We continue our series dedicated to estate transmission in the United Arab Emirates. After examining the role of the local will, we now turn to an instrument still largely unfamiliar to many French and francophone families: the foundation, and more specifically, foundations established within the DIFC (Dubai International Financial Centre) and Ras Al Khaimah (RAK).
Foundations in the United Arab Emirates: DIFC and RAK, a key tool for wealth and estate planning and transfer
Why are these structures attracting growing interest in wealth and succession planning strategies in the UAE?
The answer lies in their legal architecture: a foundation separates the legal ownership of assets from their economic benefit, while maintaining stable, clear, and secure governance. This structure allows families to anticipate the transfer of wealth while avoiding legal or familial uncertainties that may arise in the context of international succession.
1. What Is a Foundation in the United Arab Emirates?
A foundation is an autonomous legal entity, distinct from its founder, which holds assets for wealth, family, or organizational purposes.
A Structure Different from a Company
Unlike a company:
- it has no shareholders, yet enjoys full legal personality
- it is not intended to conduct commercial activities
- it is designed to organize the long‑term ownership, management, and transmission of assets
Common Uses of Foundations
In practice, foundations are often used for:
- holding real estate assets located in the UAE or abroad
- transferring commercial or real estate companies
- structuring family groups
- protecting assets against succession‑related risks
A Favourable Tax Environment
Foundations benefit from the UAE’s particularly attractive tax framework:
- no inheritance tax
- no tax on distributions
- no withholding tax
Moreover, unlike common‑law trusts, foundations are based on a legal model closer to civil‑law systems, making them more familiar and accessible to French and European nationals.
2. DIFC and RAK Foundations: How They Work and What Makes Them Unique
Foundations share several essential characteristics. They allow the founder to contribute:
- real estate assets located in the UAE or abroad
- shares in companies
- operational businesses
- financial assets
Governance
A foundation is managed by a Foundation Council, similar to a board of directors, responsible for administering the assets in accordance with the founder’s objectives.
Its operation is based on two key documents:
- The Charter – a public constitutive document
- The By‑Laws – a confidential document specifying:
- the beneficiaries
- the distribution mechanisms
- certain founder prerogatives (amending the By‑Laws, adding or removing assets, appointing or excluding beneficiaries, dissolution in specific cases)
DIFC and RAK: Two Complementary Jurisdictions
DIFC (Dubai)
- internationally recognized and robust legal framework
- inspired by Anglo‑Saxon law
- widely used by international investors and families
RAK (Ras Al Khaimah)
- highly flexible
- simplified incorporation
- generally more competitive costs
- pragmatic approach appreciated by entrepreneurs and international families
3. A Particularly Effective Tool for Wealth Transmission
In an international context, foundations offer several major advantages for organizing the transfer of assets.
Continuity
A foundation survives the death of its founder, ensuring the continuity of the wealth‑holding structure.
Legal Certainty
Governance and operating rules are clearly defined and regulated.
Flexibility
Transmission arrangements can be tailored to the needs and structure of each family.
Confidentiality
Beneficiaries and distribution terms are not made public.
Thanks to these features, foundations allow families to anticipate wealth transmission while reducing the risk of succession disputes or family conflicts.
Coming Up Next in Our Series
Foundations are a powerful tool for wealth structuring in the United Arab Emirates. However, they do not necessarily replace a will.
In our next article, we will explore the complementarity between wills and foundations, and how these two instruments can be combined to build a coherent and secure estate strategy for families with international assets.