10 October, 2023

Setup Holding Company in Dubai, UAE – Cost & Steps Involved

setup holding company in dubai

What is a Holding Company?

A holding company in Dubai, is like a parent company that owns other companies. It doesn’t usually make products or provide services itself. Instead, it owns shares or assets of other companies, called subsidiaries. These subsidiaries can be in different industries. The holding company’s main job is to manage and oversee its subsidiaries. This setup can help reduce risks and make it easier to manage different businesses under one roof. Understanding holding companies is important for anyone interested in business, as they play a big role in how corporations are structured and operate.

Establishing a holding company in the United Arab Emirates (UAE) requires obtaining the necessary licenses and permits. The requirements for licensing and permitting may differ based on the chosen company structure and the jurisdiction of establishment.

For onshore holding companies, registration with the Department of Economic Development (DED) in the respective emirate is necessary. Additionally, acquiring a trade license from the DED is essential, enabling the company to conduct its chosen activities. Depending on the nature of these activities, further permits and approvals from other government agencies might be required.

In simpler terms, if you want to setup a holding company in the UAE, you’ll need to:

  1. Register your company with the Department of Economic Development in the emirate where you plan to establish your business.
  2. Obtain a trade license from the DED, which allows your company to operate.
  3. Depending on what your company does, you may need extra permits or approvals from other government bodies.

By fulfilling these requirements, you can legally establish your holding company and begin operations in the UAE.

open holding company in dubai

How to Open a Holding Company in Dubai, UAE?

Opening a holding company in Dubai follows a series of steps, much like any other company setup in the UAE. RadiantBiz specializes in guiding you through this process smoothly.

1. Selecting the Right Location:

Choosing the right location for your holding company is crucial. Research is key to ensuring your company’s success. If you’re unsure about the best areas, RadiantBiz can assist you in finding the perfect spot.

2. Registration Requirements for Holding Company:

Gathering all necessary legal documents and agreements is the next step. This includes contracts with stakeholders and other essential written agreements. Having these in place ensures your company is well-prepared and legally protected.

3. Finding the Right Consultant:

Selecting a reputable business consultant is essential. They will provide invaluable insights into Dubai’s rules and regulations. With over 15 years of experience in company formation in the UAE, MSZ Consultancy is well-equipped to handle all your legal requirements and ensure a smooth setup process.

Partnering with the right experts like RadiantBiz can streamline the process of opening a holding company in Dubai, ensuring compliance and success for your venture.

Estimate for Starting a Holding Company in Dubai

  • Name Approval: Before you start, you’ll need to get your company name approved, which costs around AED 600.
  • Initial Approval: There’s an initial approval fee of about AED 120 to kickstart the process.
  • Memorandum of Association Drafting: Creating the official document outlining your company’s structure and operations typically costs around AED 1,500.
  • Rent of Office Spaces: This cost varies depending on the size and location of the office space you choose for your company.
  • Activity Fees: You’ll need to pay approximately AED 15,000 for the activities your company will engage in.
  • Licensing Fees: The licensing fees to legally operate your holding company in Dubai amount to around AED 10,000.

Requirements for a Holding Company in Dubai

When registering a holding company in Dubai, it’s vital to ensure compliance with all UAE government regulations. If you’re unfamiliar with the intricacies of Company Law, seeking guidance from a consultant like RadiantBiz can simplify the process and ensure all requirements are met for a smooth holding company setup in Dubai. Here are the key requirements:

1. Formation of Management Board:

Establishing a management board is essential. This board will oversee various aspects including:

  • Setting rules and regulations for subsidiaries.
  • Organizing the structure of subsidiaries.
  • Supervising the activities of subsidiaries.

2. Appointment of Directors:

Each subsidiary firm must have a director assigned to it.

3. Capitalization of Subsidiaries:

Ensuring that subsidiaries have adequate capital to operate effectively is mandatory.

4. Risk Management:

Setting limits on the risks subsidiaries can take, such as foreign currency and others, is crucial.

5. Contractual Arrangements:

The holding company is responsible for determining the terms of arrangements and contracts with subsidiaries.

By adhering to these requirements, a holding company can establish a solid foundation for its operations in Dubai, ensuring legal compliance and effective management of its subsidiaries.

 

The Advantages of Holding Company Setup in Dubai

Setting up a holding company in Dubai offers numerous advantages, making it an attractive option for investors. Here’s why:

1. 100% Foreign Ownership: 

  • Dubai allows full ownership of holding companies by foreign investors, providing complete control over business operations.

2. Easy Asset Management: 

Managing assets within a holding company structure is simplified, allowing for efficient organization and allocation of resources.

3. No Restrictions on Foreign Employees: 

  • Holding companies in Dubai can hire foreign employees without facing any restrictions, enabling access to a diverse talent pool.

4. Tax-Free Benefits: 

Enjoying tax-free benefits is a significant advantage of establishing a holding company in Dubai, maximizing profits and financial gains.

5. Diversified Investments: 

Holding companies have the flexibility to invest in multiple ventures across various industries, spreading risk and maximizing opportunities for growth.

6. Access to Professional Services: 

Dubai offers world-class regional and international professional services, supporting holding companies in their operations and expansion endeavors.

7. Employee Mobility: 

Holding companies can easily move employees between different organizations within their structure, optimizing workforce efficiency and productivity.

8. Harnessing Emerging Markets: 

Positioned strategically, holding companies in Dubai can leverage the potential of emerging markets, tapping into new opportunities for business growth and development.

9. Capital Repatriation: 

There are no restrictions on repatriation of capital from Dubai, providing flexibility and ease of financial management for holding companies.

By capitalizing on these benefits, setting up a holding company in Dubai presents a lucrative opportunity for investors seeking growth, stability, and access to global markets.

 

How Holding Companies Work In Dubai, UAE?

Holding companies work a bit differently in Dubai, UAE. Here, they are often used as powerful tools for business growth, asset protection, and tax benefits. In Dubai, a holding company can own shares or assets in other companies both inside and outside the UAE.

One of the main reasons businesses in Dubai use holding companies is to take advantage of the favorable tax environment. The UAE has no personal income tax and no capital gains tax, making it an attractive destination for investors. Holding companies can help in managing assets and profits efficiently while minimizing tax liabilities.

Moreover, Dubai’s Free Zones offer further incentives for holding companies. They provide 100% foreign ownership, exemption from import and export duties, and simplified business regulations.

Understanding how holding companies work in Dubai is essential for those looking to expand their businesses in the region while maximizing financial benefits and legal protections. It’s a strategy that has helped many companies thrive in this dynamic business hub.

 

Types of Holding Company in Dubai, UAE

 

1. Free Zone Holding Company:

 This type of holding company is established within a specific free zone in Dubai. It offers advantages like 100% foreign ownership, tax exemptions, and simplified business processes. It is ideal for businesses looking to benefit from Dubai’s strategic location and business-friendly environment.

2. Onshore Holding Company:

 Onshore holding companies are set up outside free zones and are subject to UAE Federal Law. They can engage in a broader range of activities, including those outside the UAE. While they don’t offer 100% foreign ownership, they are still an attractive option for various businesses.

3. Offshore Holding Company:

 Offshore holding companies are registered in free zones that specifically cater to international businesses and investors. They provide privacy, asset protection, and tax benefits but may have limited operational activities within the UAE.

4. Mainland Holding Company:

 Mainland holding companies can operate anywhere in the UAE. They have broader business opportunities but require a local Emirati sponsor or service agent.

Each type of holding company in Dubai has its unique advantages and considerations. The choice depends on the business goals, activities, and preferences of the company looking to establish a presence in Dubai.

 

FAQ – Setup Holding Company in Dubai

  • Can a Holding Company Own 100%?
    Yes, a holding company can own 100% of a subsidiary. It can either own all the stock or membership interests of the subsidiary or just enough to control it. Control means having sufficient stock or membership interests to ensure decisions align with the holding company’s preferences.
  • Can I Invest in a Holding Company?
    Investing in a holding company involves directing investments into other companies and assets. It can be beneficial for asset protection, tax minimization, and privacy enhancement.
  • How Does a Holding Company Make Money?
    Unlike traditional operating companies, a holding company generates revenue through asset ownership rather than producing and selling goods.
  • How Do I Transfer Money to a Holding Company?
    You can transfer cash from an operating company to a holding company without incurring taxes. As the sole shareholder of the holding company, you can move excess funds from the operating company through a tax-free dividend.

 

 

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