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Investors and business owners looking to structure assets, isolate risk, or optimise their corporate holdings in the Middle East are increasingly turning to special purpose vehicles (SPVs) in the UAE. These specialised corporate structures provide an effective way to separate financial risk while keeping operational flexibility.
The UAE has positioned itself as a leading jurisdiction for SPV formation, with financial centres such as the Dubai International Financial Centre (DIFC), Abu Dhabi Global Market (ADGM), and Dubai Multi Commodities Centre (DMCC) offering streamlined frameworks.
These jurisdictions offer distinct benefits for international investors, ranging from strong common law systems to competitive licensing fees and access to extensive double taxation treaty networks.
A special purpose vehicle (SPV) functions as a passive holding entity created for a specific, limited purpose. SPVs do not engage in commercial trading or manufacturing. Instead, they protect particular assets or liabilities, creating a bankruptcy remote and structure remote framework.
In the UAE, SPVs primarily hold investments, real estate, intellectual property, or shares in other companies. This structure isolates these assets from the parent company’s financial risks. If the parent company encounters financial difficulties, assets held within the SPV remain protected from creditors’ claims.
The UAE’s financial Free Zones have developed advanced SPV regimes. DIFC has termed these as Prescribed Companies, while ADGM and DMCC have developed their own regimes. Each of these free zones provide a set of benefits based on your business needs, location of assets, and ownership.
The main uses of special purpose vehicles in the UAE includes:
Asset holding and protection
SPVs are often used by investors in the UAE to hold real estate portfolios, whether a single asset or a portfolio. This enables a clear distinction to be made between different types of properties or locations, thus ensuring a clear organizational distinction as well as risk segmentation.
Investment structuring
Private equity firms, venture capital funds, and family offices often set up SPVs for structuring investments. The SPV can hold equity in portfolio companies, with each investment being isolated, which is quite useful when there are multiple investors in a single transaction.
Corporate reorganisation
Businesses with complex ownership structures often use SPVs during corporate reorganisations to consolidate shareholdings, streamline group structures, or facilitate acquisitions without exposing the entire corporate group to transaction related risks related risks.
Joint venture vehicles
In cases where two or more firms decide to work together on a particular project, an SPV helps create a balanced structure that separates the joint venture from the existing businesses of the firms involved.
Intellectual Property Management
Firms that own valuable patents, trademarks, or copyrights can place these assets in an SPV, which licenses the IP back to the operating firms.
While there are several jurisdictions’, the preferred ones are:
DIFC Prescribed Companies
DIFC offers one of the most cost effective SPV options in the region. The application fee is USD 100, with an annual license fee of USD 1,000. DIFC Prescribed Companies benefit from an English common law framework and can issue multiple share classes, making them suitable for complex investment structures effective SPV options in the region. The application fee is USD 100, with an annual
The regime requires qualifying applicants, including registered DIFC entities, authorised financial services firms, or entities holding appropriate licenses from recognised regulators. The setup process is entirely digital with straightforward reporting requirements.
ADGM Special Purpose Vehicles
ADGM offers considerable flexibility through multiple share classes and fully customisable memoranda and articles of association. Unlike many alternatives, ADGM permits shelf SPVs and imposes no restrictions on ownership nationality.
Since July 2021, most ADGM SPVs must appoint a Company Service Provider (CSP) to handle company secretarial and registered agent services. Certain exemptions apply for entities connected to regulated firms or those demonstrating adequate UAE presence. The ADGM Registration Authority requires applicants to demonstrate a clear nexus to ADGM, the UAE, or the GCC region.
DMCC SPV and Holding Company Licenses
DMCC introduced SPV and holding company structures with pricing starting at AED 3,690, positioning them as highly competitive options. The absence of physical office space requirements significantly reduces operational costs, and all SPVs operate through licensed Registered Agents.
Mainland UAE Structures
While Free Zones dominate the SPV landscape, mainland UAE also permits SPV formation under the Securities and Commodities Authority (SCA) oversight. Mainland structures offer broader property ownership rights but come with more stringent economic substance requirements and shareholder restrictions.
The regulatory requirements for the SPV companies in the UAE, includes the following:
Nexus requirements
All UAE jurisdictions require SPVs to demonstrate a genuine connection to the region through UAE or GCC based ownership, UAE or GCC located assets, UAE or GCC facilitated transactions that provide real economic benefit to the UAE, or UAE listed securities approved for listing in the relevant financial centre.
Corporate service provider obligations
Most non-exempt SPVs must appoint a CSP to provide a registered office address, company secretarial services, authorised signatory services, and liaison with registration authorities, ensuring proper governance exempt SPVs must appoint a CSP to provide a registered office address, company secretarial services, authorised signatory services, and liaison with registration authorities, ensuring proper governance exempt SPVs must appoint a CSP to provide a registered office address, company secretarial services, authorised signatory services, and liaison with registration authorities, ensuring proper governance.
Economic substance requirements
The UAE has Economic Substance Regulations that require entities carrying out relevant activities to have sufficient economic substance. While SPVs usually carry out passive activities, it is up to businesses to assess their individual circumstances to see if they are affected by these regulations.
Corporate tax considerations
Since June 2023, the UAE has applied Federal Corporate Tax at 9% on taxable income exceeding AED 375,000. However, SPVs and holding companies structured within qualifying Free Zones may qualify for 0% tax on certain income as Qualifying Free Zone Persons (QFZPs).
Qualifying income includes dividends from UAE or foreign subsidiaries, capital gains from share disposals, and royalties under specific conditions.
The participation exemption provides relief where ownership exceeds 5% (or acquisition cost exceeds AED 4 million), a 12month holding period applies, and the underlying entity is subject to a tax rate of at least 9%.
For setting up a SPV company in UAE, follow the mentioned steps:
Initial Planning and Documentation
Begin by defining your SPV’s purpose, intended assets, and ownership structure. Consider which jurisdiction best aligns with your business objectives, including asset location, treaty access needs, and long-term governance preferences.
Gather required documents, including passport copies and identification for all shareholders and directors, proof of address for authorised signatories, details of the assets the SPV will hold, a business plan outlining the SPV’s purpose, and source of funds documentation.
Application and Approval
Complete the jurisdiction’s online application with all required information and supporting documents. Most Free Zone authorities have digitalised their processes, allowing for remote application and approval. Once approved, you’ll receive your commercial license, with DIFC, ADGM, and DMCC all offering competitive processing timelines.
Ongoing Compliance
After incorporation, maintain compliance through annual license renewals, timely filing of required financial statements, notification of material changes to ownership or activities, and upkeep of your registered office and appointed officers.
SPVs registered in UAE jurisdictions can apply for Tax Residency Certificates from the Federal Tax Authority, providing access to the UAE’s extensive double taxation treaty network and potentially reducing withholding taxes on cross-border income flows.
To obtain tax residency status, SPVs must demonstrate a valid commercial license, sufficient economic substance in the UAE, and management and control exercised from the UAE.
The 2025 updates to the participation exemption rules clarified that the “subject to tax” test focuses on statutory tax rates rather than effective rates. An SPV holding foreign subsidiaries can claim exemption even if local incentives reduce effective tax rates, provided the statutory rate exceeds 9%.
Special purpose vehicles UAE provide a tested framework for structuring assets, risk management, and tax efficiency optimization for businesses. The UAE’s financial hubs, such as DIFC and ADGM, have an accessible regulatory framework with effective oversight, ensuring they remain competitive globally.
To be successful, you need to choose the right jurisdiction for your purpose, have substance requirements met through presence, ensure compliance through audits and e-invoicing, and use the services of advisors who specialize in SPVs to effectively manage the 2026 rules.
