The UAE is the most preferred destination for a family office setup. Due to its strategic location, stable economy, and business-friendly climate, wealthy families aim to set up their businesses in the UAE market. This article is an overview of how to set up a family office in the United Arab Emirates, from the legal foundation to operational procedures.
Understanding the Term ‘Family Offices’
Family offices are organizations specifically set up as private wealth management firms to cater to ultra-high-net-worth clients. Family offices offer a comprehensive outsourcing solution for a wealthy individual or family with many financial and personal affairs or care to handle. Making budgets, insurance, charity giving, family-owned enterprises, asset transfer, and tax preparation are a few services family offices offer.
In the UAE, family offices go into two main types: mono-family offices (one family) and multi-family offices, which allow one family to share services with other families or individuals. Constructing an SFO or MFO typically depends on the wealth complexity of the family, the type of privacy preferred, and the expenses incurred in running the office.
Legal Framework for Family Homes in the UAE
The legal environment of the UAE already favors family offices. The UAE's regulations protect investors' interest in smooth corporate operations within the state's boundary. It is also worth noting that the UAE has numerous free zones that enable 100% foreign ownership, tax-free, and profit-repatriated income, which is ideal for setting up family offices.
Family offices in the United Arab Emirates are governed by regulations from the UAE Central Bank and the Securities and Commodities Authority (SCA). These regulations ensure that family businesses operate according to the law, including provisions for anti-money laundering (AML) and counter-terrorist financing (CTF).
Setting up a Family Office in a UAE Free Zone
Family offices have several benefits in UAE-free zones such as full foreign ownership, tax exemption, and profit repatriation. Some of the preferred free zones for setting up family offices are the Dubai International Financial Centre (DIFC), Abu Dhabi Global Market (ADGM), and Ras Al Khaimah Economic Zone (RAKEZ).
Registering for a family office in Free Zone UAE requires acquiring a specified license from the Free Zone government. It includes a business plan, proof of funding at a startup, and key staff qualifications and experiences for licensing purposes. After the license is obtained, the family office can commence its operations.
Operational Set-up of Family Office in UAE
A family office's operational setup in the UAE includes hiring personnel, constructing office premises, and developing operation processes except that it is conditioned on the family office's dimension and complexity. The chief employees of a typical family office are the CEO, CIO, CFO, and support personnel.
Finding an ideal location, negotiating a lease, and installing office infrastructure are all parts of creating office space. Such a location should be convenient for the family and the employees. The offices should be adequately furnished with equipment and facilities that facilitate their processes.
The family offices maintain systems like investment management, risk management, reporting, and compliance, which shall be captured in the family office manual of policies and procedures.
Benefits of Establishing a Family Office in the United Arab Emirates
Establishing a family office in the UAE is a smart move in the current global economic scenario. The combination of prime location, rapid but firm economic development, and an attractive business environment has made the UAE a perfect place for family offices. Besides this, numerous free zones grant 100 percent foreign ownership, no taxes, and complete profit repatriation.
Living standards in the UAE are exceptionally high, with world-class health services, schools, and leisure facilities enriching the experience of anyone considering it as a potential home. These features attract affluent families who still wish to maintain a stringent focus on budgets.
Setting up a family office in the UAE may seem tough, but proper planning and expert advice benefit you a lot. The UAE is an ideal location for a family office. Thanks to its favorable and highly competitive environment with a standard lifestyle. However, to ensure the success of a family office, it is essential to understand the country's legal and regulatory framework and navigate potential licensing challenges effectively.
Markai Corporate Services plays an important role in this process, assisting with business setup, family visas, and trade licenses. For all your family business setup needs, look no further than Markai Corporate Services.
