Real Estate in Dubai. Urs Stirnimann Swiss ILC Services DMCC, Dubai 2 October 2015

Transcription

1 Real Estate in Dubai Urs Stirnimann Swiss ILC Services DMCC, Dubai 2 October 2015

2 General Info about the UAE 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

3 Real Estate Ownership in the UAE 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.

4 9/ 11 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.

5 Palm Island in Dubai 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.

6 Dubai a place for Foreigners Business model to attract more than 90% foreigners.

7 Foreigners can buy certain projects 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).

8 Financial Crisis 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.

9 UAE: Safe Haven 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

10 Property Purchase 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.

11 Property Registration Charges 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% %: if transfer from company to shareholder of the company (same person).

12 Trust UAE Property 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.

13 Waqf Other areas might be handled by a Waqf which has a certain similarity with a trust. Based on Shariah law.

14 Trustee holds the Property Trustee holds a JAFZA company in his own name on behalf of the trust or foundation.

15 Inheritance in the UAE 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.

16 DIFC Will 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.

17 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

18 Buying Property 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.

19 Legalisation, Apostille 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

20 Double Tax Treaties with the UAE 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

21 Double Tax Treaty Switzerland - UAE Normal Swiss Withholding Tax on Dividends: 35% Shareholder UAE Company >10% Ownership Withholding Tax 5% <10% ownership Withholding Tax 15% Swiss Company A Swiss Company B

22 Swiss Business Council Swiss Business Council is a source of experience. 250 Members Offices in Swiss Tower, JLT, Dubai

23 Questions?