Why are Italian-based Crypto Companies Moving to UAE in 2024?

The global cryptocurrency landscape is rapidly evolving, and businesses are continually seeking favorable environments to thrive. In 2024, a noticeable trend has emerged: Italian crypto companies are increasingly relocating to the UAE. This blog explores the reasons behind this migration and highlights the benefits that make the UAE an attractive destination for crypto businesses.

Favorable Regulatory Environment

The UAE has established itself as a crypto-friendly jurisdiction with a robust regulatory framework designed to support and protect crypto businesses. The establishment of the Virtual Asset Regulatory Authority (VARA) has provided much-needed regulatory clarity, which is crucial for the stability and growth of the industry. In contrast, Italy's regulatory environment can be more restrictive, making the UAE a more appealing option for crypto companies seeking a secure and clear legal environment.

Tax Benefits

Corporate Taxation

One of the most compelling reasons for moving to the UAE is its favorable tax regime. The UAE offers significant tax advantages, including no personal income tax and low corporate tax rates. This is a stark contrast to Italy, where higher taxes and more complex regulations can burden businesses. The tax benefits for crypto companies in UAE allow them to maximize their profits and reinvest in their growth.

● Italy: The corporate tax rate in Italy stands at 24%, with an additional regional tax (IRAP) of 3.9%, bringing the total to approximately 27.9%.

For a crypto trading company earning €150,000, the tax paid in Italy would be:

○ Italy Corporate Tax: 24% of €150,000 = €36,000

○ IRAP: 3.9% of €150,000 = €5,850

○ Total Tax in Italy: €36,000 + €5,850 = €41,850

○ Net Earnings in Italy: €150,000 - €41,850 = €108,150

● UAE: The UAE offers a much more favorable corporate tax rate of 9% on profits exceeding AED 375,000 (approx. €91,500).

For a crypto trading company earning €150,000, assuming the entire amount is taxable (exceeding the threshold):

○ UAE Corporate Tax: 9% of €150,000 = €13,500

○ Total Tax in UAE: €13,500

○ Net Earnings in UAE: €150,000 - €13,500 = €136,500

Personal Income Tax

● Italy: Personal income tax in Italy is progressive, ranging from 23% to 43%. Additional regional and municipal taxes can add up to 3%.

For an individual earning €100,000, the tax paid in Italy would be:

○ Italy Personal Income Tax: Assuming an average rate of 35%, the tax would be 35% of €100,000 = €35,000

○ Additional Regional and Municipal Taxes: Assuming 3% of €100,000 = €3,000

○ Total Personal Income Tax in Italy: €35,000 + €3,000 = €38,000

○ Net Earnings in Italy: €100,000 - €38,000 = €62,000

● UAE: In contrast, the UAE imposes no personal income tax, allowing employees and business owners to retain their full earnings.

For an individual earning €100,000:

○ UAE Personal Income Tax: €0

○ Net Earnings in UAE: €100,000

Strategic Location and Market Access

Located at the crossroads of Europe, Asia, and Africa, the UAE offers unparalleled access to major financial markets. This enhanced connectivity enables crypto companies in the UAE to efficiently reach a broader customer base and forge international partnerships.

Advanced Infrastructure and Innovation

The UAE government has launched several initiatives to support blockchain and crypto development, including the Dubai AI & Web3 Campus. These advanced facilities and resources provide an ideal environment for crypto businesses to innovate and expand.

Growing Crypto Ecosystem

The UAE’s crypto ecosystem is thriving, with a significant increase in the number of active companies and professionals in the sector. As of Q1 2024, there are over 2,040 active blockchain and crypto organizations in the UAE. The region also hosts major global crypto players such as Binance , Bybit, OKX, and Crypto.com, which have received Virtual Asset Service Provider (VASP) licenses from VARA.

Additionally, the UAE is a hotspot for high-profile blockchain events, such as:

● Ripple Swell

● Cardano Summit

● TOKEN2049

● Dubai AI & Web3 Festival

These events attract top global thought leaders and thousands of attendees, reinforcing the UAE’s status as a premier destination for blockchain and crypto innovation.

Business-Friendly Environment

The UAE is renowned for its business-friendly policies and streamlined processes for setting up and operating businesses. UAE free zones for crypto companies offer numerous benefits, including 100% foreign ownership, full profit repatriation, and exemptions from import/export duties. These advantages make the UAE an attractive location compared to Italy’s more bureaucratic business environment.

Conclusion

Italian-based crypto companies are moving to the UAE in 2024 for several compelling reasons: a favorable regulatory environment, significant tax benefits, strategic location, advanced infrastructure, a growing crypto ecosystem, and a business-friendly environment. Relocating to the UAE offers crypto businesses the opportunity to thrive in a dynamic and supportive environment.

At Finanshels, we specialize in assisting crypto companies in ensuring compliance with local regulations, optimizing tax benefits, and streamlining business operations. We provide expert guidance on navigating the tax benefits specific to crypto-based businesses, ensuring your company maximizes its financial efficiency. Contact us today to learn how we can support your move and help your business succeed in the vibrant UAE market. Reach out for a consultation and take the first step towards a prosperous future in the UAE.

‍