Key takeaways
- A UAE holding company is a company whose main job is to own shares in your operating companies; the passive vehicles offered by ADGM and DIFC cannot trade or employ staff.
- The two most common routes for a passive holding vehicle are the ADGM SPV (registration fees of USD 1,900, as of October 2026) and the DIFC SPV or Prescribed Company (USD 100 to incorporate and USD 1,000 a year for the licence, as of October 2026).
- Under UAE corporate tax, a holding company can exempt dividends and share gains from the participation exemption if it owns at least 5% of the shares (or paid at least AED 4,000,000 for them) and holds them for at least 12 months.
- A free zone holding company only keeps its free zone corporate tax treatment if it qualifies as a Qualifying Free Zone Person; holding shares for investment is a qualifying activity, but it must meet the conditions on non-qualifying revenue and audited accounts.
- A Qualifying Free Zone Person cannot join a corporate tax group, so the structure you choose for your holding company decides which tax tools you can use later.
What can a UAE holding company own and do?
A holding company can own shares in your operating companies, receive their dividends and, depending on the jurisdiction, hold other assets. ADGM describes its SPVs as passive holding companies that "cannot be used to conduct operational business or hire staff", and DIFC says the same about its SPVs.
Mainland and standard free zone holding companies are ordinary licensed companies, so what they can do depends on the activity wording on the licence issued by the Dubai Department of Economy and Tourism (DET), another emirate's economic department or the free zone authority.
Which structure suits a holding company: mainland, free zone, ADGM, DIFC or RAK ICC?
The right structure depends on what the holding company will own, where its subsidiaries sit and how much substance you can maintain; no single option wins for every group. The table below sets out what each authority itself says, as of October 2026.
| Structure | Main use | What the authority says | Check before you commit |
|---|---|---|---|
| ADGM SPV | Passive holding and asset ring-fencing | Cannot run operations or hire staff; needs a connection ("nexus") to ADGM, the UAE and/or the GCC; ADGM-registered corporate service provider required for non-exempt SPVs incorporated after 12 July 2021 | Whether your assets and investors fit the nexus test |
| DIFC SPV (Prescribed Company) | Passive holding, securitisation, structured arrangements | Can hold registrable assets from around the world; no direct staff; corporate service provider needed unless exempt; 2026 amendments opened the regime to any applicant | Current Prescribed Company Regulations text |
| RAK ICC company | Holding companies and foundations | RAK ICC states it registers holding companies and foundations | Its Business Companies Regulations 2018 on permitted activity |
| Mainland or free zone LLC with holding activity | A holding company that may also provide group services | Licence activities and shareholder rules are set by the licensing authority | Whether the licence allows holding shares and what substance the authority expects |
If the holding company only needs to own shares passively, ADGM or DIFC fit that job by design; if the parent needs to employ people or invoice group companies, a mainland or free zone licence with the right activity is the more realistic route.
How does corporate tax treat a holding company?
Dividends and gains on shares can be exempt from UAE corporate tax if the participation exemption conditions are met; if they aren't, the income is taxable. The FTA's October 2023 guide on exempt income says the holding must represent 5% or more of the shares or capital (or have an acquisition cost of AED 4,000,000), be held or intended to be held for at least 12 months, and be in a company subject to corporate tax or a similar tax at a rate of at least 9%.
Ministerial Decision No. 302 of 2024 on the participation exemption applies to tax periods starting on or after 1 January 2025 and repeals Ministerial Decision No. 116 of 2023, which still governs earlier periods. It keeps the AED 4,000,000 acquisition cost test and the 12 month period, so read the current text before you rely on an older guide.
| Tax tool | Key conditions | Source |
|---|---|---|
| Participation exemption | 5% ownership or AED 4,000,000 acquisition cost; 12 months; participation taxed at 9% or more | FTA guide (October 2023); Ministerial Decision 302 of 2024 |
| Tax group | Parent holds at least 95% of share capital, voting rights and profits and net assets; same financial year; same accounting standards; resident juridical persons; no Exempt Person or Qualifying Free Zone Person | FTA tax groups page; Ministerial Decision 125 of 2023 |
| Qualifying Free Zone Person status | Holding shares for investment is a qualifying activity; held for an uninterrupted 12 months; non-qualifying revenue within the lower of 5% of revenue or AED 5,000,000; audited financial statements | Ministerial Decision 229 of 2025 |
If you'd rather not track these dates by hand, the UAE compliance calendar is a free calendar of your company's UAE tax and compliance deadlines, personalised from a few questions, as a PDF and calendar file.
AED 4,000,000: the acquisition cost at which a shareholding qualifies for the participation exemption even if it is under 5% of the company, provided it is held for at least 12 months. Source: Ministerial Decision No. 302 of 2024 and FTA Exempt Income guide, checked 07 October 2026.
How much does it cost to set up a holding company?
Government fees for the passive ADGM and DIFC vehicles are low; the larger costs are the corporate service provider, accounting and audit. The figures below are what each authority publishes, as of October 2026.
| Item | ADGM SPV | DIFC SPV |
|---|---|---|
| Name reservation | USD 200 | Not published on the page reviewed |
| Registration or incorporation | USD 700 | USD 100 |
| Annual commercial licence | USD 1,000 | USD 1,000 plus AED 20 Knowledge and Innovation Dirham fee |
| Corporate service provider | Required for non-exempt SPVs incorporated after 12 July 2021 | Required unless exempt |
Mainland and free zone holding licence fees vary by authority and activity, so Qawi isn't quoting a single number here. Ask each shortlisted authority for its current fee schedule in writing, including renewal, office and visa costs.
How do I set up a holding company step by step?
The sequence is: decide what the company will hold, pick the jurisdiction, then register and open a bank account. Each step below names the authority involved.
- List the shares and assets the holding company will own, and where each subsidiary is licensed.
- Choose the structure (ADGM, DIFC, RAK ICC, free zone or mainland) using the table above.
- Reserve the company name with the chosen authority (for mainland, through the emirate's economic department).
- Appoint a corporate service provider where the authority requires one (ADGM and DIFC SPVs).
- Prepare the constitutional documents and shareholder details; for mainland, this includes the Memorandum of Association.
- Register the company and obtain the licence from the authority.
- Open the corporate bank account, then register for corporate tax on EmaraTax.
- Transfer the subsidiary shares into the holding company, and check Business Restructuring Relief before you do.
Can I put existing companies under a new holding company?
Yes, but the way you transfer the shares can create a corporate tax cost if it isn't structured correctly. Ministerial Decision No. 133 of 2023 provides Business Restructuring Relief where an entity receives shares or ownership interests in exchange for a transfer, other consideration is limited, and the parties meet the common ownership test of at least 50%.
What most guides don't tell you
- A holding company that qualifies for one tax tool can lose another. A Qualifying Free Zone Person cannot be in a tax group, so if you want to offset losses between group companies, a free zone parent that relies on QFZP status works against that goal.
- A passive SPV may not suit a parent that has to do work. ADGM and DIFC SPVs can't employ staff or run operations, so a parent that employs a finance team needs an active licensed company instead.
- The 12 month clock affects the exit plan. The participation exemption and the QFZP holding activity both look at uninterrupted holding periods of 12 months, so selling a stake early can turn a tax-free gain into a taxable one. Plan the sale date at formation, not at the term sheet.
Which deadlines apply to your company?
A holding company brings corporate tax registration, filing, audit and licence renewal dates, and they differ by jurisdiction. The free UAE compliance calendar lists the dates that apply to your company, so you can see them before you choose a structure.
Frequently asked questions
Can I have multiple shareholders in a free zone company?
Many free zones allow more than one shareholder, but the permitted number and company types are set by each free zone's own rules. Check the specific free zone's regulations before you draft the shareholder agreement.
Can a UAE company be owned by a foreign company?
Often yes, but it depends on the licensing authority and the activity, and each authority sets its own corporate shareholder documents. ADGM SPVs, for example, must show a connection to ADGM, the UAE and/or the GCC.
What is the best structure for a family business in the UAE?
There's no single best structure; a holding company above the operating companies is a common starting point because it separates ownership from operations. Succession and asset protection design needs legal advice on your family's facts.
Should I set up an offshore company in RAK ICC or JAFZA Offshore?
RAK ICC states that it registers holding companies and foundations, so it's a legitimate option to evaluate. Compare the RAK ICC Business Companies Regulations 2018 with JAFZA Offshore's own rules on permitted activities, and check whether your bank and counterparties accept the entity.
About Qawi · Qawi is a corporate services firm licensed in the Sharjah Media City (SHAMS) free zone, handling company formation, visas and PRO, bookkeeping, VAT and corporate tax for UAE businesses. Guides are researched from FTA, Ministry of Finance and free zone sources. Qawi on LinkedIn
Sources
- ADGM: Special Purpose Vehicles overview
- DIFC: Special Purpose Vehicles
- RAK ICC: About us
- FTA: Corporate Tax guide, Exempt Income, Dividends and Participation Exemption (October 2023)
- FTA: Corporate Tax FAQ on the participation exemption
- FTA: Tax Groups
- Ministry of Finance: Ministerial Decision No. 302 of 2024 on the Participation Exemption
- Ministry of Finance: Ministerial Decision No. 125 of 2023 on Tax Groups
- Ministry of Finance: Ministerial Decision No. 133 of 2023 on Business Restructuring Relief
- Ministry of Finance: Ministerial Decision No. 229 of 2025 on Qualifying Activities and Excluded Activities
- UAE Government portal: Steps to start a business on the mainland
Last checked: 07 October 2026
This is general information, not tax or legal advice for your specific situation.