UK-UAE Double Tax Treaty: A Business Owner’s Guide

Moving from the UK to Dubai can change your tax position, but it does not automatically mean that you stop paying UK tax. The same applies if you keep a UK company while relocating, or expand an existing UK business into the UAE.

The UK-UAE double tax treaty sets out how the UK and UAE deal with income, gains and business profits that may involve both countries. It can help prevent the same income from being taxed twice, but the result depends on where you are tax resident, where your income comes from and where your business activities take place.

In this guide, we explain what the treaty means for you, what UK tax may still apply after you move and what you should consider if your business operates in both the UK and UAE.

What does the UK-UAE double tax treaty actually do?

The UK-UAE Double Taxation Convention was signed in 2016 and later modified by the Multilateral Instrument. The current treaty covers UK Income Tax, Corporation Tax and Capital Gains Tax, alongside the relevant UAE taxes on income and corporate profits.

Its purpose is not simply to remove tax. Instead, it sets out which country can tax particular income or gains and how double taxation should be relieved where both countries have taxing rights. You can review the current provisions and modifications in the official UK-UAE Double Taxation Convention.

For example, different treaty articles deal separately with property income, business profits, dividends, interest, capital gains, employment income and pensions. That is why there is no single rule saying that becoming a UAE resident means you no longer pay UK tax.

Tax residence when moving to Dubai

One of the first issues to establish when you move to Dubai is whether you remain a UK tax resident. Your UAE visa, Emirates ID or Dubai address does not decide your UK residence position.

UK tax residence applies to each tax year separately and is determined under the Statutory Residence Test (SRT), which looks at objective criteria such as day counts, work patterns and retained UK connections.

The UK Statutory Residence Test

The SRT determines whether you are UK tax resident for a particular tax year. It includes automatic overseas tests, automatic UK tests and the sufficient ties test. Generally, if you spend 183 days or more in the UK during a tax year, you will be treated as UK resident without needing to consider the remaining tests.

If you spend fewer days in the UK, your residence status can depend on factors such as your family connections, accommodation, work and previous presence in the UK. Split-year treatment may also apply in certain circumstances when leaving the UK, although you must meet specific conditions rather than simply leaving the UK partway through the tax year.

For more details on how these tests apply, you can refer to HMRC’s current Statutory Residence Test guidance.

What happens if you are resident in both countries?

Being resident under the domestic rules of both countries does not necessarily mean you remain dual resident for treaty purposes.

Article 4 of the UK-UAE double tax treaty contains tie-breaker rules for individuals. These consider where you have a permanent home, where your personal and economic relationships are closer, your habitual abode and then nationality. If those tests do not resolve the position, the competent authorities can determine it by mutual agreement.

This is why your domestic residence position should be established first, followed by the treaty position where dual residence exists.

Which UK income can still be taxed after you move to Dubai?

Becoming non-UK resident does not mean every connection with the UK disappears for tax purposes. The source and nature of your income remain important.

UK property is a clear example. HMRC confirms that rental income from UK property remains within UK taxation even where the landlord lives overseas. Gains on UK land and property can also remain taxable for non-residents.

Typical treaty position

Private pensions are generally taxed only in the country of residence under Article 17, while government pensions follow separate rules under Article 18. Employment income is usually taxed where the work is carried out, subject to the 183-day exception under Article 14.

Inheritance Tax (IHT) is separate from the treaty, as the UK-UAE convention covers income and capital gains rather than UK IHT. Since 6 April 2025, IHT on overseas assets can also depend on your long-term UK residence status, which may continue after leaving the UK.

Dubai business expansion and permanent establishment

For UK business owners, moving yourself to Dubai and moving part of your business to Dubai are two different tax questions.

Your personal tax residence determines your individual position. Company residence determines where the company itself may be resident for tax purposes. A permanent establishment, or PE, considers whether an enterprise has enough business presence in the other country for that country to tax profits attributable to that presence.

UK companies are generally UK tax resident because they are incorporated in the UK, subject to treaty and other exceptions. An overseas-incorporated company can also become UK resident under UK domestic rules if its central management and control is exercised in the UK.

This makes management particularly important when a founder lives in one country while directors, employees and operations are divided between the UK and UAE.

When can a Dubai office become a permanent establishment?

Article 5 defines a permanent establishment as a fixed place of business through which an enterprise carries on all or part of its business. Examples specifically include a place of management, a branch and an office.

However, renting a desk or having a Dubai address should not automatically be treated as creating a PE. The treaty contains exclusions for certain activities that are preparatory or auxiliary in nature, while other arrangements can create PE exposure through people acting for the business.

If you are planning UAE operations, our Dubai tax consultants can help you review the tax implications alongside your business structure.

How are business profits taxed under the UK-UAE treaty?

Article 7 of the UK-UAE tax treaty generally allows business profits to be taxed in the country where the business is resident, unless it operates in the other country through a permanent establishment. If a PE exists, the other country can tax the profits linked to that establishment.

Therefore, opening a Dubai branch does not automatically move all of a UK company’s profits to the UAE. The tax treatment depends on the activities carried out in each country and the profits linked to the UAE operation.

For taxable UAE businesses, the general corporate tax rate is 0% on taxable income up to AED 375,000 and 9% on taxable income above AED 375,000, subject to applicable exemptions and special rules.

For a more detailed guide to UAE corporate tax rates and how they work, see our complete UAE Corporate Tax guide.

A practical business example

Suppose you own a UK company and relocate to Dubai. The UK company continues servicing UK customers, but you establish a Dubai office with local staff that develops UAE business.

You would not simply divide the company’s profits according to where you personally live. You would first consider company residence, then whether the Dubai activities create a PE and finally which profits are attributable to those UAE activities. Your retained UK activities and any UK-source personal income would need to be considered separately.

Treaty relief, documentation and common mistakes

The UK-UAE tax treaty provides ways to reduce double taxation when both countries can tax the same income. Depending on the circumstances, this may involve a credit for tax paid in the other country or an exemption under the applicable rules.

For individuals, the position is different because the UAE does not currently charge personal income tax. The main focus is often on determining which country has the right to tax the income and whether the individual qualifies for relief under the treaty.

Keeping good records can help support your tax position. These may include:

• Travel dates and UK working days
• Accommodation and family connections
• Employment arrangements
• UK property and other UK income
• Business contracts and board decisions
• Employee locations and business activities

The UAE Federal Tax Authority can issue Tax Residency Certificates to eligible applicants, which may help support a claim under a double tax treaty. However, the certificate is only part of the evidence and does not by itself confirm that relief is available.

Common mistakes to avoid

Common issues include assuming that a UAE visa changes your UK tax residence, confusing personal residence with company residence, overlooking UK property or other UK income, and treating all company profits as UAE profits simply because the business has a permanent establishment in Dubai.

Our tax consultants can help you avoid these mistakes by reviewing your residence position, UK income and company structure before they turn into costly compliance problems.

What should you review before moving or expanding into the UAE?

Good tax planning should start before you move or expand your business, rather than waiting until your first tax return is due. Before making the move, it is important to understand how your UK and UAE tax positions may work together.

You should review the following areas:

• UK and UAE residence: Establish your current UK tax residence position and consider when you may become a UAE tax resident.
• UK income and assets: Identify any UK property, employment income, pensions, investments or business income that will continue after you leave the UK.
• Company structure: If you own a company, review where key business decisions are made, where the business activities will take place and whether those activities could create a permanent establishment in the UK or UAE.
• Future plans: Consider whether your move is intended to be permanent or temporary, as this can affect your UK tax position.

If your move may only be temporary, you should also consider HMRC’s temporary non-residence rules, which can bring certain income and gains received while you are overseas back into UK taxation when you return, provided the relevant conditions are met.

Making informed UK-UAE tax decisions

The UK-UAE double tax treaty can provide valuable protection against double taxation, but it does not mean you are exempt from UK tax. The outcome depends on where you are resident, where your income arises, how your company is structured and where the underlying business activity takes place.

At Rise Accounting, we work with businesses and founders operating across the UK and UAE to understand these issues before they become compliance problems. Our Dubai accounting service can help you review your residence position, cross-border income and business structure when relocating or expanding into Dubai.

Talk to our experts about your UK-UAE tax position.

Frequently asked questions

Can I be a UAE tax resident and still be a UK tax resident?

Yes, you can potentially meet domestic residence conditions in both countries at the same time. You would then need to consider the UK-UAE double tax treaty tie-breaker rules to establish your treaty residence.

Does a UAE residence visa make you automatically non-UK resident?

A UAE residence visa does not by itself determine your UK tax residence. Your UK residence status is determined by the Statutory Residence Test, which considers your days in the UK, work pattern and UK ties for the relevant tax year.

What happens to UK rental income if I live in Dubai?

Your UK rental income can remain taxable in the UK even if you live in Dubai. You may also fall within the Non-resident Landlord Scheme and need to report the income correctly to HMRC.

Can my UK company remain in the UK if I move to the UAE?

Yes, you can move personally while continuing to own a UK company, and your residence does not automatically change the company’s residence. You should still review where the company is managed, where its activities take place and whether it develops a taxable presence in the UAE.

If I open a Dubai office, does it automatically create a permanent establishment?

Not necessarily, although an office is specifically listed as a type of permanent establishment under Article 5. You need to consider how the premises are used, what business is conducted there and whether any treaty exclusions apply.

What happens if I return to the UK after a few years in Dubai?

You may fall within the temporary non-residence rules if your period outside the UK meets the relevant conditions. You could then become taxable on certain income or gains received during your period abroad when you return to the UK.

Do I need a UAE Tax Residency Certificate to claim treaty benefits?

A UAE Tax Residency Certificate can provide formal evidence that you are a UAE tax resident and is issued by the Federal Tax Authority for treaty purposes. You should still check the specific treaty conditions because holding a certificate does not determine every UK tax issue by itself.