In order to circumvent the extended unlimited tax liability, the tax burden abroad must be at least EUR 77,000:
Tax burden in Germany | Minimum tax burden abroad
EUR 77,000 x tax rate 28.79 % | EUR 77,000 x tax rate of at least 19.19 % abroad
Tax liability: EUR 22.166 | Minimum tax liability: EUR 14.777
In addition to entrepreneurs and wealthy individuals, more and more athletes and artists are moving to Dubai. One reason for this is the attractive tax framework that the United Arab Emirates (UAE) offers. Let’s take a look at these same conditions and the relationship between the law there and the German tax laws!
No income tax in Dubai: incentives especially for individuals
Although the UAE has an income tax law and corresponding administrative authorities, the tax rate is 0 %. As a result, there is no tax on income that is attributable to the private sphere of life.
Taxation differs from German income tax law in that entrepreneurial income is always subject to its own corporate tax. This is not the case in Germany, because sole proprietors and partnerships tax their operating income according to §§ 15 and 18 EStG also with the personal income tax rate. A “real corporate tax” is paid only by corporations and partnerships that opt for taxation under the KStG according to § 1a KStG.
1.1. Tax-free income in Dubai
In Dubai, all income in the private sphere of life is tax-free or, to be precise, subject to taxation at 0%. As “private”, the Emirates define all income that does not directly come from an entrepreneurial activity (whatever legal form). Specifically, this means, for example:
This article does not replace tax or legal advice in an individual case. Facts, current law, jurisdiction, documentation and implementation remain decisive.