Tuesday, 11 February 2014

Why would you own a property in Dubai through an offshore company and not in your own individual name?

Why would you own a property in Dubai through an offshore company and not in your own individual name?

What is the main benefit of owning property through an offshore company? Is it not better to have the property held in your own name or joint names?

The inheritance laws in Dubai are not as straight forward, nor the same, as those back in the UK or the European Union. If a foreigner owns property in Dubai and passes away, the laws of their home country may not apply to their assets. Under Sharia Law there is a fixed distribution of assets upon death of the deceased owner and there is no concept of ‘right of survivorship’, for example where property passes to the surviving joint owner. By structuring your property into an offshore company, you ensure that Sharia Law will most definitely not apply to your assets and that lengthy probate proceedings are avoided.

What type of offshore companies can we use?

Since 1st January 2011, the only offshore company that can be used to hold real estate owned in Dubai is the Jebel Ali Offshore Company. This company does not allow you to trade, give you residency nor work permits. The shares of the Jebel Ali Offshore Company can be held in personal names but we usually have the shares held by an offshore company 100%. We recommend common law offshore jurisdictions such as British Virgin Islands. This means that if a death occurs Sharia Law will not apply as your assets would be held in the name of the offshore entity and not in individual names. The probate process would also take place in foreign courts.

What are the other benefits of holding a property in Dubai offshore?

The offshore entity can be designed to suit joint investors. So a group of investors can hold shares in an offshore entity that ultimately protects their portion of shares in the property. It also provides confidentiality and privacy. Hence protecting your assets.

If I already own property, can I still transfer this into an offshore company?

Yes, you can transfer all freehold property held in your own personal name into the name of the offshore entity. 

Can I own other assets through the company?

Yes. A company is a legal entity and can own any asset. So bank accounts, stocks and shares and properties in the UAE and internationally can all be held by an offshore company.

Why is the UAE a great place to set up an ‘offshore’ company?

The UAE is one of the best jurisdictions in the world for incorporating an offshore company because it is a tax-free business territory and has strict policies on privacy and confidentiality. The UAE does not have agreements concerning mandatory exchange of information about its offshore companies which are also exempt from paying corporate taxes. Many international corporations as well as expatriate entrepreneurs feel secure, comfortable and confident about establishing offshore companies in the UAE.
What are the tangible benefits of owning an offshore company?

An offshore company can act as an intermediary or holding company for private wealth or business interests. It is not mandatory for an offshore company to have a physical office, and neither is the physical presence of all shareholders required during its incorporation. There is no obligation to maintain records or books and there is no public record of the shareholders or directors, which ensures full confidentiality. And finally, it provides a legal framework for the safety and security of joint, multiple, or diverse investments. But most importantly for expatriates, the structure of an offshore company located outside the UAE allows full private ownership of assets including property located in the UAE (including Dubai, subject to additional structuring). This ensures appropriate passage, in the event of death.
What are the various assets that can be owned by an offshore company?

As a legal entity, an offshore company can ‘own’ assets as varied as bank accounts, stocks and shares, land and property.

What are the advantages of transferring the ownership of a freehold property to an offshore company? 

Property owned by an offshore company outside the UAE is not subject to Sharia law for the distribution of assets after death, because technically, a company cannot die, even when an individual shareholder does. Property and assets owned by individuals are subject to probate and may be contested. Assets which are legally owned by a company need not be subject to probate and are less likely to be contested. As a result, assets can pass outside probate or an unfavourable legal jurisdiction without the delay and cost usually associated with winding up an estate after an individual has passed away.

Kind Regards,

Vithul V Murali
Al Zaeim Corporate Services
Dubai Mobile : +971 50 55 73 538
Email  : Vithul@a2zconsultus.com
Skype : Vithul.murali

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