Public Clarification- Corporate Tax on Family Wealth Management Structures

Public Clarification- Corporate Tax on Family Wealth Management Structures

by | Oct 24, 2025

The Federal Tax Authority (FTA) has recently issued Public Clarification CTP008, providing guidance on the Corporate Tax (CT) treatment of family wealth management structures such as family foundations, holding companies, special purpose vehicles (SPVs), Single Family Offices (SFOs), and Multi Family Offices (MFOs), as well as their family members.

Family foundations and similar vehicles are increasingly used by high-net-worth individuals and families for succession planning and efficient wealth management strategies. With UAE’s growing prominence as a regional wealth hub and an evolving tax landscape, families are focussing on adopting tax efficient structures to preserve and manage assets effectively.

Under the UAE CT framework, foundations and similar entities may be treated as tax transparent, meaning they may not be subject to CT in their own capacity, if specific conditions are met. Consequently, enabling families to establish robust legal and governance structures for managing family wealth while maintaining the tax benefits generally available to individual members.

Below are some of the key aspects and takeaways from the FTA’s Public Clarification:

Particulars Key Aspects
Family foundations:
Unincorporated partnerships or those not considered as separate legal entities		 Automatically considered as transparent (no separate application is required to be made to the FTA)
Family foundations:
Juridical persons / separate legal entities		 Application to be submitted with the FTA for considering as unincorporated partnership subject to meeting the following conditions (Article 17 (1) of CT Law):

  • Foundation is established for identified natural persons or public benefit entities
  • Principal activity is to receive, hold, disburse or otherwise manage assets or funds associated with savings or investment
  • Foundation does not conduct any business activity or an activity which would constitute a business activity if undertaken directly by the founder, settlor or beneficiary
  • Main purpose of formation is not to avoid CT
  • Other conditions as may be prescribed
Holding companies or SPVs incorporated as juridical persons Eligible to make an application to be considered as tax transparent where conditions of Article 17 (1) of CT Law are satisfied, provided:

  • these are wholly owned and controlled by tax transparent family foundation
  • ownership is through uninterrupted chain of other tax transparent entities
Tax implication on foundations, holding companies, or SPVs
  • Any entity eligible to be considered as tax transparent either automatically or through application will not be subject to CT in its own hands
  • If the entities are not eligible to be considered as tax transparent, CT will apply as per the normal provisions of CT Law
  • In such cases, entities can avail the benefit of Qualifying Free Zone Persons, where applicable, exemption on dividend income, participation exemption benefit etc
Tax implication on family members
  • Income from tax transparent entities or taxable entities will not be subject to tax in the hands of the family members where such income is considered as a personal investment income or real estate investment income
  • Income from tax transparent entities will be subject to tax in the hands of the members for commercial business income and member’s share exceeds AED 1 million in one calendar year
Single Family Office (SFO) or Multi Family Office (MFO)
  • SFOs and MFOs which are juridical persons and do not meet the conditions of Article 17 are considered as taxable persons
  • Income earned by such entities such as management fee, other income etc. arising from services rendered, shall be remunerated by their Related parties and Connected Persons at arm’s length price
  • SFO’s and MFO’s may separately review the benefits available as a Qualifying Free Zone Person, where applicable

While the above provides a broad overview of the tax aspects applicable to family foundations and similar structures, it is important to note that no single model fits all situations. Each structure must be tailored to the specific needs and objectives of the family, considering factors such as the nature and value of assets, their geographical location, the beneficiaries profile, and the founder’s long-term vision. A comprehensive assessment of these elements is essential to ensure that the chosen structure is both legally robust and tax efficient over time.

Click to download a copy of the Corporate Tax Public Clarification

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