Moving to Dubai as a US citizen

The United States taxes its citizens and green card holders on their worldwide income wherever they live. Moving to Dubai does not end your US filing obligations, but the UAE's lack of personal income tax still changes the picture, and good planning keeps your US bill and your paperwork under control.

At a glance

• Tax treaty: the US and the UAE do not have a comprehensive income tax treaty.
• Filing: US citizens abroad generally keep filing a US return every year.
• Relief: the foreign earned income exclusion and foreign tax credits can reduce US tax, but only if you file.
• Reporting: foreign bank accounts and financial assets above set thresholds must be reported (FBAR and Form 8938).
• States: some US states can keep treating you as resident if you keep strong ties there.

Living in Dubai as an American

Because the UAE does not tax salaries, there is usually no foreign tax to credit against US tax on employment income. The foreign earned income exclusion and the foreign housing exclusion are therefore the main tools for employees and the self-employed. Investment income, dividends and capital gains are not covered by the exclusion and remain taxable in the US.

Before you leave, look at your state of residence. A state where you keep a home, a driver's licence or a business may argue you are still resident there.

Owning a UAE company

A UAE company owned by a US person can fall within the US rules on controlled foreign corporations. Depending on the structure, some or all of the company's profit can be taxed in the US each year, even if it is not paid out. The choice of entity, how profits are taken and the records kept all matter. We design the UAE side with your US adviser so the structure works in both countries.

How Imperial Group helps

• A review of your residence position before you move, so you know when your home-country tax exposure actually ends
• The right UAE structure for your business: free zone, mainland or a holding company, with real substance
• Company setup, visas, Emirates ID and bank account opening support
• UAE tax residency certificate, corporate tax and VAT registrations from day one
• Ongoing accounting, tax filings and a single point of contact for everything in the UAE

Sources

• IRS: US citizens and resident aliens abroad
• UAE double tax agreement network overview

This page gives general information as at the date shown and is not advice for your specific situation. Rules in other countries are summarised for orientation; your home-country position should be confirmed before you act.