From Vienna to Dubai: Strategically Leveraging Austrias Double Taxation Agreement – Practical Tax Planning between the EU and Asia

Before I show you the concrete possibilities between Vienna and Dubai, let me dispel a dangerous misconception:

Every day I meet entrepreneurs who ask me: Richard, can I simply move to Dubai and not pay any taxes anymore?

And heres the truth:

The double taxation agreement between Austria and the UAE is not a free pass. It’s a precise instrument that requires correct application.

Let’s be honest:

A poorly planned move to Dubai can end up costing you more than staying in Vienna. But a professionally structured strategy? That could save you six-figure sums in the long run.

The details make the difference.

That’s why today I’m taking you on a practical journey through Austrian-Emirati tax law. Not as a theoretical advisor, but as someone who puts these structures into action for clients every day.

The best part? You’ll learn not just the advantages, but also the risks. Because only then can you make the right decision for your situation.

Ready? Then let’s take a look at your options between Vienna and Dubai together.

Yours, RMS

The Austria-Dubai Double Taxation Agreement: Understanding the Fundamentals

The double taxation agreement between Austria and the United Arab Emirates has been in force since 2005. That means it has proven itself over nearly two decades and offers legal certainty.

But what does this mean in concrete terms for you?

What the DTA Means for You in Practice

A double taxation agreement regulates which country has the right to tax. It also prevents you from paying taxes on the same income in both countries.

The Austria-UAE DTA follows the OECD Model Convention. That means clear rules for:

• Tax Residency: Where are you considered tax liable?
• Source Taxation: Which country taxes which type of income?
• Avoidance of Double Taxation: How are taxes already paid credited?
• Information Exchange: What do the tax authorities share?

Here’s where it gets interesting: The UAE introduced a 9% corporate tax in 2023. Therefore, the DTA is more relevant today than ever.

Main Types of Taxes at a Glance

Let’s look at the various types of taxes regulated by the DTA:

This table shows: Structuring makes the difference. An Austrian GmbH with a Dubai subsidiary pays only 5% withholding tax on dividends.

When the Agreement Applies–And When It Does Not

The DTA only applies if you are tax resident in one of the two countries. Here lies the first big stumbling block.

Tax residency in Austria applies if you have:

• Residence or habitual abode in Austria
• Center of vital interests in Austria
• More than 183 days stay per year

Tax residency in Dubai/UAE is obtained by:

• Residence visa (Golden Visa, Investor Visa, etc.)
• Actual stay of at least 90 days per year
• Proof of economic substance

Additionally, the DTA does not apply to pure mailbox companies. Since 2023, the UAE requires real economic substance.

In practical terms: Your Dubai company needs office space, local staff, or at least regular local business activity.

Tax Planning Vienna-Dubai: Your Practical Options in Detail

Now it gets exciting. Because here I’ll show you the specific structures you can use.

But beware: Each structure has pros and cons. That is, you must find the solution that suits you best.

Residency Strategies Between the EU and the UAE

The foundation of any international tax planning is your personal residency. Here you have various options:

Option 1: Full Move to Dubai

You give up your Austrian residence and become tax resident in Dubai. This works if:

• You spend at least 183 days per year in the UAE
• Your center of life is actually shifted to Dubai
• You hold a valid residence visa

Advantage: Complete exemption from Austrian income tax on foreign income. Disadvantage: You lose EU benefits and really have to move permanently.

Option 2: Double Residency with Tie-Breaker

You keep ties to Austria but also establish residency in Dubai. The DTA then determines via tie-breaker rules where you are tax resident.

Criteria in order:

1. Permanent home
2. Center of vital interests
3. Habitual abode
4. Citizenship

This strategy demands careful planning. Plus, you need to be able to document where your personal center is.

Option 3: Austrian Residency with Dubai Structure

You remain an Austrian tax resident, but structure your business through Dubai. This can be advantageous for specific types of income.

Company Formation in Dubai with Austrian Base

Here I’ll show you the most popular business structures between Vienna and Dubai:

Dubai Mainland Company

An LLC (Limited Liability Company) in mainland Dubai offers maximum flexibility. You can:

• 100% foreign ownership
• Do business in the UAE and internationally
• Benefit from the 9% corporate tax (from AED 375,000 profit)

Costs: About €8,000–12,000 to set up and for the first year. Ongoing annual costs about €4,000–6,000.

Dubai Freezone Company

Freezone companies offer special advantages:

• 0% corporate tax for purely Freezone activities
• Simplified accounting and compliance
• Industry-specific licenses available

But attention: Doing business with the UAE mainland or other countries is subject to the 9% tax.

Holding Structure via Dubai

A particularly elegant solution is a Dubai holding company with Austrian subsidiaries:

This structure works especially well for entrepreneurs with established Austrian business operations.

Optimal Structuring of Dividends and Interest

The DTA offers attractive possibilities for passive income. Here are the concrete figures:

Dividend Optimization

With holdings of over 10%, only a 5% withholding tax is due. In concrete terms:

Example: €100,000 dividend from Austrian GmbH to Dubai holding

• Austrian withholding tax: €5,000 (5%)
• Dubai corporate tax: €0 (below threshold)
• Total burden: 5% instead of 27.5% Austrian capital gains tax

Savings: €22,500 per €100,000 dividend.

Structuring Interest Income

Interest also only attracts a 5% withholding tax. So you can use loans between your companies:

Austrian GmbH pays interest to Dubai company:

• Tax-deductible in Austria: 25%
• Withholding tax: 5%
• Net tax effect: 20% savings

Important: The interest rates must be at arm’s length. That is, market conditions as if between independent companies.

DTA Austria UAE: Pitfalls and Compliance Requirements

Now we come to the critical points. It’s here your structure will pass or fail.

I’ll be clear: The era of simple Dubai structures is over. Both Austrian and Emirati authorities are now paying close attention.

Providing Substance Proof in Dubai Correctly

Since 2023, the UAE require economic substance for all companies. That means specifically:

Minimum Requirements for Economic Substance:

• Qualified Activities: Real business operations on-site
• Core Income Generating Activities: Value-adding activities must occur in Dubai
• Adequate Number of Employees: Appropriate number of qualified staff
• Adequate Expenditure: Sufficient outlays in the UAE
• Physical Presence: Actual presence and office space

What does that mean in practice?

For a pure holding company, minimal requirements are sufficient. But for operating businesses, you need real substance.

Practical Substance Checklist:

• Office space with at least 1–2 workstations
• Local management or qualified staff
• Board meetings and business decisions in Dubai
• Documentation of value-adding activities
• Bank accounts and operations on-site

The costs? Plan on €20,000–40,000 per year for genuine substance.

Austrian Reporting Requirements with Dubai Structure

Even if you move to Dubai, you still have reporting requirements in Austria. Many overlook this.

Important Notifications:

1. De-registration: When you give up Austrian residence
2. Shareholding Notification: For more than 25% in foreign companies
3. CRS Report: Automatic information exchange between UAE and Austria
4. Hidden Profit Distribution: Non-arm’s length transactions

Also, there’s a ten-year clawback period for certain rules. That means Austria can ask questions years later.

Documentation Requirements:

Keep meticulous records of:

• Days spent in both countries
• Business decisions and where they are made
• Asset positions and development
• Permanent establishments and their substance

Common Mistakes and How to Avoid Them

From my practice, here are the most expensive mistakes:

Mistake 1: Lack of Substance in Dubai

Issue: Mailbox company without real activity
Solution: Build real substance from the start, even if it costs more

Mistake 2: Unclear Residency

Issue: Not clearly resident here or there
Solution: Decide clearly on one tax residence

Mistake 3: Ignoring Austrian Reporting Duties

Issue: Fines and back payments from missed reports
Solution: Systematic compliance from day one

Mistake 4: Non-arm’s Length Transfer Prices

Issue: Profit shifting treated as hidden distribution
Solution: Professional transfer pricing documentation

The most important thing: Get professional advice from day one. The costs of proper structuring are a fraction of potential back payments.

International Tax Structure EU-Asia: Combination Strategies

This is where things get particularly interesting. Dubai is not only a destination, but can serve as your gateway to other markets.

That is, you use Dubai as a bridge between Europe and Asia. And the UAE’s DTA network is impressive.

Using Dubai as a Gateway to Other Markets

The UAE have concluded over 90 double taxation agreements. This makes Dubai the perfect hub for international business.

Particularly Attractive UAE DTA Partners:

Imagine: You have a Dubai holding that has stakes in Singapore, Switzerland, and India. The tax on dividends is capped at a maximum of 10%.

Practical Example of a Gateway Structure:

Austrian entrepreneur sets up Dubai holding, which owns the following subsidiaries:

• Singapore: Software development for Asian markets
• Switzerland: IP holding for licenses
• Austria: EU sales

Result: Optimal tax structuring for all markets with full legal compliance.

Cyprus-Dubai Structure for EU Advantages

A particularly elegant solution combines the EU advantages of Cyprus with the Asian benefits of Dubai.

Why Cyprus-Dubai Works:

• Cyprus: 12.5% corporate tax, EU directives
• Dubai: 9% corporate tax, Asian gateway
• DTA between Cyprus and UAE: 0% withholding tax on dividends

The structure looks like this:

Advantages of this structure:

• EU Parent-Subsidiary Directive: 0% withholding tax within the EU
• Cyprus-UAE DTA: 0% withholding tax on distributions to Dubai
• Flexibility for further expansion

Disadvantages: Higher complexity and compliance costs.

Timing and Sequence of Implementation

The order of the steps determines the success or failure of your international structure.

Phase 1: Preparation (Months 1–3)

1. Tax and legal analysis of your current situation
2. Define goals and plan structure
3. Residence visa application for Dubai
4. Start preparations for opening bank accounts

Phase 2: Setting Up Structure (Months 4–6)

1. Company incorporation in Dubai
2. Open bank accounts
3. Implement first substance measures
4. Establish accounting and compliance

Phase 3: Migration (Months 7–12)

1. Gradual relocation of business operations
2. Adjust personal residency
3. Complete Austrian notifications
4. Optimization and fine-tuning

Important: Don’t rush. You should also coordinate each step with your tax advisor.

Timing tip: Start planning at least 12 months before implementation. This gives you time for all formalities and reduces tax risks.

Austria Dubai Taxes: Concrete Calculation Examples

Now lets calculate together what a Dubai structure brings in various scenarios.

I’ll show you realistic scenarios with real numbers. So you can see in black and white if the effort is worthwhile for you.

Sole Proprietor with Digital Business

Starting Situation:

Sarah, 34, runs a successful online marketing business. Annual turnover: €400,000, profit: €200,000. Currently an Austrian sole proprietor.

Tax Burden in Austria:

Dubai Structure: LLC with Freezone License

Sarah sets up a Dubai LLC in a Freezone and relocates her business entirely.

Extra Costs of the Dubai Structure:

• Company formation: €10,000 one-off
• Ongoing costs: €15,000 per year (license, visa, accounting)
• Living costs: Comparable to Vienna

Savings in the first year: €89,000
Savings from the second year: €99,000 annually

Return on investment: The structure pays for itself after 2–3 months.

GmbH Owner with Real Estate Portfolio

Starting Situation:

Michael, 45, owns an Austrian GmbH with an annual profit of €300,000. Additionally, he holds a property portfolio worth €2 million.

Current Tax Burden:

Dubai Holding Structure:

Michael sets up a Dubai holding which takes over his Austrian GmbH. The properties remain in Austria (as they are located there).

Optimized Tax Burden:

The saving looks small, but: Michael can now reinvest tax-efficiently and has access to Asian markets.

Holding Structure for Several Business Areas

Starting Situation:

Elena, 41, has three different business areas:

• Software company (Germany): €500,000 profit
• Consulting firm (Austria): €200,000 profit
• Online shop (EU-wide): €300,000 profit

Multi-Level Holding Structure:

Total Tax Burden of the Optimized Structure:

• Local taxes: €236,250
• Withholding tax: €25,063
• Dubai tax: €66,527
• Total: €327,840 (32.8%)

Comparison with a Pure German Holding Structure:

With a pure German structure, Elena would pay about 45% in total taxes. Thats roughly €450,000 tax.

Annual Savings: €122,160

Additionally, Elena now has optimal access to all major markets and can expand flexibly.

Important Note: These calculations are simplified. The actual tax burden depends on many individual factors. Tax laws also change regularly.

So always have any structure checked by an expert before implementation.

Frequently Asked Questions

Can I simply relocate my Austrian GmbH to Dubai?

No, a direct relocation is not possible. You have to set up a new company in Dubai and can then transfer assets or build a holding structure.

How long do I have to stay in Dubai to benefit from the tax advantages?

For tax residency in the UAE, you must spend at least 90 days a year there and hold a valid residence visa. For the use of the DTA, it is decisive where your center of life is.

What is the realistic cost of a Dubai structure?

Setup costs: €8,000–15,000. Ongoing costs: €15,000–40,000 annually, depending on complexity and desired substance. There are also consulting fees for setup and regular compliance.

Does the DTA also apply to cryptocurrencies?

The DTA treats cryptocurrencies depending on whether they are classified as capital income or business income. It requires a case-by-case assessment.

Can I as an Austrian citizen move to Dubai easily?

Yes, but you need a residence visa. Options are investor visa, employment visa, or golden visa. The requirements and costs differ by visa type.

What happens during a tax audit in Austria?

With proper documentation and real substance in Dubai, your structure is legally compliant. Its essential to thoroughly document all business decisions and stays.

How does the automatic information exchange affect things?

The UAE have exchanged information with Austria since 2018. That means: transparency is compulsory. Hiding assets no longer works— but proper structures remain possible.

Is Dubai worth it with profits under €100,000?

With profits below €100,000, costs are usually higher than the savings. You should have at least €200,000 profit to make the effort worthwhile.

Can I bring my family?

Yes, most residence visas allow you to sponsor your spouse and children. There are good international schools for children, though at a cost.

What about social security?

When you move out of Austria, your obligation to pay Austrian social security ends. In the UAE, there is no social security in the European sense. You should therefore arrange for private health and pension insurance.