The UAE has recently launched its long awaited Retirement Visa programme.
Eligible applicants must be older than 55 and have valid UAE health insurance. They must also satisfy at least one of the following financial requirements: (i) UAE real estate investment of a minimum AED 2 million; (ii) UAE savings of a minimum AED 1 million; or (iii) minimum monthly income of AED 20,000.
The Retirement Visa lasts five years with the option of renewal every five years on an indefinite basis, provided applicants continue to satisfy the criteria. This could continue until their demise.
The programme may encourage the UAE's large expat population to build their long-term plans around the UAE, which may motivate them to hold more of their global assets within the UAE. This will enhance the importance of estate planning (for instance non-Muslims executing DIFC Wills).
The announcement is significant for British expats. Previously, British expats in the UAE have not been able to establish a UAE domicile of choice, as that requires them to make the UAE their home on a permanent or indefinite basis. That has prevented British expats from transferring non-UK assets into most types of trusts/foundations, for fear of triggering an immediate 20% inheritance tax charge on the value transferred (in excess of the nil-rate band of £325,000).
The launch of the Retirement Visa potentially changes this, if British expats are able to make the UAE their permanent or indefinite home. Establishing a non-UK domicile of choice is notoriously difficult, and UK legal advice is needed, as an individual's domicile of origin is tenacious. However, the UAE Retirement Visa opens the door to what may be an interesting debate: whether long-term British expats are now able to establish a UAE domicile of choice, giving them the ability to transfer their non-UK assets to trusts or foundations without incurring UK inheritance tax.
Whilst this presents a real opportunity for new tax planning, any planning should not be rushed, as individuals born in the UK with a UK domicile of origin are automatically deemed domiciled on their return to the UK, with a potentially adverse effect on the tax status of trusts they have settled.
The programme offers long-term residents of the city who are familiar with Dubai’s value proposition an easy and hassle-free retirement option