UAE Law and Practice Contributed by: Yann Mrazek, Kath Zagatti, Hermione Harrison and Keerthi Voodimudi, M/HQ Corporate Services Ltd
ket value, depending on the Emirate. In certain Emir- ates, reduced transfer fees (often up to approximately 2%) may apply where the transfer qualifies as a gift under the land department’s rules, such as transfers between qualifying family members or to entities established by the transferor, subject to evidentiary and eligibility requirements. Accordingly, although lifetime transfers are generally tax neutral at a federal level, Emirate-level real estate registration charges may materially affect the cost of
cial arrangements, licences and contractual relation- ships. Foundations and Trusts Foundations are widely used for structured intergen- erational planning, particularly within UAE’s tier-one financial free zones, DIFC and ADGM. The respec- tive foundation legislations provide a common-law framework with strong asset protection and govern- ance features. Ras Al Khaimah International Corpo- rate Centre (RAK ICC) also offers foundation struc- tures, which may elect to rely on the courts of the DIFC or ADGM for dispute resolution. Foundations are commonly used to hold shares in family businesses, investment vehicles or UAE-based real estate port- folios, allowing for separation between control and economic benefit while embedding governance rules for future generations. Trusts are recognised within the UAE, although their practical operation depends on jurisdiction. The DIFC and ADGM have well-developed trust regimes based on common law concepts, and most operational trust structures in the UAE are established within these financial free zones due to their clarity and judicial track record. At the federal level, Federal Decree-Law No 19 of 2020 on Trusts introduced a statutory framework permitting trusts outside the free zones. However, its application in complex succession scenarios remains comparatively untested. In particular, questions con- cerning interaction with mandatory heirship principles and retained settlor control have yet to be extensively considered by UAE courts. As a result, while federal trusts are legally recognised, practitioners and families often prefer DIFC or ADGM structures where jurisprudential certainty and govern- ance mechanisms are more established. Family Holding and Governance Structures Family wealth is frequently consolidated under UAE mainland or free zone holding companies. Succession can then be managed through the transfer or restruc- turing of shares, rather than through the direct transfer of underlying assets. Shareholder agreements, family constitutions and voting arrangements are commonly
transferring immovable property. 5.2 Testamentary Dispositions Natural Persons
UAE does not impose estate/inheritance taxes on individuals, and there is no UAE personal income tax (a natural person is only within UAE CT where they conduct a business/business activity, as explained above). Accordingly, a transfer of property on death from one individual to another is not taxable in the UAE.
6. Lifetime Succession Planning Mechanisms 6.1 Common Planning Techniques
In the UAE, lifetime succession planning is a central tool for high net worth families and family-owned busi- nesses. Inter vivos structuring is often preferred to support control, continuity and certainty across gen- erations, and in practice may be more influential than testamentary planning alone in achieving long-term succession objectives. Lifetime Gifts Outright lifetime gifts of cash, shares or real estate are commonly used to transfer wealth to successive gen- erations. Once validly completed and, where required, formally registered, such transfers generally fall out- side the donor’s estate for succession purposes. In practice, families often favour transferring shares in a holding company rather than distributing underlying assets directly. This approach maintains continuity of ownership at the entity level, avoids fragmentation of operating assets, and reduces disruption to commer-
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