{"id":53616,"date":"2025-12-12T08:27:06","date_gmt":"2025-12-12T08:27:06","guid":{"rendered":"https:\/\/my.legal500.com\/developments\/?post_type=legal_developments&#038;p=53616"},"modified":"2025-12-12T08:27:06","modified_gmt":"2025-12-12T08:27:06","slug":"from-residency-to-second-citizenship-europes-emerging-hybrid-migration-models","status":"publish","type":"legal_developments","link":"https:\/\/my.legal500.com\/developments\/thought-leadership\/from-residency-to-second-citizenship-europes-emerging-hybrid-migration-models\/","title":{"rendered":"From residency to second citizenship: Europe\u2019s emerging hybrid migration models"},"content":{"rendered":"<p><strong>Under the 2025 guide, a\u00a0Family Foundation\u00a0is defined (for tax purposes) as any\u00a0foundation, trust or similar entity\u00a0used to hold family wealth \u2013 including real estate, investments, assets, and holdings \u2013 provided it meets the requirements of Article 17(1) of the Federal Decree\u2011Law No. 47 of 2022 on Corporate Tax.<\/strong><\/p>\n<p><!--more--><\/p>\n<p>Importantly:<\/p>\n<ul>\n<li style=\"list-style-type: none\">\n<ul>\n<li>It is not a new type of legal entity per se \u2013 rather it\u2019s a tax-treatment classification for existing structures (foundations, trusts, other entities) that meet certain criteria.<\/li>\n<li>This means that a foundation set up in a Free Zone such as DIFC (or equivalent zones such as RAK ICC or ADGM) can qualify \u2013 and likewise, a foreign foundation\/trust owning UAE property may also qualify under the right conditions.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>For wealth-holding, real-estate, and cross-jurisdictional families, the Family Foundation concept offers a powerful, flexible, and globally respected structure \u2013 now backed by clear UAE tax law.<strong>\u00a0<\/strong><\/p>\n<p><strong>What Conditions Must a Family Foundation Meet?<\/strong><\/p>\n<p>To qualify as a \u201cFamily Foundation\u201d (eligible for favourable tax treatment), the structure must satisfy\u00a0<strong>all<\/strong>\u00a0of the following under Article 17(1):<\/p>\n<ul>\n<li style=\"list-style-type: none\">\n<ul>\n<li><strong>Beneficiary Condition:<\/strong>\u00a0Beneficiaries must be identifiable natural persons and\/or public-benefit entities.<\/li>\n<li><strong>Principal Activity Condition:<\/strong>\u00a0The main activity of the foundation must be limited to receiving, holding, managing, investing or disbursing assets\/funds \u2013 i.e. wealth\/asset management, not operating an active business.<\/li>\n<li><strong>No \u201cBusiness Activity\u201d Condition:<\/strong>\u00a0The foundation must not conduct commercial\/business activities that a natural person would need a licence to perform.<\/li>\n<li><strong>No Tax-Avoidance Purpose:<\/strong>\u00a0The foundation\u2019s purpose must not be primarily tax avoidance. If the foundation\u2019s objective is simply asset\/wealth holding, investment, inheritance or charitable benefit, it passes.<\/li>\n<li><strong>If Distributions Are Made to Public-Benefit Entities:<\/strong>\u00a0Additional rules apply \u2013 distributions of income to public entities must be made within defined timeframes for the foundation to retain its status.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>Importantly,\u00a0unincorporated trusts\u00a0(such as those formed in DIFC or ADGM) which have no separate legal personality are by default treated as\u00a0unincorporated partnerships\u00a0for tax purposes \u2013 i.e.\u00a0fiscally transparent\u00a0\u2013 and may not need a separate \u201capplication,\u201d although they still must meet the beneficiary\/principal-activity conditions if regarded as a Family Foundation.<\/p>\n<p><strong>What the Tax Treatment Now Means\u00a0\u2013\u00a0Major Benefits for Investors<\/strong><\/p>\n<p><strong>\u00a0Fiscally Transparent\u00a0\u2013\u00a0Not Taxed at Foundation Level<\/strong><\/p>\n<p>If approved, a Family Foundation (or trust\/structure treated as such) will be treated as an\u00a0<strong>Unincorporated Partnership<\/strong>\u00a0\u2013 meaning\u00a0<strong>the foundation itself is not subject to corporate tax<\/strong>. Instead, any income (rental income, capital gains, dividends, interest, etc.) flows through to the beneficiaries.<\/p>\n<p><strong>Implication:<\/strong>\u00a0Real estate investors, families and beneficiaries can benefit from UAE property income and gains \u2013 potentially with\u00a0<strong>0% UAE corporate tax<\/strong>, provided the recipients are natural persons (or certain exempt public-benefit entities).<\/p>\n<p><strong>Multi-Tier Structures Are Supported<\/strong><\/p>\n<p>If the Family Foundation owns other legal entities (e.g. companies, SPVs, holding vehicles), those can also be treated as transparent \u2013 provided they are wholly owned and controlled by the foundation, and the entire structure meets the Article 17 conditions.<\/p>\n<p>This allows complex family holdings \u2013 real estate, shareholdings, investments \u2013 to be inside a single transparent vehicle, with consolidated tax treatment. Very advantageous for families with multi-jurisdictional assets or mixed real estate + corporate holdings.<strong>\u00a0<\/strong><\/p>\n<p><strong>Flexibility for Foreign Foundations or Non-UAE Residents\u00a0<\/strong><\/p>\n<p>The guide explicitly allows\u00a0<em>foreign<\/em>\u00a0foundations\/trusts to qualify \u2013 provided the conditions are met. For many global families, this provides significant flexibility without needing to re-domicile to UAE.<\/p>\n<p><strong>Streamlined Compliance\u00a0\u2013\u00a0Registration + Annual Confirmation\u00a0<\/strong><\/p>\n<ul>\n<li style=\"list-style-type: none\">\n<ul>\n<li>Applicable foundations must\u00a0<strong>register for Corporate Tax<\/strong>\u00a0with the FTA via EmaraTax.<\/li>\n<li>Once approved, foundations (and wholly-owned subsidiaries) must file an\u00a0<strong>Annual Confirmation<\/strong>\u00a0(within 9 months of the end of each tax period) to confirm they continue meeting the qualification conditions.<\/li>\n<li>If at any time the conditions are not met, the \u201ctransparent\u201d status is lost \u2013 which would render the foundation (and underlying entities) taxable as standard corporate vehicles.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>This encourages robust compliance, substance, and proper governance \u2013 making the structure robust, defensible, and sustainable over the long term.<strong>\u00a0<\/strong><\/p>\n<p><strong>Why a DIFC (or Other Free Zone) Foundation Is Often the Best Option in 2025\u00a0<\/strong><\/p>\n<p>For investors and families \u2013 especially high-net-worth, multi-jurisdictional or globally mobile \u2013 a foundation formed under a reputable Free Zone foundation regime like DIFC offers a unique combination of:<\/p>\n<ul>\n<li style=\"list-style-type: none\">\n<ul>\n<li><strong>Legal certainty<\/strong>: DIFC operates under English common law-inspired legislation; recognized globally.<\/li>\n<li><strong>Tax efficiency<\/strong>: When approved as a Family Foundation, it can deliver\u00a0<strong>0% UAE corporate tax<\/strong>\u00a0on UAE-sourced income\/gains.<\/li>\n<li><strong>Succession Planning &amp; Estate Structuring<\/strong>: Clear governance, beneficiary designation, asset protection, and intergenerational transfer mechanisms.<\/li>\n<li><strong>Asset Protection &amp; Confidentiality<\/strong>: Assets are held under the foundation rather than under individual names.<\/li>\n<li><strong>Flexibility<\/strong>: Works with real estate, investments, shareholdings, cross-border holdings, trusts \u2014 and supports multi-tier structures.<\/li>\n<li><strong>Ease of Compliance<\/strong>\u00a0(relatively): Once structured and approved, ongoing obligations are limited to annual confirmation, record-keeping, and governance maintenance \u2013 far simpler than operating a fully licensed commercial entity.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>For families investing in property, operating businesses, or building multi-asset portfolios \u2013 especially across jurisdictions \u2013 a DIFC Family Foundation often represents a\u00a0<strong>best-in-class structure<\/strong>\u00a0in 2025.<\/p>\n<p><strong>What This Means for Clients of Knightsbridge Group\u00a0<\/strong><\/p>\n<p>At Knightsbridge Group, our depth of experience in setting up mix-jurisdiction wealth structures, real estate holdings, and corporate vehicles gives us a distinct advantage. Based on the 2025 FTA guidance, we can:<\/p>\n<ul>\n<li style=\"list-style-type: none\">\n<ul>\n<li><strong>Structure your real estate and asset holdings via a DIFC (or equivalent) Foundation<\/strong><\/li>\n<li><strong>Help prepare and submit the application to FTA for \u201cfiscally transparent\u201d Family Foundation status<\/strong><\/li>\n<li><strong>Set up multi-tier holding structures (foundations + SPVs + operating companies) if needed<\/strong><\/li>\n<li><strong>Ensure full compliance with Article 17 conditions, UBO disclosures, substance requirements, and governance<\/strong><\/li>\n<li><strong>Manage ongoing annual compliance and confirmation filings<\/strong><\/li>\n<li><strong>Provide estate-planning, succession, and asset-protection services \u2014 ensuring long-term wealth preservation<\/strong><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>The result: your assets are protected, tax-efficient, confidential, cross-border ready \u2014 and structured to stand the test of time and regulation.<strong>\u00a0<\/strong><\/p>\n<p><strong>Conclusion: The 2025 Family Foundations Guide Is a Game-Changer<\/strong><\/p>\n<p>The May 2025 Corporate Tax Guide on Family Foundations marks a new era of clarity and flexibility in how wealth is held, protected, and taxed in the UAE.<\/p>\n<p>For global investors, expatriate families, real estate owners, and multi-jurisdictional entrepreneurs,\u00a0a properly structured DIFC Family Foundation\u00a0(or equivalent) is arguably\u00a0the most powerful wealth-holding vehicle available in 2025\u00a0\u2013 offering transparency, tax efficiency, legal certainty, and generational security.<\/p>\n<p><strong><em>At Knightsbridge Group, we believe this is the future of wealth structuring in the UAE\u00a0\u2013\u00a0and we are uniquely positioned to help clients turn that future into reality.<\/em><\/strong><\/p>\n","protected":false},"featured_media":0,"template":"","class_list":["post-53616","legal_developments","type-legal_developments","status-publish","hentry"],"acf":[],"_links":{"self":[{"href":"https:\/\/my.legal500.com\/developments\/wp-json\/wp\/v2\/legal_developments\/53616","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/developments\/wp-json\/wp\/v2\/legal_developments"}],"about":[{"href":"https:\/\/my.legal500.com\/developments\/wp-json\/wp\/v2\/types\/legal_developments"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/developments\/wp-json\/wp\/v2\/media?parent=53616"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}