Understanding Corporate Tax for Family Wealth Management Structures in the UAE

Muhammad Bilal
Sep 21
2 min read

Managing family wealth is complex, especially when multiple generations and entities are involved. In the UAE, recent updates to the Corporate Tax Law (Federal Decree-Law No. 47 of 2022) and supporting ministerial decisions have clarified how family offices, trusts, and related structures are treated for tax purposes. Here’s a breakdown of what families, investors, and advisors need to know.

What is a Family Wealth Management Structure?

A family wealth management structure typically includes:

A Family Foundation
A Holding Company
Special Purpose Vehicles (SPVs)
A Single Family Office (SFO) or Multi-Family Office (MFO)
Family Members

Each plays a unique role in preserving and growing family assets. Their tax treatment, however, depends on whether they qualify as tax transparent or as a Taxable Person.

Key Tax Rules

1. Family Foundations

May apply to be treated as tax transparent if they meet conditions under Article 17 of the Corporate Tax Law.
If tax transparent, income flows directly to beneficiaries without being taxed at the foundation level.

2. Holding Companies & SPVs

If wholly owned by a tax-transparent foundation, they too may apply for transparency.
Otherwise, they are considered Taxable Persons.

3. Family Offices (SFOs & MFOs)

Always considered Taxable Persons unless part of a transparent structure.
Subject to Corporate Tax on all income, including management fees.
If established in a Free Zone, may qualify for a 0% tax rate on certain regulated activities (e.g., wealth management, fund management).

4. Family Members

Not taxed on income considered Personal Investment or Real Estate Investment.
However, if business income exceeds AED 1,000,000 in a year, Corporate Tax applies.

Practical Scenarios

Example 1: SFO held by a Family Foundation

If both the foundation and its subsidiaries (HoldCo, SPVs) are tax transparent, only the SFO is taxable.
Without transparency, all entities are taxable, but may benefit from exemptions or 0% Free Zone rates.

Example 2: SFO held directly by Family Members

Same tax outcomes as Example 1. Direct ownership of the SFO does not change treatment.

Example 3: SFO holding investments

The SFO is always taxable.
Subsidiaries (HoldCo, SPVs) may or may not benefit from transparency or 0% rates, depending on conditions.

Example 4: Using a regulated MFO

If regulated by DFSA or FSRA, the MFO may enjoy a 0% rate on its services.
Otherwise, it is fully taxable.

Why This Matters

For wealthy families in the UAE, structuring matters. Whether you choose a foundation, a family office, or a multi-family arrangement, the tax outcome can differ significantly. Transparency elections, Free Zone status, and regulatory oversight all play a role in determining tax exposure.

Final Thoughts

The UAE’s Corporate Tax framework seeks to balance fairness with competitiveness, ensuring family offices remain viable wealth management vehicles. Families should consult with advisors to:

Assess eligibility for tax transparency
Optimize use of Free Zone benefits
Align governance structures with long-term goals

Takeaway: With careful planning, families can preserve tax efficiency while maintaining robust governance of their wealth structures.