Opening a company in Dubai while living in Spain

Is it legal to open a company in Dubai while living in Spain?

Yes, it is completely legal to open a company in Dubai even if you reside in Spain. The regulations of the United Arab Emirates allow you to incorporate and manage a company without the need to live in Dubai or obtain a residence visa, as long as the activity is carried out in accordance with local laws. This means you can set up an offshore, free zone, or mainland company, depending on your objectives, and operate internationally from Spain without breaching any regulations.

Likewise, from the Spanish perspective, there is no legal impediment for a resident in Spain to own a company abroad. The only thing you must take into account is complying with your tax obligations in Spain, such as declaring your shareholding in the company and any income derived from it when applicable.

Step by Step

Open your company

Initial Contact

Solicite una consulta gratuita desde España con uno de nuestros expertos. Le explicaremos cómo abrir su empresa en Dubái sin necesidad de viajar y resolveremos todas sus dudas iniciales.

2. Personalized quotation

Receive a detailed proposal with all the costs of the process according to the type of company you want to set up. The offer will include licenses, procedures, and the services required to operate from Spain.

3. Name’s selection

Choose up to three options for your company name. We take care of checking their availability in Dubai and ensuring compliance with all local regulations, without you having to travel.

4. Required documentation

Submit the necessary documentation, which usually includes a copy of your passport, a passport-size photograph, and proof of address. The entire process can be completed digitally.

5. Determination of business activity and legal structure

Together, we define your business activity and select the most suitable structure: Free Zone Company, LLC, or Holding. This allows you to operate legally in Dubai while residing in Spain.

6. Legal Process

Our team prepares all the legal documentation to incorporate your company in Dubai. This includes the Memorandum of Association (MOA), official forms, and the corporate documents required for registration.

7. Payment of fees

You make the payment of the official fees to issue the commercial license and complete the incorporation. The entire process is managed online from Spain.

8. Company registration and commercial license

Receive official confirmation of your company registration and obtain your commercial license. With this document, you can already operate from Spain without residing in Dubai.

9. Visa and immigration procedures

If you wish to obtain an investor visa or issue visas for employees, we manage the entire process. This step is optional: you can set up and operate your company without the need for a visa.

10. Bank account opening

We help you open a corporate bank account in Dubai. Some banks allow the process to be initiated remotely, although in-person verification may be required depending on the institution.

11. Ready to operate

Within approximately 14 days, your company will be fully active. You can issue invoices, sign contracts, and manage operations from Spain, benefiting from Dubai’s tax and commercial advantages.

WHERE DO I PAY TAXES IF I OPEN A COMPANY IN DUBAI WHILE RESIDING IN SPAIN?

Opening a company in Dubai does not automatically mean you pay taxes there. Taxation depends on several factors, especially your tax residence, which in this case remains Spain. These are the key points:

1. Company taxes in Dubai

The company you incorporate in Dubai is taxed according to the regulations of the United Arab Emirates. Currently:

Free Zone activities may benefit from 0% corporate tax if they meet the requirements of a qualifying activity.
Non-qualifying activities or those operating on the mainland may be subject to a 9% Corporate Tax.
There is no personal income tax or local tax on dividends.

2. Personal taxes in Spain

As a tax resident in Spain, you are taxed on your worldwide income, which means you must declare in Spain the profits you receive from the Dubai company, such as:

Dividends
Salaries
Any personal income derived from the business

Profits retained within the company are not declared in Spain until you receive them as an individual.

3. Declaration of assets and accounts abroad

If the company has bank accounts, assets, or shareholdings of significant value, you must comply with reporting obligations, such as:

Form 720 to declare assets abroad (if they exceed €50,000 in certain categories).
Notification of shareholdings in foreign companies, if applicable.

This does not imply paying more taxes, only reporting the information.

CAN I BE A TAX RESIDENT IN DUBAI IF I LIVE IN SPAIN?

Becoming a tax resident in Dubai is possible, but it involves meeting requirements beyond simply “having a company there.” To stop being considered a tax resident in Spain and become a resident in the UAE, two parallel conditions must be met:

1. Obtain residency in Dubai (United Arab Emirates)

To be a tax resident in Dubai, you must obtain a residence visa, which can be achieved through several common routes:

a) Company visa
b) Employment visa
c) Golden Visa (options for investors)
d) Real estate ownership (Property Visa)

In addition, a minimum physical presence is required for tax purposes in the UAE. Although the UAE does not require a minimum number of days to maintain the visa, it is recommended to maintain regular stays to justify tax residency to other countries.

For international purposes, it is usually taken as a reference to spend more than 183 days per year in the country where you wish to be considered a tax resident.

2. Cease to be a tax resident in Spain

Spain will consider you a tax resident as long as you meet any of the following criteria:

Staying in Spain for more than 183 days per year.
Having your main nucleus or center of economic interests in Spain.
Having your spouse or minor children residing in Spain (unless legally separated).

In addition, you must inform the Spanish tax authorities of your change of residence through Form 030.

TAXATION IN SPAIN VS DUBAI.

Opening a company in Dubai while residing in Spain offers very significant tax advantages, especially for digital businesses, consultancies, international services, and business models that do not require constant physical presence. Dubai stands out for its competitive tax structure, absence of personal taxes, and facilities for operating globally.

Tax aspect	Spain	Dubai (UAE)
Personal income tax	Between 19% and 47% depending on tax brackets.	0% (no personal income tax).
Corporate tax	25% standard rate (15% for new companies during the first 2 years).	0% in Free Zones if conditions are met. 9% corporate tax for non-qualifying activities.
Dividend tax	Between 19% and 28%.	0% (no dividend tax).
VAT	21% on most goods and services.	5% (only applicable if operating within the UAE or exceeding the threshold).
Wealth tax	Yes, depending on the autonomous community.	0% (no wealth tax).
Inheritance and gift tax	Yes, with variations depending on the autonomous community.	0% (this tax does not exist).
Social security contributions	High contributions for self-employed individuals and companies.	Minimal or none, depending on the activity.
Estimated total tax burden	Medium–high.	Very low.

WHAT TYPES OF COMPANIES CAN WE SET UP IN DUBAI FROM SPAIN?

Sole Establishment

A sole proprietorship registered on the mainland, where the owner assumes full legal responsibility. It allows operating in the local market and hiring employees. It has more requirements than a freelance license, but offers broader commercial reach.

Offshore

Designed for asset management or international trade, without operating in the local market. Allows 100% foreign ownership, no mandatory physical office, and few requirements. It is a fairly simple option with a low regulatory burden.

Free Zone

Located in Dubai’s special economic zones, it offers tax advantages and full foreign ownership. It requires an office within the specific free zone. It has medium complexity and certain limitations when operating outside the free zone.

Mainland LLC

Can operate freely throughout the entire UAE territory. 100% foreign ownership is allowed (in most activities). No geographical restrictions: you can open branches or subsidiaries in any Emirate. Possibility to participate in public tenders and government contracts.

DOUBLE TAXATION BETWEEN SPAIN AND DUBAI

When a person lives in Spain but has a company in Dubai, a common question arises: Will I have to pay taxes twice, in both countries?

The answer is no, as long as the Double Taxation Avoidance Agreement (DTAA) signed between Spain and the United Arab Emirates is correctly applied. This agreement establishes clear rules on where each type of income is taxed, preventing the same income from being taxed twice.

1. What is the Double Taxation Agreement between Spain and the United Arab Emirates?

It is an international agreement that determines in which country taxes must be paid on different types of income: business profits, dividends, interest, employment income, real estate, etc.

Its objectives are:

To prevent a Spanish resident from being taxed twice on the same income.
To clarify tax residency.
To reduce the overall tax burden for international entrepreneurs and companies.

This agreement is currently in force and applies to any tax resident in Spain who has an economic relationship with Dubai.

2. How does it affect a person who lives in Spain and has a company in Dubai?

The DTA establishes that:

The company is taxed according to Dubai regulations (0% or 9%, depending on the case).
The individual resident in Spain is taxed in Spain on the personal income received from that company (for example, dividends or salary).

The key point is that Spain does not tax again the corporate profits already taxed in the UAE, but only the personal income when it is received in Spain.

3. What happens with dividends?

In Dubai, dividends are taxed at 0%.

In Spain, they are declared as savings income, but thanks to the agreement:

No withholding tax is applied at source (Dubai).
They are taxed only once, in Spain, at the applicable rate.

This avoids any double taxation.

4. What if the company operates exclusively outside Spain?

If the company’s activity is carried out entirely outside Spain and its effective management does not take place in Spanish territory, Spain cannot levy corporate tax on it.
Only the company would be taxed in Dubai.

The individual, however, is taxed in Spain when they receive income.

SPECIFIC CASES: FREQUENTLY ASKED QUESTIONS RESOLVED

Freelance consultant who invoices only Spanish companies

Question: Can I open a company in Dubai if all my clients are in Spain
Answer: Yes, you can, but you must take into account that if the activity is carried out from Spain, the Spanish tax authorities may consider that the company has Spanish tax residency. It is recommended to work with international clients or to build substance in Dubai (minimum presence, effective management, etc.).

Employee in Spain who wants a separate business in Dubai

Question: I work for a Spanish company. Can I set up my own company in Dubai in parallel?
Answer: Yes. There is no legal impediment. You only need to declare in Spain the personal income you receive from the Dubai company.

E-commerce entrepreneur selling only to other countries (not Spain)

Question: If I sell products outside Spain, can I operate from Dubai without paying taxes in Spain?
Answer: Yes, if you can prove that business management is carried out outside Spain. If all operations are conducted from Spain, even if sales are international, there may be a tax risk.

Digital professional who wants to pay less tax while continuing to live in Spain

Question: Can I reduce my taxes by creating a company in Dubai while still living in Spain?
Answer: The company may benefit from Dubai’s tax regime, but you will still be taxed in Spain on your personal income. Personal taxation in Spain is not eliminated.

Spanish partner of a Spanish company who wants to open a branch in Dubai

Question: Can a Spanish company open a branch in Dubai to operate from there?
Answer: Yes. Many companies do this to expand. The Dubai branch is taxed under its own regulations and can benefit from Free Zone incentives. The Spanish parent company is only taxed on the income it receives.

Person who wants to obtain a Dubai visa to change tax residency

Question: If I obtain an investor visa in Dubai, do I automatically stop being a Spanish tax resident?
Answer: No. To stop being a Spanish tax resident, you must:

Live fewer than 183 days per year in Spain.
Transfer your center of economic interests to Dubai.
Formally notify the Spanish tax authorities of the change.
The visa is necessary but not sufficient on its own.

Large Spanish company that wants to relocate part of its structure to Dubai for tax optimization

Question: Can we move part of the activity there without Spain considering us still Spanish tax residents?
Answer: Yes, it is possible to establish a branch or holding company in Dubai with its own economic activity and tax regime. However, for the Dubai entity to be considered a tax resident in the UAE, it must demonstrate:

Effective management in Dubai
Real offices or physical presence
Local staff or administration
Strategic decisions made in the UAE

International Spanish company that wants to centralize MENA operations in Dubai

Question: We are a Spanish company with international clients and want to use Dubai as an operational hub for the Middle East and North Africa. How does this affect taxation?
Answer: The company can open a branch in Dubai to manage commercial operations in the MENA region. Dubai is one of the most commonly used jurisdictions as a regional base due to its competitive tax system and international agreements. The headquarters in Spain is only taxed on the profits it receives from the branch, not on the company’s total business. This allows for an efficient and fully legal international structure, provided tax compliance is maintained in both countries and the allocation of real functions is respected.

WHICH SPANISH COMPANIES SHOULD NOT OPEN IN THE UAE?

Type of company	Why it is not advisable to open in Dubai
Businesses with physical activity in Spain	If operations, employees, or facilities are located in Spain, the Spanish tax authorities will consider the company a Spanish tax resident.
Companies that mainly sell to Spanish clients	Taxation may remain in Spain due to the origin of the income and the center of economic interests.
Activities regulated in Spain (finance, education, healthcare…)	These activities must comply with Spanish regulations, so having a base in Dubai does not avoid local tax or regulatory obligations.
Companies unable to demonstrate real activity in Dubai	If there is no substance (office, operations, staff), the tax authorities may consider the structure artificial.

¿CÓMO DEMOSTRAR LA DIRECCIÓN EFECTIVA?

For a company to be truly considered a tax resident in Dubai (and not in Spain), it is essential to demonstrate economic substance. This involves:

Having a real office or physical space in Dubai (not just a virtual address).
Holding board meetings in the United Arab Emirates with properly dated minutes.
Making strategic decisions from Dubai, not from Spain.
Having locally hired staff or outsourced services based in the UAE.
Having telephone lines, domains, servers, or infrastructure associated with Dubai.
Making regular trips to manage the company from the UAE.
Clearly separating business activity in Dubai from personal life in Spain.
Having suppliers, clients, or commercial relationships that justify activity in the UAE.
Keeping verifiable documentation for any inspection (contracts, minutes, emails, records).

HOW TO INVOICE FROM DUBAI TO SPAIN AND EUROPE LEGALLY?

To operate correctly, it is important to understand how invoices are issued from a Dubai-based company when the client is in Spain or the EU:

Invoicing Spanish or European companies (B2B)

UAE VAT does not apply.
The Spanish/EU client applies the reverse charge mechanism.
The invoice must include the corresponding clause.

Invoicing Spanish or European individuals (B2C)

In many cases, it may be necessary to register in the European VAT system (OSS) if digital services or products are sold.
Dubai VAT is not charged.

Invoicing to countries outside the EU

VAT-exempt invoice (export of services).

Invoices must comply with Dubai requirements

Company name
UAE address
TRN (if the company is registered for VAT)

Income received by you as an individual must be declared in Spain.

WHO ARE WE?

With a solid track record working with international companies headquartered in the United Arab Emirates, at LocaBase we specialize in assisting our clients with the incorporation, restructuring, and expansion of businesses in the Middle East, as well as providing accounting and tax advisory services, with a particular focus on European companies. We also offer specialized advice to clients seeking to invest in real estate in the region, efficiently managing all tax and administrative requirements.

At LocaBase, we are proud to be a driving force for positive change in the business world. Our company offers a unique combination of strategic vision, innovation, and access to a favorable business environment in Dubai, creating the perfect foundation for business success.

Marina R. L.

LORCABASE ADVANTAGES

LorcaBase stands out for its comprehensive tax approach, covering everything from strategic planning to the day-to-day management of regulatory compliance in the United Arab Emirates.

Comprehensive advice from experts

With a team of tax and accounting advisors and specialists in UAE regulations, we offer full management of all your tax obligations.

Personalized support

From the initial assessment of your tax situation to the filing of returns and the resolution of issues, we support you at every stage.

Speed in compliance

Thanks to our experience and local expertise, we ensure that returns are filed correctly and on time, avoiding penalties or unnecessary audits.

End-to-end support

We do not limit ourselves to preparing filings; we oversee your entire company’s tax cycle. We provide a complete view that covers both day-to-day operations and strategic tax planning.

Experience in the Emirati market

We have in-depth knowledge of UAE tax regulations and FTA practices. This experience allows us to anticipate risks, identify optimization opportunities, and ensure solid and secure compliance at all times.

WHAT OUR CLIENTS SAY ABOUT OUR SERVICES

WHAT OTHER RELATED SERVICES DO WE OFFER?

Company incorporation

Our team offers a full company incorporation service in Dubai, managing licenses, corporate structures, legal requirements, and bank account opening.

Corporate solutions

We provide tailored corporate solutions that include bank account opening, license management, visa services, company liquidation, among other options.

Accounting and Finance

We deliver a comprehensive accounting service that ensures regulatory compliance and financial control for your Dubai-based company, with full transparency and efficiency.

M&A

We advise on merger, acquisition, and company sale processes, carrying out thorough financial and legal analyses to ensure secure and efficient transactions.

TAXATION

Our tax team optimizes your company’s tax structure, ensuring compliance with tax regulations while maximizing the benefits of operating in an environment free of direct taxes.