Dubai structure, Belgian tax authorities

Entrepreneur with a UAE FZCODubai structure, Belgian tax authorities

International · Dubai

€280,000extra tax avoided
2tax years accepted

Initial situation: the tax authority placed the entire profit under the Cayman tax.

A Belgian entrepreneur with a UAE Free Zone company (FZCO) faced an audit by the Belgian tax authority. It ruled that the FZCO was a legal construction under the Cayman tax, taxing the entire profit directly in the hands of the Belgian shareholder.

€280.000Tax at stake
2 tax yearsPeriod under audit
FZCOStructure in the UAE

Approach: build a watertight substance file.

Step 1
Complete substance file compiled
Step 2
Local presence and banking in Dubai demonstrated
Step 3
Separation of holding and operational FZCO substantiated
Step 4
Economic motives independent of the tax benefit demonstrated

Outcome: file accepted, Cayman tax off the table.

The tax authority accepted the file. The Cayman tax was not applied. A potential additional tax burden of roughly €280,000 over two tax years was fully avoided.