Choosing where to establish your business can dramatically impact how much profit you keep after taxes.
Germany UAE Tax Comparison: This article compares the tax implications for business owners receiving dividends from their own companies in Germany and the UAE, focusing on corporate tax, dividend taxation, capital gains, and social security obligations.
Quick Takeaways of our Germany UAE Tax Comparison
Our Germany UAE Tax Comparison provides you with a general overview of the following taxes:
- 🇦🇪 UAE: 0% personal income tax, 9% corporate tax (0% for qualifying income of qualifying free zone companies), no dividend withholding tax.
- 🇩🇪 Germany: ~30% corporate tax, 26.375% dividend withholding tax, high social security costs.
- UAE’s tax regime allows for significantly higher post-tax profit retention.
- Both countries have strong double taxation treaty networks, including with each other.
Germany UAE Tax Comparison – Quick Overview
| Tax Category | 🇦🇪 UAE | 🇩🇪 Germany |
|---|
| Corporate Tax Rate | 9% (above AED 375,000), 0% (for qualifying income of qualifying free zone companies) | ~30% (15% CT + 5.5% surcharge + trade tax) |
| Dividend Tax (Personal) | 0% | 25% + 5.5% surcharge (~26.375%) |
| Withholding Tax on Dividends | 0% | 26.375% |
| Participation Exemption | Broad, including foreign subsidiaries | Limited and subject to strict conditions |
| Capital Gains Tax (Personal) | 0% | 25% + surcharge |
| Social Security (Expats) | Not required | Mandatory & high |
UAE: A Low-Tax Gateway for Global Entrepreneurs
Our Germany UAE Tax Comparison focuses on these tax classes in the UAE:
Corporate Tax
As of 2023, the UAE introduced a 9% corporate tax on profits exceeding AED 375,000 for mainland businesses. Qualifying free zone companies continue to benefit from 0% tax on qualifying income, provided they meet certain conditions.
Dividend Income
Individuals in the UAE do not pay personal income tax on dividends. Dividends received by UAE companies from other UAE-resident companies are exempt. Foreign dividends may also be exempt under the
Participation Exemption, subject to ownership thresholds and subject-to-tax rules.
Interest and Royalties
Interest earned by individuals is tax-free. Companies may pay 9% corporate tax unless exemptions apply. There is
no withholding tax on interest or royalty payments—ideal for international structures.
Capital Gains
Individuals pay no tax on capital gains. Businesses may qualify for exemptions on share disposals, though real estate gains may be taxed depending on the structure.
Social Security Contributions
No contributions are required from expatriates, and UAE nationals pay modest rates—lowering overall labor costs.
Germany: A High-Tax Environment with Comprehensive Coverage
Our Germany UAE Tax Comparison focuses on these tax classes in Germany:
Corporate Tax
Germany applies a 15% corporate tax, a 5.5% solidarity surcharge, and municipal trade tax (14–17%), totaling around
30%.
Dividend Income
Dividends are taxed at 25% plus a 5.5% surcharge, resulting in an effective rate of
26.375%. They are also included in personal income, increasing the marginal tax burden.
Capital Gains
Capital gains are taxed at 25% plus surcharge. Participation exemptions apply only in limited situations.
Withholding Tax
Germany imposes a 26.375% withholding tax on dividends, even to treaty countries—unlike the UAE, which imposes
no withholding tax.
Social Security Contributions
Employers and employees must contribute to multiple social insurance schemes, significantly increasing the overall cost burden.
Comparative Insight: Net Profit Retention
UAE business owners benefit from significantly higher post-tax profit retention. Germany’s tax layers and mandatory contributions reduce net income, even when double tax treaties are used.
Visual Insight: A comparative chart is available upon request.
Legal References of Our Germany UAE Tax Comparison
Main legal sources of our Germany UAE Tax Comparison:
UAE
Germany
Partner with viiCON Consulting for Hassle-Free Company Registration and Business Setup in the UAE
This Germany UAE Tax Comparison provides a general overview only. It is important to seek consulting based on your specific business case,At
viiCON Consulting, we help entrepreneurs and investors unlock the full potential of the UAE’s tax-friendly environment. From business setup to ongoing compliance, our team ensures you make the most of available tax advantages.
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Disclaimer
This article is for general informational purposes only and does not constitute legal, financial, or tax advice. Laws and regulations may change, and individual circumstances vary. Please consult a qualified advisor before making any decisions based on this content.
