UAE Corporate Tax: What Family Wealth Management Structures Need to Know
As the UAE’s corporate tax landscape continues to evolve, families and private offices are paying close attention to how their wealth structures fit within the law. The Federal Tax Authority (FTA) recently released a clarification on the corporate tax treatment of family wealth management structures, explaining how foundations, holding companies, and family offices are treated for tax purposes.
In this article, Trinity Group breaks down what this means and how it can affect your family’s assets, investments, and long-term planning.
What Is a Family Wealth Management Structure?
In the UAE, many affluent families organise their assets through structured vehicles such as:
- Family foundations or trusts – often used to hold shares or real estate for succession and asset protection
- Holding companies and SPVs – used to manage business interests or investments
- Family offices – entities that oversee wealth management, investments, and family governance
These arrangements can be established in ADGM, DIFC, or other UAE jurisdictions to provide both control and confidentiality. The new FTA clarification confirms how each of these vehicles is viewed under the UAE Corporate Tax Law (Federal Decree-Law No. 47 of 2022).
(Source: Federal Tax Authority UAE)
How Corporate Tax Applies to Family Wealth Structures
With the introduction of corporate tax, many families are rethinking how their investment and ownership structures are set up. The recent FTA clarification outlines that:
- Trusts and similar entities without legal personality are fiscally transparent, meaning income is attributed to the underlying beneficiaries or entities rather than being taxed at the trust level.
- Family foundations and similar entities with separate legal personality are, by default, subject to the 9% corporate tax (0% for taxable income up to AED 375,000).
However, a family foundation can apply to the FTA to be treated as an Unincorporated Partnership, i.e. fiscally transparent for Corporate Tax purposes, provided they meet specific conditions.
Conditions to be Fiscally Transparent
A key provision in the Corporate Tax Law allows eligible Family Foundations to apply to the FTA to be treated as an “Unincorporated Partnership”. If approved for this special treatment, the Family Foundation becomes fiscally transparent. This means:
- The Foundation itself is not subject to corporate tax and is generally not required to file tax returns.
- The tax liability (if any) is shifted to the individual beneficiaries based on their share of income.
To achieve this favorable transparent status, a Family Foundation must meet strict conditions, including:
- Beneficiary Condition: Established for identifiable natural persons or a public benefit entity (or both).
- Principal Activity Condition: Its primary activity involves holding, investing, and managing assets associated with savings or investment.
- No Business Activity Condition: It must not conduct commercial or business activities that would otherwise be taxable if undertaken directly by its founder or beneficiaries.
- No Tax Avoidance Condition: Its main purpose must not be to avoid corporate tax.
The most crucial point: the structure should focus on passive investment and wealth preservation, not active business operations. This distinction defines whether the entity can enjoy tax transparency.
Holding Companies and SPVs: Extending Tax Transparency
Families often use holding companies or SPVs to manage investments or business interests. If wholly owned by a fiscally transparent Family Foundation, these entities can also apply for tax transparency, meaning the income flows to the beneficiaries without the company itself being taxed.
The key: they must remain passive investment vehicles. Any active business activity could trigger the standard 9% corporate tax.
Considerations for Families Offices
Family offices are treated as taxable persons under the Corporate Tax Law. They are subject to corporate tax on all income — including management fees and any other revenues they earn.
The FTA’s clarification offers valuable guidance but also underscores the importance of getting your structure right. Small details such as where a family office is registered or whether it is regulated can determine whether it pays 0% or 9% corporate tax.
This is where professional support can make a real difference.
What About the Family Members?
Family members who receive income from a family structure are not personally subject to corporate tax if the income is classified as:
- Personal investment income, or
- Real estate investment income
However, if a family member earns more than AED 1 million per year from active business activities, they may fall under the corporate tax regime as an individual conducting business in the UAE.
Key Takeaway: Tailored Structures Matter
While the guidance provides useful clarity, it also highlights that no two family structures are the same. Factors such as the type of entity, its activities, regulatory oversight, and location all influence whether and how corporate tax applies.
For instance, a family foundation or office established in DIFC, ADGM, or another Free Zone may be treated differently depending on how it operates and the nature of its income. Some entities may be eligible for reduced or zero tax rates, while others may need to meet specific compliance conditions.
Understanding these distinctions and structuring accordingly is where professional advice becomes essential.
How Trinity Group Supports Family Wealth Structures
At Trinity Group, we help families, trustees, and private offices navigate the UAE’s corporate tax rules with clarity and confidence.
Our specialists assist with:
- Reviewing existing family office or foundation structures
- Planning to qualify for 0% Free Zone tax benefits
- Ensuring compliance with the Corporate Tax Law
Our goal is simple: to help families protect their wealth, remain compliant, and continue to grow their legacy within the UAE’s corporate tax framework.