Taxation of a Dubai property for a French tax resident

In Dubai, local taxation on real estate is light. For an investor who is a tax resident of France, however, the key issues lie in the country of residence. This article gives general benchmarks and does not replace the advice of a tax professional.

On the UAE side: few taxes

There is no annual property tax and no personal income tax in Dubai, and property capital gains are not taxed locally. The main costs remain the registration fee (4%) and service charges.

On the France side: what needs to be examined

A French tax resident remains taxable in France on all their income and wealth. Several issues need to be addressed:

• Rent earned in Dubai: it may need to be declared in France, with the tax treaty between France and the United Arab Emirates governing its treatment to avoid double taxation.
• Capital gains on resale: their treatment depends on applicable French rules and the treaty.
• The real estate wealth tax (IFI): a property located abroad falls within the tax base when net real estate wealth exceeds the threshold of €1.3 million.
• Bank accounts and certain contracts held abroad: these must be declared.

And what if you relocate to Dubai?

A change of tax residence completely changes the analysis. It is governed by specific criteria (household, main activity, centre of economic interests, length of presence) and needs to be prepared for, since tax residence is not simply declared.

Going through a company?

Holding a property through a local company can have wealth-planning or inheritance benefits, but brings other obligations, notably the corporate tax introduced in the UAE and accounting formalities. This should be decided with an advisor, not by default.

The right approach

Before buying, having overall taxation simulated by a competent advisor in both countries allows you to compare actual profitability, not just gross returns.

To review your project and check the conditions currently in force, book an appointment with Arzouni Properties.