UAE corporate tax on rental income

Who falls under UAE corporate tax at all

Official rule The legal basis is Federal Decree-Law No. 47 of 2022, which applies to financial years beginning on or after 1 June 2023.^[1] Cabinet Decision No. 116 of 2022 sets the rates: 0 per cent on taxable income up to AED 375,000 and 9 per cent above it.^[2]

For a legal person the position is simple. A company incorporated in the UAE is a resident person and is inside the scope from day one.

For a natural person the route into the tax is completely different. You are not caught because you exist, only to the extent that you conduct a business. Cabinet Decision No. 49 of 2023 draws two lines.^[3] First, the tax only reaches a natural person once turnover from business activity exceeds AED 1 million in a calendar year. Second, and this is the point that matters here, wages, personal investment income and real estate investment income are not business activity at all, at any level.

Why a private landlord's rent sits outside it

Official rule The Cabinet Decision defines real estate investment as any investment activity of a natural person connected directly or indirectly with the sale, leasing, sub-leasing or renting of land or property in the UAE, which is not conducted, or does not require to be conducted, through a licence.^[3] The whole question therefore turns on a single word: licence.

The Federal Tax Authority published a guide on exactly this on 24 October 2024.^[4] It settles four things that come up in almost every conversation we have:

There is a flip side that is easy to miss. Because the income is excluded, the related costs are excluded too. Service charges, agency fees and maintenance are not deductible against anything, because there is nothing to deduct them from.

Where the exemption ends

Official rule The boundary sits where a licence or permit becomes necessary. The FTA guide works this through with a holiday home operator: running apartments as short-term lets requires a permit from the Department of Economy and Tourism, that is a licensed business, and the income from it is inside the scope of corporate tax.^[4]

The rest of that example is worth reading twice. The same person remains exempt on their normally let, long-lease apartments. Both worlds can exist side by side in one portfolio.

Nexus Bridge experience This is the single most common unnoticed border crossing we see. An owner switches one unit to nightly letting for a better yield, and treats it exactly like the long lease next door. The classification changed the day the permit became necessary.

What changes when a company holds the property

Official rule A UAE company is a resident person. All of its income is business income, without the carve-out that applies to natural persons. Rent and disposal gains are therefore subject to 9 per cent above AED 375,000.^[2] There is no participation exemption for the direct sale of a property.

Registration is the second difference. A natural person with no taxable business activity does not have to register with the FTA. A company must register regardless of whether any tax ends up being due.^[3]

Worked example: same rent, two structures

Worked example An owner living in Europe holds three let apartments in Dubai with a combined annual net rent of AED 600,000. The comparison below shows the UAE side only, and assumes for simplicity that no further deductible expenses arise.

The AED 20,250 is only the visible part. Add the licence, bookkeeping, the return itself and, depending on the structure, an audited set of accounts. In the UAE a company generally makes a private owner's position worse, not better.

The free zone question

Official rule The hope that a free zone company solves this does not survive contact with the text. Ministerial Decision No. 229 of 2025 lists ownership and exploitation of immovable property as an excluded activity.^[5] The only carve-out concerns commercial property inside a free zone, and then only in transactions with another free zone person. Residential property never qualifies for the zero rate.

As a private individual you do not need this rule anyway, because the real estate investment exclusion already places you outside the scope.

Your home country is a separate question

Everything above describes the UAE side and nothing else. Whether tax arises where you live is decided by your own country's law, entirely independently of what Dubai does.

Official rule German readers should note one specific point: the double taxation agreement between Germany and the UAE expired on 31 December 2021 and has not been replaced.^[6] There is currently no treaty allocating taxing rights between the two states for the periods that follow.

This page is information, not tax advice. The purpose of it is to give you the questions to put to an adviser in your country of residence, before a structuring decision rather than after one.

Five mistakes we see every month

1. Applying the AED 1 million threshold to the rent. The threshold only covers turnover from business activity. Rent from personally held property does not count towards it at all, however large it is.
2. Reading a licence into the Ejari registration. The FTA has put in writing that Ejari is an administrative record and not a business permission. These are two entirely different registers.
3. Treating short-term letting like a long lease. Once a holiday home permit is required, a licensed business activity exists and the income falls inside the scope. This is the most frequent unnoticed crossing.
4. Reading the company as a tax saving. In the UAE, incorporating removes an exemption that a natural person already has.
5. Treating the UAE side as the whole answer. Whether tax is due in Dubai does not tell you whether tax is due at home.

How we work

We are paid by the client, not by product distribution. We take no commission from banks or sellers, our fee is agreed in advance, and we accompany you to the bank rather than working for the bank. On tax we do not advise: we set out the published rules with their sources, and we hand your adviser a file they can read.

Frequently asked questions

Sources