If a Belgian settles in Dubai, his income from work will not be taxed at all, just like his income from investments, including real estate. Recently, however, there has been a corporate tax in Dubai.
Payments to tax havens on the rise: here are the ten favorites of Belgian companies
“A tax reform came into force in 2023explains Denis-Emmanuel Philippe. Local and foreign companies are taxable in Dubai, provided they are established there and carry out an economic activity there. Corporate tax amounts to 9%, above 375,000 dirhams per year, which corresponds to approximately 95,000 euros. But there are exemption regimes and tax-free zones.”
Furthermore, underlines our expert, there is a tax convention between Belgium and the United Arab Emirates, aimed at avoiding double taxation of profits. So, if a Belgian company has a UAE branch, it should be taxed at 9% in Dubai and these profits should be exempt from tax in Belgium.
gull“It is hardly a coincidence that the European Parliament opposed the removal of the United Arab Emirates from the European list of countries at high risk of money laundering”
Repeated scandals
What about the situation of a Belgian resident who opens a bank account in Dubai to hide his money there? The UAE is part of the Automatic Exchange of Financial Information (CRC or Common Reporting Standard). In principle, the Belgian tax authorities should therefore receive the information from Dubai. Denis-Emmanuel Philippe adds that the country is also subject to KYC legislation (Know Your Customer), in the fight against money laundering.
“However, we can legitimately wonder whether financial institutions in Dubai are really doing their jobnuance the lawyer. Both with regard to the automatic exchange of financial information and with regard to due diligence obligations in the fight against money laundering.” In this regard, the journalistic investigation Dubai Uncovered revealed that the country’s financial institutions had sheltered the money of Russian criminals and oligarchs subject to international sanctions. “It is hardly a coincidence that the European Parliament opposed the removal of the United Arab Emirates from the European list of countries at high risk of money laundering”specifies Denis-Emmanuel Philippe.
Belgian companies paid 372 billion euros to Dubai
The lawyer points out that Dubai appears on numerous Belgian lists of tax havens. When a Belgian company receives a dividend from an Emirati subsidiary, the dividend is in principle taxable in Belgium. Indeed, the deduction of RDT (definitively taxed income) is not applicable with Dubai.
Tax havens are still popular!
In addition, from an amount of 100,000 euros, a Belgian company is required to declare payments made to Dubai to the tax authorities. For these payments to be deductible, it must be demonstrated that they are part of “real and sincere” operations and that the company in Dubai is not an “artificial construction”. According to the FPS Finances, Belgian companies declared payments to the United Arab Emirates totaling an astronomical 372 billion euros in 2022, compared to 298 billion euros the previous year. These payments to the United Arab Emirates represented no less than 80% of all payments declared to tax havens in 2022…
