Since the ceasefire, the attractiveness of the United Arab Emirates (UAE) has continued to grow, and the support measures introduced by the authorities demonstrate their intention to further strengthen this appeal.
Favourable taxation, economic dynamism, high‑quality infrastructure and a strategic position between Europe, Asia and Africa make the UAE a destination of choice for expatriates—whether employees, entrepreneurs or investors. However, behind these undeniable opportunities lie legal, administrative and cultural specificities which, if not properly understood, can quickly become sources of risk.
This article aims to shed light on the main difficulties encountered when relocating to the UAE, in order to alert prospective expatriates—individuals and companies alike.
1. A Hybrid and Constantly Evolving Legal Framework
The UAE legal system is based on a combination of civil law, common law influences (particularly in certain free zones) and principles derived from Islamic law. This plurality can create misunderstandings for expatriates unfamiliar with these specificities.
Moreover, local legislation evolves rapidly, particularly in labour law, taxation (including the recent introduction of corporate income tax) and the regulation of foreign investment. Outdated information can therefore lead to inappropriate or even harmful decisions.
2. Residency Status and Dependence on a Sponsor
One of the central elements of expatriation to the UAE is the residency system, which is generally linked to a sponsor (employer or legal entity). This dependency can create several difficulties:
- Restricted professional mobility: changing jobs may require specific formalities, or even the consent of the current employer in some cases.
- Risk of losing residency status: termination of an employment contract often results in the loss of the residence visa within relatively short timeframes, combined with the absence of social protection (such as unemployment benefits).
- Complex administrative procedures: renewals, visa transfers and regularisations require particular rigour and, above all, familiarity with administrative practices.
3. Labour Law: Practices Sometimes Far from European Standards
Although UAE labour law has undergone significant reforms, it remains generally favourable to employers, and certain practices may surprise expatriates:
- Restrictive contractual clauses, particularly non‑compete provisions;
- End‑of‑service gratuities calculated according to specific and regulated rules, similar in cases of dismissal or voluntary resignation;
- Absence of certain protections found in other jurisdictions, especially regarding dismissal procedures (such as pre‑dismissal interviews).
A careful reading of the employment contract and prior negotiation are essential to avoid ambiguity or unpleasant surprises.
4. Setting Up a Business: Structural Choices and Local Constraints
The UAE offers a favourable environment for entrepreneurship, particularly through its free zones. However, several pitfalls must be avoided:
- Inappropriate choice of legal structure (mainland vs. free zone);
- Activity restrictions depending on the licences granted;
- Compliance obligations (economic substance, tax filings, etc.) that are often underestimated.
A poorly anticipated legal structure can limit business growth or lead to significant restructuring costs, which we unfortunately encounter frequently.
5. International Taxation and Reporting Obligations
Although the UAE is known for its advantageous tax regime, this does not mean a complete absence of tax obligations:
- Expatriates may remain taxable in their home country depending on their personal situation;
- Companies must now comply with corporate income tax and transfer pricing rules;
- International transparency obligations (automatic exchange of information, asset declarations) must be taken into account.
These are all issues that must be fully understood when planning an establishment in the UAE. Poor anticipation can lead to significant tax reassessments.
6. Family Law and Succession: A Frequently Overlooked Issue
Matters relating to personal status (marriage, divorce, succession) are governed by specific rules, sometimes inspired by Islamic law. Although alternative options exist for non‑Muslim expatriates—particularly regarding inheritance—they require proactive steps:
- Drafting a local will to secure the transfer of assets;
- Choosing the applicable law in certain cases;
- Anticipating the patrimonial and family consequences.
A lack of planning can lead to complex situations for heirs, and our firm works closely with a French notary to provide local assistance on these personal matters, as each situation is unique.
Given these challenges, seeking advice from an experienced legal professional is essential to ensure proper risk management. Our support includes:
- Analysing the expatriate’s personal and professional situation;
- Anticipating legal and tax risks;
- Securing contracts and corporate structures.
Beyond compliance, the objective is also to optimise strategic choices in a rapidly evolving environment.
The good news is that the difficulties encountered in the UAE are rarely insurmountable—provided they are anticipated.