Real Estate in Dubai - STEP · PDF fileReal Estate in Dubai Urs Stirnimann Swiss ILC Services...
Transcript of Real Estate in Dubai - STEP · PDF fileReal Estate in Dubai Urs Stirnimann Swiss ILC Services...
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Real Estate
in Dubai
Urs Stirnimann
Swiss ILC Services DMCC, Dubai
2 October 2015
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• 7 Emirates form the United Arab Emirates (UAE)
• - 9 mio. Inhabitants - Population growth: 8% p.a. for 15 years - Oil related income for Dubai: approximately 5% of GDP - ~85% of population are foreigners
• Hub for: - Middle East - Asian Subcontinent - Central Asia - Parts of Africa
• 2 billion people live within a flight radius of 4-5 hours
General Info about the UAE
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• Up to 2002, foreigners could not own property in
the UAE.
- Few foreigners were interested in buying UAE
property.
Similar to companies:
• UAE companies could not be controlled by
foreigners.
- They could only own up to 49%.
- Since 1986 foreigners can own 100% in free
zones companies.
Real Estate Ownership in the UAE
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• After the 9 /11 attack, Arabs not welcome
anymore in the west.
• Arabs withdrew money from the west to place
them in banks in Arab countries.
• Which placed it again in the west.
• Investment possibilities were needed in the Gulf
region.
9/ 11
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• In 2002 announcement of
Palm Island,
• where foreigners can
own property.
• Followed by many other projects
Burj Khalifa, Emirates Hills, Meadows, Springs,
Dubai Marina, etc.
Palm Island in Dubai
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• Business model to attract more than 90%
foreigners.
Dubai a place for Foreigners
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• Other Gulf countries followed and allowed
foreigners to own in certain areas,
westernised projects representing western
lifestyle.
• Attractions which make Dubai appealing for
vacation and to live.
• The success of the projects attracted additional
money from all over the world.
• No income nor wealth tax in the UAE
(only for foreign oil companies and banks).
Foreigners can buy certain projects
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• Dubai was heavily
affected by the Financial
Crisis 2008/2009.
• Real Estate lost 50-60%.
• In the meantime it is
again on the level of
2008.
Financial Crisis
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• Dubai has become the safe haven in
the region (for the rich people).
• Iraq war, Arab Springs, Syria, ISIS
(Daesh)
increased the demand for Dubai.
• Everybody is welcome and easy to
get a residency through:
- Employment
- As shareholder of a UAE company
- As owner of UAE property
• Residency for 3 years, renewable
UAE: Safe Haven
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• Majority of property is bought by natural persons.
• Some bought it in the name of offshore companies.
• Up to 2010, it was possible to buy with BVI, Seychelles
companies,
or UAE offshore companies from RAK or Jebel Ali.
• Some of those companies were held by trusts or
foundations.
• In 2010, it was announced that Dubai property can only
be bought in the name of JAFZA offshore companies or
personal name.
Property Purchase
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• Transfer charge at Dubai Land Department: 4%
• Restrictions for selling of the property.
• Change of shareholder must be reported to
Dubai Land Department
• Any change of shareholder results in a Land
Department charge of 4%.
• 0.125%: if transfer from company to
shareholder of the company (same person).
Property Registration Charges
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• JAFZA has become reluctant to register trusts /
trustees holding the JAFZA company.
• UAE has also trust law in the financial free zone
(DIFC).
But very seldom used.
• Trust in any case can only own assets in UAE
areas where foreigners can buy.
Trust – UAE Property
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• Other areas might be handled by a Waqf which
has a certain similarity with a trust.
• Based on Shariah law.
Waqf
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• Trustee holds a JAFZA company in his own
name on behalf of the trust or foundation.
Trustee holds the Property
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• Inheritance in the UAE is rather complex.
• Probate through UAE courts, all in Arabic.
• Court of First Instance will apply Shariah Law
usually also for non-Muslims.
• Appealing it might lead to the application of the
foreign law for non-Muslims.
• Might take many months if not years.
Inheritance in the UAE
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• Since May 2015, non-Muslims can register a
will at the DIFC Will Registry.
• Based on Common Law principles.
• All in English.
• Testamentary freedom.
• However, only for Dubai assets.
• Only for non-Muslims and who has never been
Muslims before.
DIFC Will
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DIFC Will
DIFC Will
Bank Account
in Dubai
Dubai Offshore
Company House / Apartment
in Dubai
Guardianship
of Children
Bank Account
in London
Villa in
Ras Al Kaimah Company in
Mauritius
Company in
Abu Dhabi
Property in
India
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• The experience of the financial crisis
recommends to buy only finished projects and
not off-plan.
• And only from well recognized developers with
a proven track record.
• Location is also in Dubai important.
• Expo 2020 might bring some additional input.
Buying Property
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• The UAE and many countries of the Middle East
are not part of the 1961 Hague Convention.
• Expensive legalisation in UAE consulates.
~USD 1,000 per document
Legalisation, Apostille
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• Algeria
• Armenia
• Austria
• Belarus
• Belgium
• Bulgaria
• Bosnia
• Canada
• China
• Czech Republic
• Egypt
• Finland
• France
• Germany
• India
• Indonesia
• Italy
• Korea
• Lebanon
• Luxembourg
• Malaysa
• Malta
• Morocco
• Mozambique
• New Zealand
• Morocco
• Mozambique
• New Zealand
• Pakistan
• Philippines
• Poland
• Romania
• Seychelles
• Singapore
• Spain
• Sri Lanka
• Sudan
• Syria
• Switzerland
• Tajikistan
• Thailand
• Tunisia
• Turkey
• Turkmenistan
• Ukraine
• Usbekistan
• Yemen
Double Tax Treaties with the UAE
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Normal Swiss Withholding Tax on Dividends: 35%
Double Tax Treaty Switzerland - UAE
Swiss Company A
UAE Company
Swiss Company B
>10% Ownership Withholding Tax 5%
<10% ownership Withholding Tax 15%
Shareholder
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• Swiss Business Council is a source of experience.
• 250 Members
• Offices in Swiss Tower, JLT, Dubai
Swiss Business Council
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Questions?