UAE Law and Practice Contributed by: Ildar Yuvakaev, Ruslan Akhmetov, Olga Serova and Daiana Ubushaeva, Consigliere Group
treated as fiscally transparent, with the focus on the trustee and beneficiaries. Second, remuneration received for fiduciary services may create UAE corporate tax exposure where the activity is conducted as a business, while unpaid fam - ily roles generally do not. In practice, families manage these issues through careful structuring. Foreign foundations and trusts may, where conditions are met, obtain transparent treatment, allowing income to be attributed to ben - eficiaries rather than the structure itself. Families also consider beneficiary relocation, the location of management and professional fiduciary arrange - ments, while addressing foreign tax rules and report - ing obligations. A common approach is to use UAE foundations for regional assets and offshore trusts for international assets where they provide greater legal certainty. The dominant asset protection structure in the UAE is the family foundation – DIFC and ADGM foundations as premium options, with RAK ICC foundations as a cost-effective alternative. Foundations are commonly used as the central vehicle for holding family wealth and business interests. Asset protection is prospective only. Transfers made when insolvent or in anticipation of creditor claims may be vulnerable to challenge under fraudulent disposition provisions and onshore claw-back rules. Free zone protections are not absolute: mainland UAE assets may still be vulnerable to claims before onshore courts. Key risks include sham or alter-ego challenges where founders retain excessive practical control, despite reserved powers being permitted by law, as well as the unresolved interaction between foundation structures and Sharia-based heirship claims. Effec - tive structures require genuine governance, including proper administration, records, accounts, councils and ongoing compliance. 4. Family Business Planning 4.1 Asset Protection
Tax outcomes require careful structuring, including maintaining foundation transparency requirements and considering foreign tax treatment. For cross-bor - der families, the common approach is a hybrid model: UAE foundations for regional assets, combined with offshore trusts where deeper case law and interna - tional asset protection are preferred. 4.2 Succession Planning Family business shares are commonly transferred during the founder’s lifetime into DIFC, ADGM or RAK ICC foundations, with succession governed by the foundation’s charter and by-laws rather than inheritance. This preserves ownership continuity and avoids fragmentation, with larger families increasingly using branch structures under a master foundation to accommodate separate interests. A complementary approach is corporate restructur - ing, with operating businesses consolidated under holding vehicles and economic rights separated from control through different share classes. The UAE Fam - ily Companies Law (Federal Decree-Law No 37/2022) provides additional onshore tools, including transfer restrictions, buy-back mechanisms and recognition of family charters. Supporting measures include family waqf structures, registered wills, lifetime gifting and insurance-based equalisation between active and non-active family members. Governance is central to succession planning, with families commonly adopting constitutions, share - holders’ agreements and family councils addressing employment, transfers, exits and dispute resolution. Ultimately, the success of any structure depends on effective governance and family alignment. 4.3 Transfer of Partial Interest UAE law does not generally impose a transfer tax on lifetime or death transfers of partial interests in enti - ties, and there is no standalone UAE discounting regime for lack of marketability or control. Discount concepts may, however, arise in related contexts. Dubai’s 4% Dubai Land Department (DLD) transfer fee applies to the value of real property rather
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