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It is possible to reside in Spain and have a company in Dubai, allowing you to take advantage of certain tax and business advantages. Thanks to the double taxation agreement between Spain and the United Arab Emirates (UAE), duplicate tax burdens can be avoided, provided that established regulations are complied with. This agreement, effective since 2007, details measures to prevent tax evasion and provides benefits such as tax exemptions, reduced rates and withholding refunds.
However, it is crucial to be well advised to avoid conflicts with the Spanish Treasury, especially if you manage large volumes of income. Spain has strict regulations and can preemptively seize funds until tax compliance is demonstrated.
We highlight these 3 taxes, which are the most important, in Dubai there are only two taxes, which are the Corporate Tax and VAT (VAT), which is applicable only if you carry out activities within the United Arab Emirates.
If you want to keep your residence in Spain while operating a business in Dubai, it's vital to ensure that the company's control and management center is actually located in Dubai. Key factors include:
Address of the managers: The majority should not reside in Spain, and meetings should be held regularly in Dubai.
Executive Decisions: They must be taken exclusively in Dubai, with documentary evidence.
Business Operations: Contracts, invoicing and accounting must be managed from Dubai.
Physical office: A real workspace in Dubai is a must.
For the company to pay taxes in Dubai and not in Spain, make sure to:
- Sign contracts and carry out operations only in Dubai.
- Maintain business accounting and documentation in Dubai
- Make payments from bank accounts located in Dubai.
In addition, it is essential to inform the Spanish Treasury about your participation in the Dubai company and to comply with all tax cooperation laws.
Tax residency determines where taxes are paid:
If you are a tax resident in Spain, you must pay taxes on your global income in Spain, including the salaries of your company in Dubai. To minimize taxes, you can assign yourself a reduced salary from your company in Dubai.
If you move to Dubai during the year, you must declare in Spain the income earned before the move.
The most advantageous option, fiscally speaking, is to establish both your residence and your company in Dubai.
No, you can open a company in Dubai without residing there. However, if you live in Spain, it is essential to structure the company to avoid tax problems.
To be considered a tax resident in Dubai:
- You must spend at least 183 days a year in Dubai.
- You should not have a partner or children living in Spain or maintain active economic activities there.
If you travel to Dubai sporadically but spend most of your time in Spain, you could still be a Spanish tax resident.
It's also feasible. In this case, you can receive a salary from your company in Spain without taxing personal income tax in Dubai. This is especially useful if you can't move your entire business operation to Dubai.
There are several strategies to optimize your taxes by combining residence in Spain and business in Dubai. The most advantageous option is to live and operate from Dubai, but each case is unique and requires a detailed analysis.
At Gestoria Ibérico, we offer personalized advice to help you structure your business and tax situation in the best possible way. If you want to explore your options or open a company in Dubai, schedule a free consultation at the following link.
