Establishing a tax presence in Dubai: good or a bad idea for French SMEs?

For a French digital SME, SaaS, e-commerce or IT services company that already generates more than €500k in annual revenue and aims for international expansion, Dubai is obviously a dream.

Ultra-attractive taxation, a cosmopolitan environment, a strategic position between Europe, Asia and Africa… the emirate has ticked all the boxes to become a leading destination for mobile entrepreneurs.

However, when you scratch the surface, tax establishment in Dubai is far from being a miracle solution for all companies. Between tax residency issues, new corporate tax rules, international compliance obligations, and French pitfalls (exit tax, double taxation, etc.), the reality is far from the myth of "automatic zero tax."

Let's discover together what the real benefits, hidden risks and conditions for tax success in Dubai are, with a practical perspective for SME leaders who want to go beyond preconceived ideas.

Dubai's tax advantages: a real asset (but not without conditions)

At first glance, Dubai seems like the ideal tax haven:

• 0% personal income tax. Salaries, dividends, interest and personal capital gains are not subject to local tax for tax residents.

  
  

• Attractive corporate tax Since 2023, a rate of 9% applies only to profits exceeding AED 375,000 (~€95,000), which remains competitive compared to 25% in France.

  
  

• VAT at 5% Low compared to Europe, with a lighter indirect structure for businesses and consumers.

  
  

• A network of free zones (Free Zones) These allow, under strict conditions, to achieve 0% corporate tax and full repatriation of profits.

This tax package benefits those who meet the tax residency requirements, demonstrate genuine economic activity in Dubai, and choose a legal structure suited to their business model. Without these factors, the advantages remain theoretical.

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The brakes too often neglected by leaders

1. Tax residency: not automatic, but conditional on economic reality

To be considered a tax resident, simply having a postal address in Dubai is not enough. You must prove that your personal and economic life is actually located in the United Arab Emirates (UAE). Examples include prolonged physical presence, permanent residence, and a center of economic interests.

This requirement is crucial: without confirmed tax status, you could still be considered a French tax resident, and therefore taxable in France on your worldwide income.

A recent case illustrates this: A couple living in Dubai were asked to pay more than one million euros in taxes in France, because the tax authorities considered that their actual tax residence had not been transferred.

2. Corporate tax: a game-changing innovation

Although corporate tax remains low, since 2023 a 9% corporate tax applies to profits exceeding a threshold and reporting obligations appear.

For international companies or subsidiaries, this means:

• Understanding the difference between local activity and foreign-source income.

  
  

• Respect the rules of tax submission and compliance even if the tax appears small.

  
  

• Properly manage local VAT (5%) and indirect taxes. ( Clemenceau Group )

3. The exit tax and French taxation

Even if you become a tax resident in Dubai, France does not automatically erase your obligations.

Some income or gains made in France may remain taxable in France, especially if you have recently left France or still hold significant assets.

This point is crucial for executives who believe that "leaving France" is enough to eliminate all tax liabilities. It requires not only a genuine strategy for relocating residence, but also meticulous planning.

A common mistake made by managers: "relocating without relocating the company"

Many executives believe that simply relocating to Dubai is enough to benefit from more favorable tax treatment. In practice, this is rarely sufficient.

In this scenario, the executive moves for personal reasons , obtains a visa and residency in Dubai, but the company remains based in France : headquarters, teams, clients, invoicing and value creation remain predominantly French.

Result :

• The manager can remain a French tax resident if his center of economic interests has not actually changed;

• the company continues to be fully taxed in France , without any tax advantages;

• and the risk of audit increases, because the tax authorities now analyze the economic reality rather than just the declared addresses.

👉 The rule is simple: you cannot move a company's tax burden by simply moving its manager.

Only a coherent reorganization of activity, functions and value creation makes it possible to consider sustainable tax optimization.

Dubai: For which SMEs is this a relevant solution?

Dubai can be an excellent tax destination for:

• SMEs with shareholders involved in local management,

• those that can demonstrate real economic activity on site

• companies that want to structure an international growth platform,

• companies in SaaS, e-commerce or tech services, whose revenues can be captured beyond traditional borders.

However, some SMEs could lose out if:

• They are not ready to organize their true local presence.

• They continue to generate the bulk of their profits in France or in other countries with which France has tax treaties.

• They are unaware of local reporting, VAT or corporate tax obligations.

How Blendy can support your project in Dubai

At Blendy, we know that the tax implications of an international project go far beyond simply comparing tax rates. Sustainable optimization necessarily results from a comprehensive strategy that includes:

1. Personalized analysis of your overall tax situation We assess your current structure, your income, your growth prospects and identify the tax levers available in Dubai and France.

2. Appropriate legal structuring Creation or adaptation of entities (Free Zones, Mainland), implementation of agreements and compliance with local obligations.

3. Secure transfer of tax residence We verify the conditions of tax residence, anticipate exit tax pitfalls, and secure your declarations.

4. Multi-jurisdictional tax compliance Local VAT, corporate tax, international conventions… Blendy helps you stay compliant in all the countries where you are active.

So? Dubai: opportunity or tax mirage?

Dubai represents a real tax opportunity for ambitious SMEs — provided they approach it with rigor, strategy and expert support.

Its attractive tax regime is real, but it is neither automatic nor universally advantageous without proper structuring and careful planning.

For a French tech, SaaS, e-commerce, or digital SME aiming for structured international expansion, Dubai can be a powerful launchpad. But without a solid strategy, the tax dream can turn into a real risk.

👉 It is better to anticipate, structure and support — rather than chasing after low taxation that is not really accessible.

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