Foreign investors opening companies in DIFC can choose between several types of companies, among which special purpose vehicles/special purpose companies (SPVs/SPCs). Businessmen establish SPVs in DIFC in accordance with the provisions of the Special Purpose Company Regulations of 2008. Our specialists in company formation in Dubai can offer more information on the legislation applicable to special purpose vehicles in DIFC. You can also read the following lines to make a better picture of this kind of business structure available in Dubai, UAE.
| Quick Facts | |
|---|---|
| SPV stands for | Special Purpose Vehicle |
SPC stands for | Special Purpose Company |
Who can open an SPV/SPC in Dubai? | International and local entrepreneurs looking for a flexible business structure |
| Optimal structure | Private company limited by shares |
| Recommended for group investors (YES/NO) | YES |
| Estate planning | SPV/SPC in Dubai are recommended |
| Raising capital through SPV/SPC in Dubai (YES/NO) | YES |
| Opening a SPV/SPC in Dubai’s free zones | Available option and most recommended |
| Recommended free trade zone for SPV/SPC in Dubai | Dubai International Financial Center (DIFC) |
| Is a physical office required for opening a SPV/SPC in Dubai? (YES/NO) | NO |
| Registered address for SPV/SPC in Dubai | Required |
| Annual general meetings for SPV/SPC in Dubai | Not imposed |
| SPV for startups | Can act as platforms for raising capital and sustaining startups in Dubai |
| Can allocate capital to specific projects | One of the best uses of SPV/SPC in Dubai |
| Choosing our Dubai agents for opening SPV/SPC | We provide comprehensive services for company formation in Dubai at affordable costs. |
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Best use for SPVs/SPCs in Dubai
Being quite a flexible structure, many foreign entrepreneurs prefer to open an SPV/SPC in Dubai and enjoy many of the benefits. Here are the situations in which it is good to opt for setting up an SPV in Dubai:
- One can participate in co-investments or as part of group investors that have a common business goal. This can be about startups or pool funds with low business and financial risks.
- Foreign investors can opt for Dubai SPV/SPC for establishing a holding company. The choice is an optimal one because there are many advantages: asset protection, tax efficiency, holding shares, etc.
- With an SPV in Dubai, you can enter into a joint venture as long as both business obligations and rights are established.
- Raising capital with an SPV/SPC in Dubai is possible because this structure can access varied capital markets, including abroad.
- There are people who prefer Dubai SPV for estate planning. With this structure, wealth distribution and succession can be established better.
Are you interested in this business structure? Do you want to set up a company in Dubai? You have at your fingertips complete services offered by our local agents, including incorporating an SPV/SPC in Dubai. Plus, you can explore this infographic:
How to set up a special purpose company in DIFC
Among the types of structures that can be used for setting up a special purpose company in DIFC, only the private company limited by shares can be employed as a special purpose vehicle. This type of entity will benefit from several advantages not granted to other companies established in the Dubai free zone. The registration is completed with the DIFC Authority based on the Memorandum and Articles of Association which must state the specific objects of activity of the SPV. The Dubai SPV must be registered for carrying out financial activities only. One of our specialists can help investors from abroad to open a company in Dubai, including SPVs/SPCs.
Characteristics of a SPV in Dubai International Financial Centre
Special purpose vehicles are not subject to the legislation applicable to other types of companies in the DIFC as follows:
- the SPV is not required to have a physical office in DIFC, but only a registered address;
- the SPC must not file audited accounts;
- the shareholders of an SPC must not hold an annual general meeting.
The DIFC special purpose company is also subject to several restrictions, among which:
- it cannot undertake commercial activities;
- it cannot act as a general partner in a partnership used for investment purposes;
- the maximum number of shareholders in an SPC is limited to three.
Also, the DIFC SPV must appoint a corporate service provider who was previously licensed by the DIFC Authority and who will manage the special purpose company.
Engaging in varied activities with an SPV in Dubai
One of the reasons why local and foreign entrepreneurs prefer to create SPV in Dubai is the fact that they can participate in several activities. But here it must be taken into account that it should align with the particular purpose. In case they do not qualify for this, entrepreneurs can opt for a holding company in Dubai.
The following video presentation offers details about SPV/SPC in Dubai:
Tax benefits for SPVs in Dubai
SPVs/SPCs in Dubai are also advantageous from a tax point of view, especially if they are incorporated in DIFC. Here there is 0% taxation on incomes and there is also the protection of double tax treaties signed by the UAE.
Economy of Dubai in a few lines
Below we present some statistical data about the UAE economy that can help you in the future in the businesses you want to develop in Dubai:
- Dubai’s economy grew by approximately 3.2% year-on-year and reached around AED 115 billion in Q1 of 2024.
- Dubai is determined to reach its goal by 2033 and that is doubling the economy until reaching AED 32 trillion.
Our experts in company formation in Dubai are at your disposal with assistance in setting up an SPV, but they can also guide you in other situations. For example, they can help you with the formalities linked to immigration to Dubai. We, therefore, invite you to contact us and let us guide you when setting up a business in Dubai or for any other problem you want to solve.