to the high quality of life in the country.
- Also, you can save money on taxes since the UAE doesn’t impose personal income tax or capital gains tax.
Regulations
UAE Foundation Legislation and Regulations
UAE foundations are governed by the ADGM, DIFC, and RAKICC, offering a modern and flexible legal framework.
DIFC Foundation
The DIFC Foundations Law (DIFC Law No. 3 of 2018), requires two council members for each foundation. Foundations must have a physical office in the DIFC to register. Appointing a registered agent and a guardian is optional but necessary for charitable foundations.
ADGM Foundation
The ADGM governed by the Foundation Regulations 2017, regulations require at least two council members for a foundation. If there is no surviving founder, appointing a guardian is mandatory. The foundation must also maintain a physical presence in the ADGM.
RAK ICC
According to the RAK ICC Foundations Regulations 2019, foundations must have a registered agent, at least two council members, and a physical presence in the UAE. While appointing a guardian is optional for regular foundations, it is mandatory for charitable foundations.
Structure
The Structure of a Foundation
-
Purpose-Driven
Foundations in the UAE are designed for specific goals such as wealth preservation, asset protection, estate and legacy planning, or charitable endeavors. They cannot engage in commercial activities for profit.
-
Funding
Often established and funded by a single individual or family for intended beneficiaries.
-
Governance
Foundations are managed by a Council and operate according to their founding charter and by-laws.
-
Oversight (Optional):
Guardian: May be appointed to ensure the Council acts in accordance with the foundation’s purpose.
Registered Agent: Required to receive legal notices and official communications.
-
DIFC & ADGM
- Familiar legal framework based on English common law.
- Asset use must directly support the foundation’s purpose.
-
RAK ICC
- Offers greater confidentiality with non-public registry.
- Provides flexibility in how foundation assets are utilized.
Key Considerations for UAE Foundations
- Location: Which free zone aligns best with your objectives?
- Purpose: What are the specific goals of your foundation (estate planning, philanthropy, etc.)?
- Control: How much oversight do you desire over asset use?
- Confidentiality: Is maintaining a high level of privacy a priority?
Guide
How to Set Up a Foundation in the UAE
Combining knowledge with expertise and experience, an accounting firm is the best bet to help manage your accounting and tax filing as a business in Dubai. Here’s what we can offer:
Defining Foundation’s Purpose
Clearly state the purpose of the foundation, such as philanthropy, asset protection, or wealth management.
Choosing a Jurisdiction
Select a jurisdiction like the Dubai International Financial Centre (DIFC), Abu Dhabi Global Market (ADGM), or Ras Al Khaimah International Corporate Centre (RAK ICC), each known for their specific legal frameworks and benefits.
Appointing a Registered Agent
Engage a registered agent to assist with the application and handle legal requirements.
Drafting the Foundation Charter and By-Laws
Create a charter detailing the foundation’s aims, beneficiaries, capital, and governance structure, which will serve as its foundational legal document.
Forming the Foundation Council
Appoint a minimum of two council members to oversee the foundation’s strategic management and governance. These members can be individuals or corporate bodies.
Establishing a Physical Presence
Set up a physical office within the selected jurisdiction, as mandated in DIFC, ADGM, and RAK ICC.
Appointing a Guardian
Mandatory for charitable foundations, a guardian ensures the council adheres to the foundation’s mission.
Completing Registration and Licensing
File the necessary documents with the jurisdiction’s regulatory authority to register the foundation and secure the licenses needed for lawful operation.
Maintaining Compliance and Reporting
Follow the jurisdiction’s regulatory requirements, including regular compliance audits and financial reporting.
Documents
1. The Foundation Charter is a document that outlines the foundation’s: Objectives, Beneficiaries, Capital, and Governance structure. It must be drafted with precision and clarity.
2. The Bylaws are a document that define: The functions and duties of the foundation’s council, The procedures for appointing and removing council members The decision-making processes The Bylaws complement the Charter and cover aspects not detailed in it.
3. The Proof of Identity and Address document includes: For individuals involved (e.g., founders, council members): Copies of passports Proof of address (such as a utility bill or residence certificate) For legal entities involved: Company documents such as articles of association Lists of directors and partners Any necessary translations or certifications.
4. The Application Form: Is issued by the relevant authority Needs to be completed and submitted as part of the registration process.
5. The Information on Founders and Members document details: The individuals or entities establishing the foundation Their roles.
6. The List of Activities document provides a description of the activities the foundation will undertake.
Difference
How does the incorporation process differ between DIFC, ADGM, and RAK ICC
| Aspect | DIFC | ADGM | RAK ICC |
|---|---|---|---|
| Purpose | Asset protection, wealth management, philanthropy | Asset management, succession planning, charitable activities | Wealth planning, asset protection, family governance |
| Tax Implications | Generally tax-exempt, specific rules apply | Tax-neutral, no corporate or income tax | Tax-neutral, no corporate or income tax |
| Beneficiaries | Clearly defined beneficiaries, rights protected | Flexible beneficiary definition, including discretionary trusts | Beneficiaries can be individuals or entities |
| Asset Holding Capabilities | Broad range of assets, including real estate | Holds various assets, including financial instruments | Can hold diverse assets, subject to local regulations |
| Governance Structure | Flexible, can adopt various structures | Council-based governance, with guardian for non-surviving founders | Council-based governance, guardian optional |
| Transparency & Reporting | Annual financial statements, information disclosure | Regular reporting to financial services regulator | Financial reporting and transparency obligations |