Company Formation in the UAE and Residency - what are the exact costs?

[karishi]

Since I have other︃ people working with me I suspect I would need a company, right?

How enforced are︄ the checks for the 183 days in the country?Is it ok to rent some cheap︅ space, like a room in a shared apartment, or you have to demonstrate somehow that︆ you spent 183 days in the country?

 

[JustAnotherNomad]

Where do your employees live? You can also live in the UAE and manage a‌ company that is located somewhere else.
For the tax residency certificate, they check when you‍ entered and left the country. You don’t have to demonstrate anything, it’s all digital. They⁠ know exactly when you were in the country.

 

[BlueMist]

There are cheaper freelancing options available if company is not required. AED 7,500 Dubai freelance permit may be a cheaper option, this is without residence visa, which cost extra. And‌ you can trade in your name only.

Regarding health insurance, it is only compulsory for‍ Dubai and Abu Dhabi. So technically speaking residence visa holders from other Emirates e.g. Fujairah⁠ living in Dubai can opt for non DHA / HAAD compliant health insurance. However I⁤ checked once with Luxembourg based Globality Health and they said that although they can technically⁣ insure me, they would require some local DHA compliant insurance anyway.

 

[BlueMist]

A proper international‍ (excluding USA) DHA compliant health insurance by reputable companies e.g. Cigna, Aetna expect to pay⁠ $4000 per year if you are in mid thirties. I am using Pacific Prime, they⁤ can pull up excel sheet comparison depending on your needs and hospitals tiers.

 

[JustAnotherNomad]

I wouldn’t want to go with Cigna because I believe their terms are very much‌ in their own favor. Globality seems like a much better option and if I recall‍ correctly, the price was similar (~$4000 per year).
That they require local insurance is unfortunate.⁠ What’s the cheapest local insurance you can get, just for compliance?

There are also “freelance”⁤ options where you still get a regular FZE, you just can’t hire anybody.
I have⁣ heard that you have to be careful with other freelance licenses: Some make you an⁢ employee of the free zone company and then it can be difficult to get a︀ non-objection certificate (NOC). But I’m not sure if those rumors are true.

 

[karishi]

What are the⁠ advantages, from a tax perspective, of being registered as freelancer in Dubai?

 

[JustAnotherNomad]

It’s just cheaper than setting up a proper company and you will still be eligible‌ for a residency visa.

 

[karishi]

Ok, but someone above said that‍ to be tax resident in the UAE you need to spend 183 days in the⁠ UAE. While on other documents (this is a 2017 document so things might have changed⁤ ) regarding CRS ( http://freezonedubai.it/wp-content/uploads/2017/05/UAE-CRS-GUIDELINES-NOTES.pdf ) it says that you are considered resident in the⁣ UAE:

a) Any UAE National
b) An individual who is a resident in UAE with:⁢
i. a valid Emirates ID and
ii. a valid Residency Visa.

So if you are︀ considered a resident in the UAE for CRS purposes just by having the residency visa,︁ the one which just requires you a visit every 180 days, that means that being︂ a freelancer in the UAE would be interesting, as a bank account in the UAE︃ would not report for CRS purposes as long as the two above conditions are met.︄ What make a big difference for me is CRS, if I have to spend 183︅ days to be considered resident in the UAE, than that's not interesting, but if I︆ just need to be there once every 180 days, that's a completely different story.

 

[JustAnotherNomad]

You only have to be there 183 days per year to get the tax residency‌ certificate.
If you don’t need one, you’re probably good.
Panama is even easier (one visit‍ every 2 years or so), but there’s the same situation with the tax residency certificate.⁠
But I would generally advise against claiming to be tax resident in a country which⁤ you only visit every 2 years...

 

[karishi]

So I think that⁣ they are two different things, I mean, my understanding is that, as long as I'm⁢ considered a UAE resident by the UAE bank, no CRS reporting happens, so the money︀ that is in that bank is like it doesn't exist for any other country. My︁ work is 100% digital and remote, I write software for clients all over the world,︂ so there are no "goods" or anything physical.
I understand that I would not be︃ able to tell Italy that I am a tax resident in the UAE, so for︄ example I couldn't buy a house in Italy with the money I generate in the︅ UAE, because the Italian tax authority would ask me where those 300k come from, but︆ as long as I don't own anything, anywhere, that's not an issue. I didn't know︇ about Panama, but I trust the UAE more for banking ( maybe I'm wrong on︈ this ).

 

[BlueMist]

Cigna has a pretty good reputation here, similar to Aetna, which has taken over⁣ Aviva UAE not that long time ago. The premium can be lowered if you don't⁢ care for top UAE hospitals to be covered. Integra Salama international insurance would be cheaper︀ but they don't have a great reputation. Of course there is Bupa Silver / Gold︁ I think which are one of the most pricy. Bupa Gold for example includes US︂ & free premium for child until 10yr, but expect to fork out $11,000 per year︃ if you are in mid thirties.

If you don't care about international insurance, then probably︄ the most reputable local insurance would be from Daman.
As for the cheapest I have︅ no idea but would check Orient Insurance.

 

[JustAnotherNomad]

@BlueMist
I was told that Cigna et al. have limited coverage (even if it’s a‌ couple million $) and that coverage has to be renewed periodically. If they deem you‍ too expensive, they can just refuse to renew your coverage and you’re suddenly uninsured. Of⁠ course if you never get really sick, it’s not an issue.

Globality has plans with⁤ unlimited coverage (at least that’s what I’ve been told) and they can’t cancel your plan⁣ unilaterally or refuse to renew it. If you exclude USA (which is only relevant if⁢ you stay there for more than X days - for short stays you’d still be︀ covered), it’s only $4000 per year or so.

I am healthy and I have enough︁ money, so for me, health insurance is only needed for very expensive, unexpected things like︂ cancer etc. that can be ruinous if you don’t have coverage. That’s why for me︃ the most important thing with health insurance is that the worst case is covered. I︄ don’t care about coverage for when I have a cold. But if I should ever︅ get really sick, then I want them to cover the best treatment you can get︆ anywhere, no matter the cost (well, pretty much at least). I guess most people here︇ are like me.
So the cheap UAE insurance would only be a formality if thats︈

 

[JustAnotherNomad]

You don’t even have︃ to bank in the UAE. If you bank in, say, Singapore, and you show them︄ your UAE papers, I don’t think they would report anything to Italy either. They would︅ report to the UAE.
You could probably even buy real estate in other countries because︆ you could show that the money comes from the UAE, where you live.
But it︇ still seems a bit risky to me, living in Italy as an Italian and trying︈ to hide your money from the taxman. If you get caught, you might end up︉ in jail. Better move to another country.
And actually, if you move back to Italy︊ later, you might be able to pay almost no taxes because they want rich Italians︋ to move back home.

 

[karishi]

I think it︁ depends on what is your nationality, I'm Italian and Italy has a good Healthcare system︂ for things like cancer, and I can always go back to italy and say that︃ I'm resident there and get back the healthcare.
So in my case I use the︄ insurance for big operations which are not cancer, like recently I had the gallbladder removed.︅ For me having an insurance mean that I can choose the surgeon and the date︆ of surgery, I don't care about day to day visits and for bad things like︇ cancer, so I guess everyone has his needs

 

[JustAnotherNomad]

Yes, I could go back to my home country (which I left because I don’t‌ want to live there anymore) and then pay massive taxes there. No thanks.
My home‍ country has good healthcare and a Globality lets you choose and hospital. So you can⁠ also get treated in your home country. But you don’t have to move back there⁤ just to get health insurance.

If I moved back there, I would pay the same⁣ or more in taxes than what a good private international health insurance like Globality costs⁢ in the first place. Sure, it’s nice to have as a fallback solution if you︀ go broke, but until that happens, I would prefer proper private health insurance.

 

[BlueMist]

@JustAnotherNomad well, I can't say anything bad about Cigna so far. I have been with‌ them for less than 1 year and so far they included anything I wanted to‍ claim that was covered. Also don't confuse Cigna e.g. US experience with UAE. This will⁠ be different. All international companies have 3rd party local administrators here for direct billing. Now⁤ there are better and worse admin companies. Cigna is using Neuron, which is considered the⁣ top admin company - which means is smoother in accepting direct billing claims / pre-approvals.⁢ I was with William Russell before and never had problems as well - they also︀ used Neuron. WR however is quite expensive and they increased the premium as I was︁ hitting another bracket year group age with them, so I changed - since I am︂ healthy and I can allow myself to do so. Aetna for example has its own︃ direct billing facility. Also what is great about Aetna is that they have many direct︄ billing facilities worldwide, including Europe. This is also worth checking, so you can go to︅ your home country clinic/hospital without having to pay anything.

Direct billing is extremely convenient, this︆ is the benefit you get with local DHA compliant insurance providers. BUPA Premier is also︇ very good, but $6,500. For me Globality (Luxembourg) is a bit too good to be︈ true. I hope they pay and don't do any problems, but I have no experience︉ with them.

Top hospitals and clinics here charges are high, so a good insurance would︊ come handy. Choosing a good health insurance company is like choosing a good offshore holding︋ company, which you can benefit from long term. This is tedious process and you only︌ learn things when s**t hit the fan. For example insurance companies have clause of customary︍ and reasonable charges. They may find the expensive clinic you went to (which is not︎ a part of direct billing) that their charges are above reasonable and customary and pay️ you what they would normally pay in their direct billing facilities for the same.

I don't know⁤ if those of us here running away from paying even "1 cent" in tax to⁣ home country taxman will be welcomed with free care upon coming back. I think it⁢ depends on the country and whether you paid medical contributions or not. But yes, private︀ international health insurance would deal with this. However, planning for long term health insurance provider,︁ it is worth to check whether they can keep your home country coverage upon coming︂ back, because most can't and are pretty much targeted for "expats".

 

[JustAnotherNomad]

I don’t know about Italy, but I think in Europe, most countries have universal healthcare‌ for all residents, so it’s tax-funded. As a citizen, they can’t deny you residency, so‍ you will always have coverage. But you will have to pay taxes. And they may⁠ ask questions about your money. I don’t want to go back and I just don’t⁤ want anything to do with the government.
But say you get a very serious disease⁣ that is very treatable, but the treatment is €150,000 per month. With the treatment, you’re⁢ fine, but without the treatment, you die after two weeks. Good luck if you have︀ an insurance plan that is limited to 3 million! Or even worse, if the plan︁ expires 4 months after your diagnosis and they refuse to renew it.
That’s what I︂ care about. I know that people have had good experience with Cigna, but for me,︃ health insurance is for a SHTF scenario, not some small surgery that costs €3000.
Globality covers treatment worldwide, I heard about some German guy living in Dubai. He went back︄ to Germany to get surgery, paid for by Globality, then came back to Dubai.
That’s what I want. I want to be able to choose my doctors freely (except USA︅ maybe if that doubles the price of the insurance plan).

 

[BlueMist]

@JustAnotherNomad the international insurance by Cigna for $4000 if you are in mid thirties will‌ cover you worldwide excluding USA. The annual limit is $2,000,000. Cigna has also international plus‍ plan with unlimited coverage, don't know how much it costs... Aetna for example cost the⁠ same but offers coverage annual limit of $4,000,000. The devil is in details. You have⁤ to spare few days to go through policy wording of each and find which do⁣ you feel most comfortable with. For example Aetna despite double the coverage limit, doesn't cover⁢ any brain related issues. Others don't cover development disorders e.g. Globality (important for newborns). There︀ will be always some exceptions, bigger or smaller. Bupa Elite, which includes US, comprehensive dental︁ and has one of the least amount of exclusions, has annual limit of $5,100,000 but︂ it costs $11,000 per year or $10,000 if you opt for 20% co-insurance.

Your example︃ by the "German guy living in Dubai, who went to Germany for surgery" would most︄ probably get covered by all of the above.

I understand your concerns, as I share︅ similar, but going through policy wording of 20+ insurance companies, I can guarantee you there︆ is no "one to rule all". If someone plays dirty, there is always a way︇ to kick you out from the health insurance plan. What if Globality won't kick you︈ out but will increase the premium x10 ? This is what happens with some health︉ insurance providers, they have TIERS they put you in for renewal depending the amount you︊ claim or how risky your health become to them during your "relationship".

Globality wording:
"If the treatment or other measure for which benefits have been agreed is more than is︋ medically necessary or if the amount claimed for is not within the usual, customary and︌ reasonable, we will be entitled to reduce its payment/reim- bursement and the insured shall be︍ responsible for all costs, which are not within the usual, customary and reasonable, as we︎ do not cover any amount, which is not within the usual, customary and reasonable."

So even if you have $10,000,000 or "unlimited" coverage it doesn't mean you can go to️ the best clinic in the world, be operated by the top surgeon and you won't‌ have to pay a dime. It doesn't work like that.

I agree Globality is very‍ interesting option and I was myself very interested in it, before they were called DKV⁠ Globality, their offer was always impressive. I know those who got insured before DHA regulations⁤ kicked in, could continue to be covered even with Dubai residence visas but for new⁣ clients they are a bit wary.

 

[JustAnotherNomad]

Thanks, that’s valuable input.
The insurance broker I spoke to said that Globality has rules‌ against premium hikes. They can’t just increase prices to make you cancel your plan voluntarily.‍
Of course there will be some restrictions - but I’m sure Cigna would have similar⁠ rules?
There’s also Foyer, which is supposed to be very good as well.
If all⁤ else fails, I could always go back to my home country, so I’m not too⁣ worried about that. As you mentioned, the simple cases will always be covered, but I⁢ am worried when you need to renew your plan, and as far as I have︀ understood, with Cigna and others you never get insurance “forever”.

 

[karishi]

Me neither, but⁣ if you have cancer, the government is not your number one worry. And if you⁢ did things correctly, they can't do much. Although of course for ethical reasons this would︀ be the last resort solution.