The Middle East has become the world’s fourth-largest wealth center, home to a growing population of ultra-high-net-worth individuals. Dynamic and outward-looking, the region is making its mark on the international stage while offering its residents a constantly improving quality of life. This transformation is largely explained by the rise of private wealth and the central role played by family businesses.
For families residing in the United Arab Emirates, issues relating to family protection, wealth transfer and succession are therefore of crucial importance, both for family businesses and for the preservation and growth of private wealth.
In this article, we present important legal, tax and governance considerations for families residing in or considering relocating to the United Arab Emirates (UAE), as well as useful information from our recent survey of 300 high-net-worth individuals in the Middle East, entitled Time to Talk .
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Wealth transfer and inheritance: a priority in the UAE
In the UAE, within a constantly evolving legal environment, estate and wealth planning is a strategic priority for anyone aspiring to effectively structure their assets and ensure that their wealth is transferred in accordance with their wishes.
Despite the recent reform of inheritance law, the absence of a will or clear provisions can lead to the automatic application of local provisions, which may differ from the expectations of the person concerned or their family.
The UAE has adopted a landmark federal reform of family law applicable to certain expatriates, which came into effect on February 1, 2023 , ending the automatic application of Sharia principles in inheritance matters. This reform introduces a more universal legal framework, aligned with international standards.
Despite the recent reform of inheritance law, the absence of a will or clear provisions may lead to the automatic application of local laws.
However, even with this new inheritance law system, proactive estate planning remains necessary to ensure that assets are distributed according to the deceased’s wishes, rather than according to local regulations. Planning tools such as wills registered with the relevant authorities, lifetime gifts, foundations, and trusts must be carefully tailored to suit the individual’s needs, particularly to:
- to avoid any ambiguity and any dispute between the heirs;
- to designate or exclude certain beneficiaries;
- to define specific provisions (bequest, guardianship, business continuity); and
- to strengthen legal certainty and recognition of succession procedures beyond national borders.
According to research conducted by Lombard Odier, only 18% of families have a formalized succession plan 1 , a finding that highlights a critical gap in long-term planning.
In April 2025, Abu Dhabi updated and expanded its Law No. 14 of 2021 on Civil Marriage and its Effects, establishing a contemporary legal framework for foreign residents regarding marriage, divorce, and inheritance.
New law on personal status: consequences for expatriate families
In April 2025, Abu Dhabi updated and expanded its Law No. 14 of 2021 on Civil Marriage and its Effects, establishing a modern legal framework for foreign residents regarding marriage, divorce, and inheritance. This reform demonstrates a strong commitment to promoting legal inclusion and aligning with international legal standards.
The law aims to simplify disputes of a personal nature, to offer accessible procedures and to allow expatriates to benefit from clear provisions in matters of family law.
Regarding inheritance, expatriates can freely dispose of their assets, provided their will is valid and duly registered. Without such a document, assets are distributed according to the default rules: half of the inheritance goes to the surviving spouse, and the other half is divided equally among the children, or between the parents and siblings if there are no children.
This reform offers families an alternative to religious frameworks for marriage and inheritance, while facilitating legal procedures in cases of divorce, child custody or inheritance, according to legal principles rather than religious law.
As Joëlle de Cerjat points out:
“According to local lawyers and legal experts, although Abu Dhabi’s civil courts now accept wills under the civil system, this does not guarantee full compliance with testamentary provisions when they contradict Sharia principles, or when the testator comes from a jurisdiction where Islamic law governs family law. Therefore, a careful analysis of the individual legal context remains essential.”
Regarding inheritance, expatriates can freely dispose of their assets, provided that their will is valid and duly registered.
Family governance: from theory to practice
Family businesses are the backbone of the UAE economy, making a significant contribution to GDP, excluding oil revenues. Faced with the challenges of growth and succession, and given their increasingly complex structures, effective family governance has become a strategic priority to ensure continuity and intergenerational cohesion.
Family governance is not limited to defining rules within the family. It encompasses formal mechanisms for decision-making, conflict resolution, succession planning, and preserving shared values. By clarifying roles, professionalizing management, and preparing the next generation for its responsibilities, governance frameworks bring clarity and stability.
In Dubai, the Family Business Centre recently published new guidelines aimed at helping families develop robust governance frameworks. However, despite its crucial importance, fewer than one in six family businesses in the region has such a framework in place .<sup> 2 </sup> Key obstacles include intergenerational disagreements, unclear decision-making processes, and the absence of agreed-upon protocols.
By clarifying roles, professionalizing management, and preparing the next generation for its responsibilities, governance frameworks bring clarity and stability.
As legal and economic conditions are constantly changing, particularly due to corporate tax and family law reform, entrepreneurial families located in the UAE can proactively manage their succession challenges by establishing formal governance structures, documenting succession procedures, and ensuring that strategic decisions align with long-term family and business objectives.
Taxation in the country of origin: a grey area for expatriates
The UAE offers an exceptionally favorable tax environment for individuals, with a 0% tax rate on passive income, capital gains, gifts, and inheritances. However, expatriation does not necessarily eliminate obligations in one’s country of origin. Leaving one’s home country can have significant tax consequences, which must be carefully planned before departure.
It is essential to ensure compliance with all tax rules of the country of origin, while also anticipating any tax obligations that may remain after relocation. Many jurisdictions continue to tax certain assets, particularly real estate, regardless of the owner’s residence. Furthermore, unlimited tax liability may apply if the assets are located primarily in the country of origin, even if the owner has left the country.
Expatriation does not necessarily eliminate obligations in force in one’s country of origin. Leaving one’s country of origin can have significant tax consequences, which must be carefully planned before departure.
To be comprehensive, an expatriation plan to the UAE must therefore integrate not only tax compliance, but also the transfer of the center of vital interests, taking into account cultural, social, and economic ties. According to a study conducted by Lombard Odier, less than a third of expatriates are fully aware of this . <sup> 3 </sup>
Risks include double taxation, ongoing reporting obligations, and penalties for non-compliance. Savvy UHNWIs typically take a proactive approach, conducting a tax audit before relocating, reviewing double taxation treaties, and establishing appropriate international structures to ensure a smooth transition.
Contrary to popular belief, corporate tax also applies to individuals carrying out business activities in the UAE.
Developing a business in the UAE: a tax overview for newcomers
Since June 1 , 2023, the UAE has applied a federal corporate tax. Its rate is set at 9% on taxable income exceeding a predetermined threshold (currently AED 375,000), with income below this threshold remaining exempt.
Contrary to popular belief, corporate tax also applies to individuals conducting business in the UAE. Any business activity that generates regular income, even without a formal legal entity, may be considered taxable. Therefore, entrepreneurs must maintain proper accounting records, file the necessary tax returns, and comply with local tax regulations.
The law also extends corporate tax to entities incorporated outside the UAE if their place of effective management is located within the country. Thus, offshore companies, although registered abroad, can be reclassified as UAE tax residents if strategic or administrative decisions are made locally.
According to Joëlle de Cerjat:
“It is not uncommon for a shareholder residing in Dubai to retain control and power over an offshore company they own. Even if incorporated abroad, such a company can be reclassified as a UAE tax resident if management decisions are made locally. This is because UAE tax authorities consider the ‘place of effective management’ to be the primary criterion for determining a company’s tax residency. In practice, this can expose the company to a 9% tax. It is therefore essential to carefully examine offshore governance structures to avoid any unforeseen taxation.”
Private banking and family offices: a maturing ecosystem
Dubai is now among the world’s leading wealth management centers. The Dubai International Financial Centre (DIFC) currently hosts more than 400 firms specializing in asset management and wealth structuring . This concentration of expertise attracts international families seeking operational proximity and tax efficiency.
For ultra-high-net-worth individuals (UHNWIs), the appeal lies not only in local private banking services but also in the opportunity to establish a family office rooted in the region. Family offices benefit from access to qualified professionals and top-tier services, ranging from discretionary portfolio management and estate planning to arbitration and governance advice.
With over half a century of experience in the Middle East, Lombard Odier combines the prudence of its Swiss heritage with in-depth regional expertise. From our local office, we offer our clients tailored onshore solutions that reflect both local opportunities and global perspectives. A growing number of families are seeking our assistance, not only for managing their investments but also for guidance in structuring their cross-border wealth, family governance, and sustainable investment strategies—aspects that are becoming essential for preserving wealth across generations.
