How to Open a New Company in UAE to Expand Your Italy-Based Business

Expanding your business from Italy to the UAE opens up new opportunities in one of the world’s most vibrant economic hubs. The UAE’s strategic location, business-friendly policies, tax benefits, and thriving markets make it an attractive destination for international companies. Whether you’re in fashion, technology, or manufacturing, the UAE offers a dynamic environment to establish and grow your business. This blog will guide you through the essential steps to open a new company in the UAE, ensuring a smooth expansion of your Italy-based business.

Why Expand to the UAE?

The UAE has earned a reputation as a global business destination with its robust infrastructure, zero personal income tax, and policies that encourage foreign investment. Here’s why the UAE is an ideal choice for Italian businesses looking to expand:

1. Strategic Location: Situated at the crossroads of Europe, Asia, and Africa, the UAE is a prime location for reaching global markets.
2. Business-Friendly Environment: The UAE government continuously introduces policies to simplify company formation, foreign ownership, and operations.
3. Tax Incentives: With zero personal income tax and corporate tax exemptions in Free Zones, the UAE offers significant tax benefits.
4. Access to a Diverse Market: The UAE’s population includes residents from all over the world, making it an ideal market for diverse products and services.
5. Strong Infrastructure: The UAE boasts world-class logistics, financial services, and advanced technology that support business growth.

Step-by-Step Guide to Opening a New Company in the UAE

1. Decide on Your Business Structure

The UAE offers multiple business structures to suit different business needs, including:

• Limited Liability Company (LLC): Common for businesses operating within the Mainland UAE. An LLC allows access to the local market but previously required a local sponsor to hold 51% ownership. Recent reforms now allow 100% foreign ownership in many sectors.
• Free Zone Company: Ideal for businesses that don’t require direct access to the UAE mainland market. Free Zones offer 100% foreign ownership, zero corporate tax, and simplified setup processes.
• Branch Office: Your Italian company can establish a branch office in the UAE, allowing it to conduct business under the parent company’s name while following UAE regulations.

Choosing the right structure depends on your business goals, market reach, and industry requirements.

2. Choose Between Mainland, Free Zone, or Offshore

Each of these options has its unique benefits:

• Mainland: Offers access to the entire UAE market without restrictions, but requires adherence to more regulations.
• Free Zone: Provides 100% ownership, tax exemptions, and lower startup costs, but limits trading within the Free Zone or internationally unless you work with a local distributor.
• Offshore: Suitable for international trade and asset management, but offshore companies cannot conduct business within the UAE.

Tip: Italian companies looking for cost-effective expansion without local market access may prefer Free Zone options, while businesses requiring local market access should consider a Mainland setup.

3. Select the Appropriate Free Zone (If Applicable)

The UAE has over 40 Free Zones, each catering to specific industries such as media, technology, finance, and manufacturing. For example:

• Dubai Multi Commodities Centre (DMCC): Suitable for commodities trading, finance, and logistics.
• Jebel Ali Free Zone (JAFZA): A hub for manufacturing, trade, and logistics.
• Dubai Silicon Oasis (DSO): Ideal for tech-focused businesses.
• Abu Dhabi Global Market (ADGM): A leading financial Free Zone.

Choose a Free Zone aligned with your industry to benefit from specialized infrastructure and support.

4. Reserve Your Business Name and Apply for Initial Approval

Selecting and reserving a unique business name is an important step in the UAE’s company formation process. Make sure the name:

• Reflects your business activity without conflicting with existing names.
• Adheres to UAE naming conventions (e.g., no offensive or religious terms).
• Includes “LLC” if setting up a Mainland company.

Once you’ve chosen a name, apply for initial approval from the relevant licensing authority (e.g., the Department of Economic Development for Mainland businesses or the Free Zone Authority for Free Zone companies).

5. Prepare the Required Documents

Each business structure has specific document requirements. Generally, you’ll need:

• Application form: Complete a business application form detailing your company’s structure and objectives.
• Passport copies: For all shareholders and directors.
• Proof of address: Required for each shareholder.
• No Objection Certificate (NOC): For UAE residents who already hold visas and want to start a new business.
• Business plan: Some Free Zones require a detailed business plan, especially for specialized industries.

You may also need translated and notarized documents, especially if they’re in Italian, as the UAE requires documents in Arabic or English.

6. Obtain Licenses Based on Your Business Activity

Securing the right license is crucial for conducting business in the UAE. Common types include:

• Commercial License: For trading and general commerce activities.
• Professional License: For service-oriented businesses like consulting and legal firms.
• Industrial License: For manufacturing, production, and assembly activities.

For Free Zones, the specific authority in your chosen zone will handle licensing, while Mainland businesses will need to go through the Department of Economic Development (DED).

7. Open a Corporate Bank Account

After obtaining your license, you can open a corporate bank account with a local or international bank in the UAE. Required documents generally include:

• Trade license copy
• Memorandum of Association
• Passport copies of shareholders
• Shareholders’ residency visas (if applicable)

Most banks in the UAE have rigorous compliance checks, so be prepared for a detailed verification process. Choose a bank with services that match your business needs, and consider local banks for easier transactions in AED (UAE Dirhams).

8. Obtain Visas for Employees and Investors

The UAE allows business owners to sponsor their own visas, as well as visas for employees and dependents. The number of visas you can obtain depends on your office space and business structure.

The visa application process involves:

• Entry Permit: Initial visa approval for entering the UAE.
• Medical Test and Emirates ID: Required steps after arrival in the UAE.
• Residence Visa: The final visa stage, allowing long-term residency and eligibility for additional services.

Many Free Zones offer visa packages, streamlining the process and simplifying employee onboarding.

9. Set Up an Office Space

The UAE requires businesses to have a physical presence. Free Zones typically offer flexible options, including shared office spaces, co-working facilities, and warehouses. Mainland companies may need to lease commercial office space, depending on licensing requirements.

For Italian businesses testing the waters in the UAE, virtual offices are a cost-effective option that allows you to establish a local address without a full physical office.

10. Comply with UAE Tax and Reporting Requirements

While the UAE offers a tax-friendly environment, businesses must still comply with VAT and, where applicable, corporate tax regulations. Here are some key tax considerations:

• VAT Registration: The UAE imposes a 5% VAT on most goods and services. Register for VAT if your annual turnover exceeds the threshold (AED 375,000).
• Corporate Tax: Effective June 1, 2023, the UAE introduced a 9% corporate tax on profits exceeding AED 375,000.
• Economic Substance Regulations (ESR): Applicable to specific industries, ESR ensures that companies conducting relevant activities have sufficient economic substance within the UAE.

It’s essential to stay updated with regulatory requirements and work with a local tax advisor to ensure compliance.

Benefits of Opening a UAE Company for Italy-Based Businesses

Opening a UAE company allows Italian businesses to enjoy several advantages:

• 100% Foreign Ownership: Free Zones allow full ownership without a local sponsor.
• Corporate Tax Exemptions: Many Free Zones offer tax exemptions, especially for international business activities.
• Access to the Middle East and African Markets: The UAE’s strategic location provides easy access to a broader region.
• Diverse Workforce: The UAE’s multicultural environment and skilled workforce make hiring easier.
• Robust Legal System: The UAE’s laws and regulations provide a stable environment for business operations.

Conclusion: Expand Your Business Successfully in the UAE

Expanding your Italy-based business to the UAE can be a strategic move for growth, giving you access to a tax-friendly environment, global markets, and a supportive infrastructure. By understanding the UAE’s company formation steps—from choosing a business structure and selecting a Free Zone to fulfilling compliance and tax obligations—you can ensure a smooth transition into this vibrant market.

Engaging with local consultants or legal advisors can further streamline the process, ensuring that you meet all requirements and make informed decisions tailored to your business goals. With careful planning and execution, your Italian business can thrive in the UAE’s dynamic economy, contributing to long-term success and global reach.