Dubai, Germany, and the US are some of the best places for foreigners to start a business. They are friendly to immigrants, have a good business environment, boast a strong economy, and offer a high quality of life. Learning how to set up a business in Dubai, Germany, and the US is your first step in exploring these locations.
At Remitly, we understand the complexities surrounding international business setups. So, we’ve prepared this guide to get you started.
Understanding the key differences and benefits of setting up a business in Dubai, Germany, and the US
Although these strategic locations offer growth opportunities, you may need to assess their benefits and differences to decide where you’d like to start your business. .
Dubai
Starting a business in Dubai means respecting hierarchy and decision-making authority, as that is how their business culture works. They have strong relationships with, and focus on punctuality, trust, and compliance with local and international laws.
The country follows a conservative dress code, uses an indirect communication style, avoids confrontation, does not charge income tax, and certain zones offer tax exemptions for international companies. The work week for most businesses starts on Sunday and ends on Thursday. The work-life balance can be demanding in the hospitality industry, especially as Dubai is a major international tourist attraction.
Germany
Germany has a business culture similar to Dubai’s, respecting hierarchy and decision-making authority and focusing on compliance with local and international laws. Their workweek starts on Monday and ends on Friday, and they follow an 8 a.m. to 5 p.m. or 9 a.m. to 6 p.m. schedule.
The country has a bit more of a relaxed work culture, but follows a formal and conservative dress code with a preference to dark colors. Germany has free trade zones (FTZs), also known as free ports, which exempt international businesses from Value Added Tax (VAT) and import duties.
The United States
The US has a focused business culture that respects decision-makers. The work week for most businesses is Monday through Friday from 9 a.m. to 5 p.m. The Communication style is direct for most businesses, but it is also incredibly polite, especially in hospitality settings.
The country has a demanding work culture, but follows a dress code that shifts between business formal and business casual. The US has foreign trade zones (FTZs) near ports of entry that give foreign companies tax breaks.
Important considerations for entrepreneurs
When setting up your business in Dubai, Germany or the US, it’s important to consider how receptive the local market will be to your product or service. Conducting a market survey to understand the demand, opportunities, weaknesses, strengths, threats, and potential for growth should be one of your first steps.
Operational costs, such as taxes, labor costs, rent, banking services, and startup costs, are other items to keep in mind as an entrepreneur. What’s more, you should check out the existing competition in your industry, and explore local regulations, including intellectual property protection, and other consumer behavior and preferences.
Digital connectivity allows you to use technology to make operations efficient. For example, checking if your favorite websites or payment avenues are banned or limited where you wish to operate will help streamline your process. Also, consumer behavior and preferences should be taken into account.
A few additional items to consider include:
- Potential business partners and their openness to investing in the target country
- Required licenses and permits
- Currency stability and national economic growth
- Local banking and payment systems
- Available logistics and operations solutions
- Corporate tax implications across regions
Establishing a business in Dubai
Here’s what you need to know when setting up a business in Dubai as an immigrant, from legal requirements and UAE policies to necessary approvals, licenses, and the application process.
Types of business licenses in Dubai
Dubai authorities approve your operations via a business license. Mainland businesses apply with the Department of Economy and Tourism (DET), while free zone businesses apply with the Free Zone Authority. Applications for business licenses can be picked up in-person or found online.
There are several types of business licenses in Dubai. We’ve highlighted a few.
Commercial license: You apply for this if you’re involved in general trading activities, such as importing and exporting goods, and selling in retail and wholesale. A construction or car rental company, for example, requires a commercial license to operate legally in Dubai.
Professional license: To operate in Dubai, people or companies providing professional services, such as consultancy, management, environmental activities, and accountancy, must apply for a professional license.
E-trader license: Immigrants can conduct business online in the United Arab Emirates (UAE). However, you can only offer services online. You aren’t allowed to sell products. You’ll register on the official Dubai Department of Economic Development (DED) website and attach your valid UAE residence visa and Emirates ID.
Industrial license: If you’re in the manufacturing space, you’ll apply for an industrial license.
Tourism license: Dubai’s luxurious lifestyle, high-end malls, and world-class infrastructure attract many international tourists. This presents an opportunity to invest in the hospitality and tourism sector. If you invest in hotels, tour operations, travel agencies, guest houses, tourist camps, or events management, you must apply for a tourism license with the authorities.
Dual license: This one allows you to operate in free zones and mainland Dubai as long as you have the required approvals.
Benefits of free zones vs. mainland companies in Dubai
Once you decide if you’re going to set up shop in a free zone or a mainland location in the United Arab Emirates (UAE), you’ll need to figure out if it makes business sense to get a dual license.
We’ll compare the two to help you decide which option benefits your business structure and needs.
Free zone Dubai
The free zones are 100% foreign ownership. They offer exemptions from corporate tax, as well as import and export duties, and feature lower operational and setup costs. Operations are limited within the free zone, unless you’re exporting. You can transfer all profits earned to your home country, so long as you fulfill your tax obligations in the UAE.
The free zones are governed by zone-specific authorities or bodies such as Free Zones Authority (FZA) and Dubai Development Authority (DDA). Each free zone has particular laws and regulations, so be sure to read the fine print.
Finally, not all businesses are allowed. Check with the zone’s authority to find out more about limited activities.
Mainland Dubai
Mainland Dubai allows 100% foreign ownership. However, you’ll need a UAE national as a partner to invest in banking, telecommunications, and security. You must also allocate 51% of the company to a UAE national, according to Federal Decree Law No. (32) of 2021 on Commercial Companies. You will pay corporate tax and VAT, but are free to operate anywhere in the UAE, as well as do business with the government.
Mainland Dubai is governed and regulated by a single body, the Department of Economic Development of Dubai (DED). All types of businesses are allowed, but it does cost more to set up and run a business in mainland Dubai compared to free zone Dubai.
Steps to follow when setting up a business in Dubai
UAE’s Ministry of Economy outlines the steps to take to set up a business in Dubai.
Step one: Identify the business you wish to set up and, if it’s allowable, where you intend to set it up.
Step two: Decide if you’ll be setting up in a free zone or mainland Dubai.
Step three: Choose a legal structure, e.g., sole proprietorship or limited liability company (LLC).
Step four: Pick and register a unique trade name that differs from your legal name, and choose a space you’ll rent or buy.
Step five: Get initial approval by submitting the required documents, including copies of your passport copies, a business plan, and a letter explaining the business idea.
Step six: Pay registration fees, acquire a license to operate, and open a business bank account.
Step seven: Apply for a UAE business visa.
Costs and financial considerations to make when starting a business in Dubai
Setting up a business in Dubai comes at a cost. You can expect to spend between AED 10,000 and AED 50,000 to set up in free zones and AED 20,000 to AED 40,000 to set up in the mainland.
Additionally, you’ll be paying rent or a land purchase price, consultant fees, visa fees, and license and approval fees. Make sure you have enough saved for all the overhead costs of starting your business.
Germany is also a great location for immigrants to start and run a business. Unfortunately, setting up here can be complex due to bureaucracies and industry-specific regulations that may make your list of requirements longer.
Consider consulting with legal and immigration consultants for a seamless experience. Be sure you’re up-to-date on things, including legal forms of business.
Legal business structures in Germany
Sole proprietorship (Einzelunternehmen): You’re the business’s sole owner and are personally liable for all risks, debts, and lawsuits.
Partnerships (Personengesellschaft): Business conducted by two or more people一partners. There are several types in Germany.
- Civil law partnership (GbR): Partners share business debts equally.
- General partnership (Offene Handelsgesellschaft, OHG): A business with at least two partners, with no limit on how they share liability.
- Limited partnership (Kommanditgesellschaft, KG): Has a minimum of two partners, where one partner has unlimited liability, while another’s liability is capped at the value of their shares.
Corporations (Kapitalgesellschaften): Corporations allow all owners to have limited liability. Legally, a corporation is separate from the owners and has the power to perform tasks that individuals do, such as entering into contracts, suing, hiring employees, or applying for loans.
- Limited Liability Company (GmbH): Offers shareholders limited liability.
- Non-profit Limited Company (gGmbH): A GmbH that’s a non-profit.
- Entrepreneurial Company with Limited Liability (UG): Designed for startups as it requires lower minimum capital.
- Stock Corporation (AG): This may be founded by one person, but it differs from a sole proprietorship because of extra regulatory requirements such as a management and a supervisory board.
Corporate tax requirements and exemptions in Germany
Germany’s tax landscape can be complex because the federal, state, and municipal governments levy taxes. Generally, you’ll pay corporate tax at 15% and a 5.5% solidarity surcharge tax一tax to fund social projects.
Depending on your municipality, you’re also subject to trade taxes ranging from 7% to 17%. Value-added tax (VAT) costs 19%, but certain goods and services—like food items—pay 7% VAT. Enjoy VAT and import duties exemptions in free trade zones (FTZ).
Initial approvals and permits
In order to start your business, you’ll need to obtain approvals and permits. These include:
- Business visa (D-Visa) to enter Germany to do business.
- A residence permit for self-employment if you’re not a European Union/ European Economic Area (EU/EEA) citizen.
- Business registration
- Address with the local citizen’s office (Bürgeramt)
- Local trade office (Gewerbeamt) for licenses and permits
- Tax number with the local tax office (Finanzamt)
- Chamber of commerce, if necessary
- Accident insurance, and an employment agency.
- Permits and licenses
- Some industries, like healthcare, attract special permits and licenses.
- VAT registration
- Trade license (Gewerbeanmeldung)
You must also register with the local trade office. German law treats German-owned and foreign-owned businesses equally. However, you’ll need more documents to register and operate a business in Germany as a foreigner.
Starting a business in the US
Expats can easily open and run businesses in the United States. However, the process may be long. A team of immigration, company formation, import-export, real estate, supply chain, and international tax experts simplifies the process.
How to choose the right business entity for your needs
Legal businesses in the US are similar to those in Germany. Before settling on an entity, consider tax implications, liability protection, administration and management complexities, and effects on raising capital.
You’re free to incorporate your business in the the US with no restrictions on foreign ownership. However, you must register as a foreign corporation and get an employer identification number (EIN) from the Internal Revenue Service (IRS).
How to open a business bank account in the US
To launch a business, you’ll need to have a bank account for business transitions. You’ll need a bank account for business transactions. To open a business bank account, you must register your business, obtain your EIN, attach the necessary documents and visit the bank to apply. You may start the application online, but you must visit the brand for in-person verification.
Each state in the US has specific legal requirements. Although the federal government formulates and implements laws and policies, you must also comply with the state laws where you operate.
To do this effectively, be sure to research thoroughly and stay informed on changes and updates. We suggest joining local business associations to share news, views, and issues and to develop a centralized compliance framework that includes professionals from different departments, such as IT, human resources, and operations, to reduce legal risk. Finally, you should Invest in relevant consultants. It may be expensive, but non-compliance is usually more costly.
FAQs
What is the best location for a business setup in Dubai?
It depends on your needs, but you have the choice between mainland or free zones. Carefully assess their differences and benefits to make an informed decision.
How do I set up a company in Dubai as a US citizen?
Identify the business you wish to establish, check for restrictions at your preferred location, and then decide whether to establish it in a free zone or on mainland Dubai.
Choose a legal structure, pick and register a unique trade name—different from your legal name—decide where you’ll operate from and if you’ll rent or buy. Pay the necessary registration fees, acquire a license to operate, open a business bank account, and apply for a UAE business visa.
Can a foreign entrepreneur start a business in Germany?
Yes. A local partner isn’t necessary.
What are the benefits of starting in a free zone over a mainland company?
Exemptions from corporate tax, import duty, and export duties. Set-up and operational costs are also lower.