The UAE work permit rule is written around a place, not a payroll. In the translation of Federal Decree-Law No. 33 of 2021 read for this guide, Article 6(1) says "It is not permissible to undertake work in the UAE and the employer may not recruit or employ any worker, except after obtaining a work permit from the Ministry" [1]. A developer, bookkeeper or sales head who never sets foot in the country is doing their work somewhere else, and the law firm CMS reads the position the same way: no UAE visa and no UAE work permit [2].
That is why hiring overseas staff under a UAE free zone company looks so easy, and why founders get it wrong. The UAE side is usually the quiet side. The exposure sits in the worker's country, which decides whether your "contractor" is an employee, and in your own tax return, because a free zone company claiming the 0% rate must carry out its core work in a Free Zone [3].
BusinessDubai.ae has set up UAE free zone and mainland companies since 2013. This guide covers the four routes, what each does to visas, payroll and cost, the free zone substance rule, deductions and permanent establishment risk abroad. It is general information, not legal or tax advice, and it describes no specific foreign country's rules.
Can a UAE free zone company hire someone who lives outside the UAE?
Yes. A UAE free zone company can engage a person who lives abroad as an independent contractor, as a direct overseas employee or through an employer of record, and none of those three needs a UAE visa or work permit, because both attach to work done in the UAE. The fourth route is relocating the person on a UAE visa.
An independent contractor sells you a service under a commercial agreement. The person invoices you and looks after their own taxes where they live.
A direct overseas employee has an employment contract with your UAE company but lives and works in another country. You are the legal employer, which can mean registering as an employer and running payroll in that country.
An employer of record (EOR) is a third party that already has a legal entity in the worker's country. It employs the person under local law, runs payroll and invoices you for the cost plus a monthly fee, while you direct the work.
Relocation is the comparison point: the person moves to the UAE, your company sponsors a work permit and residence visa, and one place in your visa quota is used. Our guide to hiring employees in Dubai covers that process in full, so it is not repeated here.
The cheapest route on paper is rarely the one with the least risk. A contractor agreement costs almost nothing to set up and carries the largest reclassification exposure, while a UAE visa costs the most up front and is the only route that puts the person's work inside the Free Zone.
How do the four routes compare on visas, payroll, cost and risk?
The four routes differ most on who the legal employer is. A contractor has none, a direct overseas employee and a relocated employee have your UAE company, and an employer of record takes the role itself for an advertised fee of about USD 599 a month. Only relocation uses a UAE visa and a quota place.
The table below compares the four routes for a UAE free zone company. Provider prices are advertised list prices in USD, read on 13 October 2026 [4][5]. Visa figures are BusinessDubai.ae package prices dated 24 September 2026, and each states its visa basis [20].
| Factor | Overseas contractor | Direct overseas employee | Employer of record | Relocate on a UAE visa |
|---|---|---|---|---|
| Legal basis | Commercial services agreement | Employment contract with the UAE company | Local employment contract with the EOR, plus your service agreement with the EOR | UAE employment contract, work permit and residence visa |
| Legal employer | Nobody. The person is in business for themselves | Your UAE company | The EOR, in the worker's country | Your UAE company |
| UAE visa or work permit | No | No | No | Yes |
| Uses a visa quota place | No | No | No | Yes |
| How they are paid | Invoice, then bank transfer or a contractor platform | Payroll run by you, usually under the rules of the worker's country | Local payroll run by the EOR, which invoices you | UAE payroll from the company account |
| Advertised or BD cost | Contractor platforms advertise USD 29 to 99 a month for management and USD 325 a month for a contractor of record | No UAE fee. Employer costs are set by the worker's country | Deel and Remote both advertise USD 599 per employee per month, on top of salary and employer costs | On IFZA, the first visa adds AED 8,500 to the licence-only package and the second adds AED 3,200, before salary and insurance |
| Main risk | Reclassification as an employee in the worker's country, and IP that was never assigned | Employer registration, payroll taxes and social security abroad, and a possible taxable presence there | The monthly fee, and tax questions the EOR does not remove | Up-front cost and quota, and the full weight of UAE employment rules |
Read the "Legal employer" row first. Almost every other row follows from it.
Does UAE labour law reach an employee who never works in the UAE?
On the texts read for this guide, the UAE work permit requirement attaches to work in the UAE, so it does not reach a person who never works here. CMS, in guidance dated 15 June 2026, adds that UAE law can still govern the employment contract if the contract says so, even though no visa or permit applies.
Start with a caveat about the source. The Ministry of Human Resources and Emiratisation's own copy of Federal Decree-Law No. 33 of 2021 could not be opened during research for this guide. The text below comes from an English translation that is marked as not official, of the original 2021 text, and later amendments were not checked against a consolidated version [1]. Confirm the quotations with a UAE employment lawyer before you build a contract on them.
Two provisions matter.
Article 6(1), the permit trigger. The translation reads: "It is not permissible to undertake work in the UAE and the employer may not recruit or employ any worker, except after obtaining a work permit from the Ministry" [1]. The trigger is work in the UAE. Nothing in the text read for this guide says a permit is required for a person who never works in the UAE.
Article 17(6), remote work. The translation reads: "If the worker wishes to perform his work remotely, whether inside or outside the State, with the approval of the employer, the latter may require specific working hours." [1] This shows the law contemplates remote work outside the State for a worker who is already under it. It does not create a separate permit-free category of overseas employee.
The executive regulations (Cabinet Resolution No. 1 of 2022) list remote work among the recognised work models. That text was read in a reproduction, not in the official PDF [6].
What CMS says about staff abroad
The clearest professional reading found is the CMS Expert Guide to Remote Working for the UAE, dated 15 June 2026 [2]. Three points, attributed to CMS and not to a UAE authority:
- UAE employment regimes are, in CMS's words, "largely silent on cross-border remote working arrangements".
- Where the contract is under UAE, DIFC or ADGM law, CMS says that framework "will generally continue to govern" the relationship.
- CMS states that "UAE residence visa and work permit requirements are not applicable to employees who work remotely outside of the UAE".
CMS also says the end-of-service gratuity rules do "not make any distinction on workplace location", and that health insurance is generally not required for non-sponsored staff abroad [2]. So choosing UAE law for an overseas employee's contract is not neutral. On the CMS reading it can bring gratuity with it, while the worker's own country may apply its mandatory protections as well.
Pro Tip: Decide the governing law of an overseas employment contract on purpose, with advice from both ends. Ask the UAE lawyer what UAE law would add (gratuity is the usual answer, on the CMS reading) and ask a lawyer in the worker's country which local protections apply whatever the contract says. Two regimes stacked on one employee is the expensive outcome.
For people who work for you inside the UAE without being on your own visa, the rules are different and stricter. Our guide to staff secondment and outsourcing in the UAE covers that situation.
Which free zones have written rules for employees who live abroad?
ADGM is the only UAE jurisdiction found with a written rule: section 11(3) of its Employment Regulations 2024, in force since 1 April 2025, disapplies the visa and permit section for remote employees abroad. DIFC applies a where-do-they-work test, and IFZA, Meydan Free Zone and DMCC publish nothing on staff abroad.
The two financial free zones run their own employment law. Every other free zone discussed here sits under the federal Decree-Law, with the zone authority handling permits and visas.
ADGM: the remote employee section
ADGM's Employment Regulations 2024 came into force on 1 April 2025. Section 11(3) reads: "For Remote Employees who do not reside in and do not perform work in the UAE, sections 4, 38, 39, 40, 41, 42, 43, 44, 45 46 and 49 of these Regulations shall not apply." [7]
Section 4 is the one that matters most here. It says: "The Employer shall be responsible for obtaining, maintaining and paying the cost of the Employee's UAE residency visa, work permit and UAE identity card." [8] With section 4 switched off, an ADGM employer has a written basis for employing a person abroad with no UAE visa.
Section 11(4) keeps the person inside the rest of the regime. It provides that "references in these Regulations to 'Employee' includes Remote Employees." [7] A remote employee abroad is still an ADGM employee for everything section 11(3) does not exclude.
One limit: holding an ADGM licence does not automatically place a company in this regime. Under section 75(3), the Regulations do not apply to employers holding a dual licence from the Abu Dhabi Department of Economic Development whose employees are governed by the UAE Labour Law, or to employers exempted by the Board [9].
DIFC: where the person ordinarily works
No equivalent carve-out was found for the DIFC. The source read was a frequently asked questions document from the DIFC Courts Pro Bono Programme, which is undated. The DIFC Employment Law itself (DIFC Law No. 2 of 2019, as amended) was not read in its primary text, so confirm the point with a DIFC lawyer.
That document says the DIFC Employment Law applies to individuals "based within, or ordinarily working in or from" the DIFC, "or if the individuals employment contract is stated to be subject to the laws of the DIFC Employment Law" [10].
On that reading, an employee abroad falls under DIFC employment law only if they ordinarily work in or from the DIFC or the contract opts in. If you are choosing between the two financial centres, our ADGM versus DIFC comparison covers the wider differences.
IFZA, Meydan and DMCC: ask in writing
No statement from IFZA, Meydan Free Zone or DMCC about employees or contractors who live abroad was found. The one DMCC document located deals with authorisation for people working in the free zone and refers to the older Labour Law No. 8 of 1980 [11].
Silence is not permission and it is not prohibition. If your arrangement depends on the zone's view, put the question to the zone in writing and keep the reply. If you are still choosing a zone, our free zone company setup page compares the packages.
Is the person abroad a contractor or an employee?
The label in the contract does not decide whether a person abroad is a contractor or an employee. The worker's country decides, usually by looking at five things: control, integration, exclusivity, who supplies the tools, and who carries the financial risk. Its answer also sets the payroll taxes and social security owed.
No country's test is described here, because each one is different. These are the general questions most systems ask in some form.
| Question | Points towards contractor | Points towards employee |
|---|---|---|
| Control | You agree a deliverable and a deadline. The person decides how and when to do it | You set hours, approve leave and direct the daily work |
| Integration | The person sits outside your team structure | Company email, a job title, a line manager, a place on the organisation chart |
| Exclusivity | Several clients at once | One client, full time, for an open-ended period |
| Tools | Own equipment, software and workspace | Company laptop, licences and accounts |
| Financial risk | Fixed price or milestones. They bear the cost of fixing their own errors | A fixed monthly amount whatever is delivered |
No single row decides the outcome. An authority looks at what actually happens, not only at what the contract says.
The misclassification risk sits in the worker's country, not in the UAE. If the authority there decides the person was an employee all along, the consequences are whatever that country's law provides, and they can reach back to the start of the engagement. The worker's country decides employee status, payroll taxes and social security. Take advice there before the person starts.
Common Mistake: Engaging a full-time, single-client "contractor" on a monthly salary. The person works your hours, uses your laptop, reports to your manager, takes leave when you approve it and receives the same amount on the same day each month. Every one of the five general tests points to employment. Calling the document a consultancy agreement changes none of those facts.
A contractor who lives inside the UAE is a different case with its own licensing rules. Our guide to a freelance permit versus a company covers that side.
What should the contractor agreement cover?
A contractor agreement with a person abroad should deal with six things in writing.
- Scope and deliverables. Describe outputs, milestones and acceptance, not hours and attendance.
- Intellectual property assignment. State that everything created under the agreement is assigned to the UAE company, and get the signature before work starts. Payment of an invoice does not by itself transfer ownership.
- Confidentiality. Cover client data, source code and pricing, with obligations that survive the end of the agreement.
- Data protection. Say what personal data the person will handle, where it is stored and which security measures apply.
- Governing law and disputes. Choose the law and the forum deliberately. A choice of UAE law in the contract does not stop the worker's country applying its own mandatory rules.
- Termination. Notice, handover of work and credentials, return of equipment, and final payment.
Pro Tip: Sign the IP assignment before the first line of code or the first design file exists. A retrospective assignment depends on the goodwill of someone who may no longer work with you. Our guide to setting up a software development company in Dubai explains why paying in full is not the same as owning the code.
What does an employer of record do, and what does it cost?
An employer of record is a company that legally employs your worker in the worker's own country and invoices you for salary, employer costs and a fee. Deel and Remote both advertise USD 599 per employee per month, and advertised fees across providers read on 13 October 2026 run from about USD 199 to USD 1,200.
The EOR signs a local employment contract with the person, runs local payroll and pays local taxes and social contributions. You sign a service agreement with the EOR and direct the daily work, without needing an entity in that country.
The table below shows prices advertised by named providers. Every figure is in USD, is a list price and not a quote, and was read on 13 October 2026 [4][5][12][13][14][15].
| Provider | Product | Advertised price (USD) | Notes |
|---|---|---|---|
| Deel | Employer of record | 599 per employee per month | Contractor management 49 a month. Contractor of record 325 a month |
| Remote | Employer of record | From 599 per employee per month | Contractor management from 29, a higher contractor tier from 99, contractor of record from 325 |
| Teamed | Employer of record | From 599 per employee per month | Price shown on its UAE page. Refundable deposit of one month's gross salary. Page reviewed 13 June 2026 |
| Skuad | Employer of record | 349 a month shown, with 499 struck through | Price shown on its UAE page, dated 7 October 2026 |
| Playroll | Employer of record | Often 300 to 800 per employee per month, or a percentage of salary | From an article dated 25 March 2026 |
| FMC Group | Market range | 199 to 1,200 a month, or 8% to 20% of payroll | A range quoted by a UAE consultancy, undated 2026 |
These are fees only, on top of salary and employer costs in the worker's country. Several of the prices appear on pages about hiring in the UAE, so ask each provider for a written quote for the country your worker lives in.
At the advertised USD 599 a month, the fee alone is USD 7,188 a year. At the dirham peg of 3.6725 that is about AED 26,400 a year per person, or about AED 2,200 a month.
What an employer of record fixes, and what it leaves with you
An employer of record fixes the employment-law side: the person has a lawful local employer and correct payroll, and the reclassification risk of a contractor arrangement largely goes away.
It does not fix three things:
- Intellectual property. The person's work may vest in the EOR as the legal employer. Check that the EOR's contracts assign it on to your company.
- A taxable presence abroad. A permanent establishment is about what the person does for your business in that country. A sales head who concludes your contracts does the same thing whoever issues the payslip.
- Free zone substance. A person employed by an EOR abroad is not your full-time employee in a Free Zone.
Quick Math: An EOR fee of USD 599 a month is about AED 26,400 a year [4][5]. On BusinessDubai.ae's IFZA package, the first visa adds AED 8,500 to the licence-only price and the second adds AED 3,200. On Meydan Free Zone the figures are AED 8,550 and AED 6,550 [20]. So one year of EOR fees costs about three times the first IFZA visa and about eight times the second. The visa then brings a UAE salary, health insurance and relocation costs that an EOR arrangement does not, so compare totals, not fees.
How do you pay staff abroad from a UAE company account, and does WPS apply?
A UAE free zone company pays people abroad by international bank transfer from its corporate account, against an invoice for a contractor or a payroll record for an employee. Whether the Wage Protection System applies to a worker who holds no UAE work permit was not found in any primary source read for this guide.
What the bank will ask
Regular payments to individuals in other countries are a pattern a bank's compliance team may ask about, and the answer is paperwork. Keep, for each person:
- the signed contract;
- each invoice, or the payroll record for an employee;
- evidence that the work was delivered, such as a milestone sign-off or a timesheet you already use;
- for an EOR, the service agreement and the monthly invoice.
Pay from the company account, never a personal one, and reference the invoice number in the transfer. If account opening is still ahead of you, describe overseas payments in the application so the first transfer is not a surprise. Our guide to opening a corporate bank account in Dubai covers what banks ask for and why applications stall.
The worker's country can add payment rules of its own, on currency for example. That is a question for the adviser in that country.
The Wage Protection System point
The Decree-Law, in the translation read, requires an employer to pay wages "in accordance with the regulations approved in the Ministry" (Article 22(2)), and allows salary in a currency other than dirhams if the contract says so (Article 22(3)) [1]. The words "Wage Protection System" do not appear in the Decree-Law text itself.
No primary source read for this guide says whether the Wage Protection System applies to a person who has no UAE work permit and works entirely abroad. This guide does not assert it either way. If your company is registered with the Ministry and also pays people abroad, ask the Ministry or your free zone authority how those payments should be treated, and keep the answer.
For staff who are on your UAE visa, payroll is a compliance task with deadlines. Our post-setup services team handles visa and payroll administration for UAE-based staff.
Will a team abroad cost a free zone company its 0% corporate tax rate?
A team abroad can cost a free zone company its 0% rate if that team does the core work. Article 8 of Cabinet Decision No. 100 of 2023 requires a Qualifying Free Zone Person to carry out its core income-generating activities in a Free Zone, with adequate assets, qualified full-time employees and operating expenditure there.
What Article 8 says
Article 8(1) reads: "A Qualifying Free Zone Person shall undertake its core income-generating activities in a Free Zone or a Designated Zone, depending on where such activities are required to be conducted, and having regard to the level of the activities carried out, have adequate assets, an adequate number of qualified full-time employees in a Free Zone or a Designated Zone depending on where such activities are required to be conducted, and incur an adequate amount of operating expenditures, in relation to each activity." [3]
Article 8(2) deals with outsourcing: "Core income-generating activities can be outsourced to another Person in a Free Zone or a Designated Zone depending on where such activities are required to be conducted, provided the Qualifying Free Zone Person has adequate supervision of the outsourced activity." [3]
Article 8(3) contains a wider rule for qualifying intellectual property. For that one category, the related activities can be outsourced "to any other Person in the State and to any other Person who is not a Related Party outside the State" [3].
Article 8(4) explains what counts as core. Core income-generating activities "mainly consist of those significant functions that drive the business value for each activity" and "are not exclusively or mostly support activities" [3].
Read together, core work must be done in a Free Zone by the company's own qualified full-time employees, or outsourced to another person in a Free Zone under adequate supervision. A contractor abroad, an overseas employee and an employer-of-record worker abroad are all outside a Free Zone. The only offshore outsourcing the text recognises is for qualifying intellectual property, and then only to someone who is not a related party.
What the FTA guide adds
The Federal Tax Authority's guide on Free Zone Persons (May 2024) is guidance and is not legally binding, but it shows how the authority reads the rule [16]. It asks for "an adequate number of full-time, qualified employees in the Free Zone". It also draws the line that matters for a team abroad: "A Free Zone Person may also perform non-core activities relating to its Free Zone Business outside of a Free Zone. Activities are non-core if they do not directly drive sales or are routine in nature." [16]
In the guide's worked example, staff outside the zone carrying out "routine delivery execution" are not performing core activities. If their work went beyond routine execution, the guide says "Company P would not meet the requirement" [16].
| Work | Likely character | Can it sit abroad for a company claiming 0%? |
|---|---|---|
| Bookkeeping, payroll processing, IT support, back-office administration | Routine or support | Yes, on the guide's wording about non-core activities |
| Customer support that follows a script | Routine | Usually yes |
| Winning customers, negotiating terms, deciding price | Drives sales and business value | No. Core work belongs in a Free Zone |
| Key management and commercial decisions | Significant functions | No |
| Research and development on qualifying intellectual property | Core, with a special rule | May be outsourced abroad, but only to a person who is not a related party |
The table shows the direction of the rule. Classifying a real role is a judgement on the facts.
What failing costs, and who is unaffected
A company that fails a Qualifying Free Zone Person condition is taxed at the ordinary rates, 0% on taxable income up to AED 375,000 and 9% above that, from the start of that tax period. It also cannot be a Qualifying Free Zone Person for the following four tax periods [20]. One year of running core work from abroad can therefore cost five years of the 0% rate.
Article 8 is a condition of the 0% regime. A company that is not claiming the 0% rate is unaffected by it. That describes most service and software companies in a free zone, whose income from ordinary clients is not qualifying income to begin with. Such a company is an ordinary taxable person, pays 0% up to AED 375,000 and 9% above, and may be able to use Small Business Relief while its revenue is AED 3,000,000 or less, for tax periods ending on or before 31 December 2029 [20]. It can put its whole delivery team abroad without touching Article 8.
Three guides go deeper: the Qualifying Free Zone Person 0% tax guide for the full list of conditions, the IP holding company guide for the qualifying intellectual property rules, and the Small Business Relief guide for the 2029 end date.
Real Talk: Article 8 bites a specific kind of founder: one whose free zone company earns qualifying income (trading between free zone companies, holding shares, certain regulated or logistics activities) and whose commercial brain sits abroad. If your buyers, deal-makers or portfolio managers live outside the UAE and your Dubai office is a desk and a licence, you have a substance problem. If you run a design agency or a software studio billing ordinary clients, you were never on the 0% rate, and Article 8 is not your issue.
A company whose every worker is abroad has no employees in a Free Zone at all. No source read for this guide addresses that case directly, so if such a company relies on the 0% rate, ask a UAE tax adviser how it meets Article 8. If you want a structure where the core roles sit in the UAE and support sits abroad, model your position→
Are payments to overseas staff and contractors deductible for UAE corporate tax?
Fees and salaries paid to people abroad are deductible on the general rule in Article 28(1) of Federal Decree-Law No. 47 of 2022, provided they are incurred wholly and exclusively for the business and are not capital. Payments to the founder's own overseas company or to relatives must also meet the arm's length standard.
The general rule, in the Ministry of Finance's English text of December 2022 (an unofficial translation, so confirm the current wording after later amendments), reads: "Expenditure incurred wholly and exclusively for the purposes of the Taxable Person's Business that is not capital in nature shall be deductible in the Tax Period in which it is incurred" [17]. The list of non-deductible expenditure in Article 33 does not include contractor fees.
A contractor's invoice, an employer-of-record invoice and an overseas employee's salary are all treated the same way. The proof is the same file the bank wants: contract, invoice and evidence of delivery.
Payments to connected and related parties
The position changes when the person or company on the other end is connected to you. Under Article 36(1), a payment to a Connected Person "shall be deductible only if and to the extent the payment or benefit corresponds with the Market Value of the service" [17]. Article 36(2) defines a Connected Person as an owner, a director or officer, or a related party of either. Article 34 applies the arm's length standard to transactions between related parties, and Article 55 deals with transfer pricing documentation.
This catches arrangements founders rarely think of as tax-sensitive:
- the UAE company pays a "management fee" to the founder's own company in another country;
- the founder's sibling or spouse abroad is paid a monthly retainer;
- a development team sits in a company the founder also owns, which invoices the UAE company each month.
In each case the fee has to be what an independent business would pay for the same service, and you need to show how you arrived at it.
For a company claiming the 0% rate there is a second consequence. Complying with the arm's length and documentation rules is itself one of the conditions of being a Qualifying Free Zone Person. A mispriced fee to your own overseas company is therefore not only a deduction problem.
Common Mistake: Setting the monthly fee to the founder's overseas company as a round number chosen to leave a convenient profit in each country. A fee with no method behind it is the first thing a transfer pricing review questions. Write down how the fee was set (a cost-plus calculation, or a comparison with what outside providers charge) at the time you set it, and review it each year.
Our transfer pricing guide for the UAE covers the methods, the documentation thresholds and the disclosure form.
Can a remote worker abroad create a taxable presence for the UAE company?
Yes. A person abroad who habitually concludes contracts for the UAE company, or whose home is used for the company's business most of the time, can give the company a permanent establishment in that country. The OECD's 2025 commentary uses 50% of working time over twelve months as its benchmark.
A permanent establishment is a taxable presence: the other country can tax the profit attributable to it. Two questions arise, and they are answered in different places:
- Does a permanent establishment exist? The worker's country decides, under its own law and any tax treaty it has with the UAE.
- If one exists, what happens on the UAE side? UAE corporate tax law answers that.
The two usual triggers
The contract-concluding agent. Under the long-standing international model, a person who habitually concludes contracts in the name of a foreign company, or habitually plays the principal role in concluding them, can create a permanent establishment for it. This is why a senior sales role is the classic trigger.
The home office. A home can be a fixed place of business of the company if it is used for the company's business on a continuing basis.
What the OECD said in 2025
The OECD Council adopted an update to the Model Tax Convention on 18 November 2025, with new commentary on home offices [18]. The commentary is guidance for interpreting tax treaties. It is not the law of any country, and each country's domestic law and each treaty still decide the outcome.
Its benchmark is that a home "would generally not be considered a place of business of the enterprise if the individual worked from that home or relevant place for less than 50 per cent of their total working time for that enterprise over the course of any twelve-month period" [18]. At or above that share, the question is "determined by the facts and circumstances" [18].
The commentary then names the factor that carries most weight: "A prominent consideration is whether there is a commercial reason for the activities to be undertaken by that individual in the Contracting State" [18]. A commercial reason means something like serving customers in that market. The commentary indicates that letting someone work from home in order to reduce costs is not, by itself, a commercial reason. The text on agents who conclude contracts was left unchanged by the update.
A fully remote employee is well above 50%, so the answer turns on why they are there and what they do.
The UAE side: the foreign permanent establishment election
Article 24(1) of Federal Decree-Law No. 47 of 2022 allows an election: "A Resident Person can make an election to not take into account the income, and associated expenditure, of its Foreign Permanent Establishments" [17]. The condition is in Article 24(7): the exemption "shall only apply to a Foreign Permanent Establishment that is subject to Corporate Tax or a tax of a similar character" in the foreign country at a rate of not less than 9% [17].
Confirm these provisions for amendments before relying on them. The text above is the December 2022 unofficial translation. The Ministry of Finance announced amendments to the ministerial decision on the participation and foreign permanent establishment exemptions on 23 December 2024, effective from 1 January 2025 [19].
For a company claiming the 0% rate, a permanent establishment abroad is a double problem. Under Cabinet Decision No. 100 of 2023, qualifying income must not be "attributable to a Domestic Permanent Establishment or a Foreign Permanent Establishment", and income that is so attributable "shall be considered Taxable Income" [3].
No guidance from the Ministry of Finance or the Federal Tax Authority was found on home-office permanent establishments for a UAE company's staff abroad.
Pro Tip: Keep contract-signing authority in the UAE and write it into the role. The overseas person's contract and job description should say that they may introduce and support deals but may not negotiate final terms or sign, and that approval and signature sit with a named director in the UAE. Then make practice match the paper, because paper that the emails contradict protects nobody.
When is it better to bring the person to the UAE on a visa?
Relocating the person is better when the role is core to a company claiming the 0% rate, when the person will sign contracts, or when you expect them in Dubai within a year. On BusinessDubai.ae's Dubai packages the first visa adds about AED 8,500 and the second adds AED 3,200 to AED 6,550.
A UAE visa is the only route that places the person's work inside the Free Zone, which is what Article 8 asks for. It also removes the question of a taxable presence abroad for that person.
What a visa adds to the package
The table below shows what each of the first two visas adds to a licence-only package, derived from BusinessDubai.ae's package prices dated 24 September 2026 [20]. Each figure is the difference between packages, so the basis is always stated. IFZA does not publish prices, so its figures are partner prices.
| Free zone | Emirate | Licence only, no visa (AED) | First visa adds (AED) | Second visa adds (AED) | Notes |
|---|---|---|---|---|---|
| IFZA | Dubai | 12,900 | 8,500 | 3,200 | Partner price. Lowest second-visa cost in Dubai |
| Expo City | Dubai | 12,500 | 8,550 | 3,500 | Package total with two visas: 24,550 |
| Meydan Free Zone | Dubai | 12,500 | 8,550 | 6,550 | Package total with two visas: 27,600 |
| Dubai South | Dubai | 12,500 | 8,550 | 6,550 | Package total with two visas: 27,600 |
| SRTIP | Sharjah | 5,510 | 8,480 | 3,805 | Non-Dubai alternative |
| ANC Free Zone | Ajman | 4,888 | 5,912 | 5,400 | Non-Dubai alternative. Lowest first-visa cost |
| Year two, Dubai packages | Dubai | About 80% of year one | Included in the renewal | Included in the renewal | Cards, deposits and compliance items sit outside the headline |
These are package prices for the visa. They exclude salary, health insurance, flights and gratuity, which BusinessDubai.ae's package pricing does not cover, so price those separately before comparing against an employer of record.
If the company does not need a Dubai address, the same decision costs less in the northern emirates. A Sharjah package at SRTIP is AED 13,990 with one visa, and our business setup in Sharjah page shows what that includes. ANC Free Zone in Ajman is the lowest complete package at AED 10,800 with one visa, and our business setup in Ajman page itemises it [20]. Both are non-Dubai alternatives.
Visa quota
Every UAE visa uses a place in the company's quota, and in a free zone the quota is tied to the package and the office or desk you take. If the people you relocate will serve UAE mainland clients directly, the structure question changes too, and our mainland company setup page covers that route. Renewals, medical tests and Emirates ID steps for each visa are handled by our post-setup services team.
Once someone is on your UAE visa, confirm the current absence rules with the immigration authority before agreeing that they can live abroad for long periods. Our guide to remote work arrangements for UAE employees discusses remote working for staff based here.
The remote work visa: a visa where you are not the employer
There is a middle path for a person who wants to live in Dubai without becoming your employee. The UAE's remote work (virtual work) visa is a self-sponsored one-year residence for people whose employer or business is outside the UAE. Our guide to the cheapest residency visas in the UAE puts the income requirement at USD 3,500 a month and the all-in first-year cost at about AED 1,220 to AED 2,770.
It does not make you the employer and it uses none of your quota. That is also its limit: a person employed by your UAE company does not, on its face, have an employer outside the UAE. It suits someone employed by a foreign entity or running their own business abroad, so check eligibility before planning around it.
For an itemised comparison of zones on the number of visas you actually expect to need, get a free consultation→
Which route fits which situation?
The route depends on what the person does, not on where they live. Support work by one or two freelancers suits a contractor agreement, a full-time worker suits an employer of record at an advertised USD 599 a month, and a core role in a company claiming the 0% rate belongs in the UAE.
| Situation | Route that usually fits | Why |
|---|---|---|
| One or two freelancers abroad doing support work | Contractor agreement | Low cost, real independence is plausible, and support work is not core |
| A full-time developer abroad | Employer of record, or direct employment after local advice | Full time for one client usually looks like employment |
| A sales head abroad who signs deals | Relocate, or remove signing authority and take local tax advice | Concluding contracts is the classic trigger for a taxable presence |
| A team of ten in one country | Consider a subsidiary in that country | Ten EOR fees at USD 599 a month come to about AED 264,000 a year, and a team that size is a presence in fact |
| A founder claiming the 0% rate | Core roles in the Free Zone, support abroad | Article 8 of Cabinet Decision No. 100 of 2023 |
| A founder who wants the person in Dubai within a year | Start with an EOR or contractor, and plan the visa and quota now | Avoids building a structure you will unwind |
At ten people the question becomes one of structure: a local company owned by the UAE company employs the team, invoices the UAE company and is taxed where it operates. Our guide to a branch versus a subsidiary explains the difference between the two forms from the UAE side, and the fee between the two companies is a related-party transaction from day one.
Real Client Stories
These are composite examples built from the situations founders most often face when their team sits outside the UAE. Names and details are illustrative, and the only figures used are published rules, advertised provider prices and BusinessDubai.ae's package prices.
The developer who was a contractor in name only
Karim ran a software studio from a Dubai free zone and engaged a developer abroad on a services agreement. He then paid the same amount on the same day each month, set working hours, and issued a company email address and laptop. Nothing in the UAE objected, because no UAE visa or work permit was involved. The exposure sat in the developer's country, where control, integration and exclusivity are the usual tests of employment. Karim moved the developer to an employer of record at an advertised USD 599 a month.
Lesson: the label on the contract does not decide status. The working pattern does, and the worker's country is the judge.
The founder whose 0% rate depended on a team abroad
Leila's Dubai free zone trading company planned to claim the 0% rate while the people who sourced suppliers and negotiated sales all lived abroad. Article 8 of Cabinet Decision No. 100 of 2023 asks for core income-generating activities in a Free Zone, with adequate assets, qualified full-time employees and operating expenditure. She kept bookkeeping and customer support abroad and moved the two deal-making roles to Dubai on IFZA's package, where the first visa adds AED 8,500 and the second adds AED 3,200.
Lesson: decide where the core work sits before the first tax return is filed, not after it.
The sales head who signed from his home office
Daniel's consultancy hired a sales head who lived abroad, worked from home full time and signed client contracts in the company's name. The UAE side was simple: no visa and no quota place. The risk was abroad. A person who habitually concludes contracts is the classic trigger for a taxable presence, and the OECD's 2025 commentary treats a home used for most of the working time as a question of facts and circumstances. Daniel moved signature to a director in Dubai and took tax advice in the sales head's country.
Lesson: write who can sign into the role, then make practice match the paper.
Your next steps
Three decisions carry most of the weight. First, be honest about whether the person is a contractor or an employee, and let the worker's country answer that, not the contract template. Second, if your free zone company claims the 0% rate, map which roles are core and keep those in a Free Zone. Third, keep contract-signing authority in the UAE unless you have deliberately chosen to have a taxable presence abroad.
BusinessDubai.ae can help with the UAE half of this: choosing a zone on the number of visas you will really need, with itemised pricing and no hidden fees. Our free zone company setup page shows what each package includes at nought, one and two visas. For the worker's country, you need an adviser there, and we will say so plainly.
Frequently Asked Questions
Can a UAE company employ someone living abroad?
Yes. A UAE company can employ a person who lives and works abroad, and on the texts read for this guide no UAE work permit or residence visa is needed, because both attach to work done in the UAE. The worker's country decides payroll taxes and social security.
Do I need a UAE work permit for someone who never enters the UAE?
No UAE work permit requirement was found for a person who never works in the UAE. Article 6(1) of Federal Decree-Law No. 33 of 2021, in the unofficial translation read, ties the permit to undertaking work in the UAE. CMS stated on 15 June 2026 that UAE residence visa and work permit requirements do not apply to employees working remotely outside the UAE.
Does UAE labour law apply to a remote employee abroad?
UAE labour law can apply to a remote employee abroad if the employment contract is governed by it, according to CMS guidance dated 15 June 2026. The worker's own country may also apply its mandatory employment rules, so take advice in both places.
Does UAE end-of-service gratuity apply to an employee who lives abroad?
It can. CMS says the UAE gratuity rules make no distinction based on workplace location, so an overseas employee whose contract is under UAE law may be entitled to it.
Does the Wage Protection System apply to staff outside the UAE?
No primary source read for this guide answers that question. Ask the Ministry of Human Resources and Emiratisation or your free zone authority and keep the reply.
Can an ADGM company employ staff abroad without UAE visas?
Yes. Section 11(3) of the ADGM Employment Regulations 2024, in force since 1 April 2025, disapplies section 4 (the employer's duty to obtain the UAE residency visa, work permit and identity card) for remote employees who neither live nor work in the UAE. They remain employees under the rest of the Regulations.
Does DIFC employment law cover an employee who works abroad?
Only in limited cases, on the source read. A DIFC Courts Pro Bono Programme FAQ says the DIFC Employment Law applies to people based in, or ordinarily working in or from, the DIFC, or whose contract is stated to be subject to it. The primary law text was not read for this guide, so confirm with a DIFC lawyer.
Do IFZA, Meydan or DMCC have rules on staff who live abroad?
No published rule from IFZA, Meydan Free Zone or DMCC on staff who live abroad was found as of 13 October 2026. Put the question to the zone in writing if your arrangement depends on its view.
What is the difference between a contractor and an employee abroad?
A contractor runs their own business and sells you a result, while an employee works under your direction as part of your organisation. Most countries look at control, integration, exclusivity, tools and financial risk. The worker's country applies its own test, and the label in the contract does not bind it.
What happens if an overseas contractor is reclassified as an employee?
The consequences are set by the worker's country and can reach back to the start of the engagement. In general terms they may include unpaid payroll taxes, social security contributions and employment entitlements.
Who owns the IP created by an overseas contractor?
Do not assume the UAE company owns it. Paying an invoice does not by itself transfer rights. Get a written assignment to the company signed before the work starts.
How much does an employer of record cost in 2026?
Deel and Remote both advertise USD 599 per employee per month, read on 13 October 2026. Across the providers read, advertised fees run from about USD 199 to USD 1,200 a month. The fee is on top of the worker's salary and the employer costs in their country.
Is an employer of record cheaper than a UAE visa for one hire?
On fees alone, no. One year at USD 599 a month is about AED 26,400, while the first visa on BusinessDubai.ae's IFZA package adds AED 8,500 to the licence-only price. A UAE visa then brings a UAE salary, health insurance and relocation costs, so compare the full cost of each route.
How much does adding a visa add to a Dubai free zone package?
On BusinessDubai.ae's package prices dated 24 September 2026, the first visa adds AED 8,500 at IFZA and AED 8,550 at Meydan Free Zone, Dubai South and Expo City. The second visa adds AED 3,200 at IFZA, AED 3,500 at Expo City and AED 6,550 at Meydan Free Zone and Dubai South.
Will hiring people abroad cost me the 0% free zone rate?
It can, if the people abroad do the core work. Article 8 of Cabinet Decision No. 100 of 2023 requires core income-generating activities to be carried out in a Free Zone with adequate qualified full-time employees there. Routine and support work can sit abroad on the FTA guide's wording.
Can a Qualifying Free Zone Person outsource core work to a company abroad?
No, with one exception. Article 8(2) allows core activities to be outsourced to another person in a Free Zone under adequate supervision. Only activities relating to qualifying intellectual property may be outsourced outside the UAE, and then only to a person who is not a related party.
What happens if my free zone company fails the substance test?
A company that fails a Qualifying Free Zone Person condition is taxed at the ordinary rates, 0% up to AED 375,000 of taxable income and 9% above, from the start of that tax period. It also cannot be a Qualifying Free Zone Person for the following four tax periods.
Does the substance rule affect a free zone company that is not claiming 0%?
No. Article 8 is a condition of the 0% regime only. A free zone service or software company whose income is not qualifying income is an ordinary taxable person, and where its staff sit does not affect Article 8.
Are payments to overseas contractors deductible for UAE corporate tax?
Yes, on the general rule. Article 28(1) of Federal Decree-Law No. 47 of 2022 allows expenditure incurred wholly and exclusively for the business that is not capital in nature. Keep the contract, the invoice and evidence of delivery to support the deduction.
What if the overseas contractor is my relative or my own company?
Then the payment is a connected or related-party transaction. Under Article 36 of Federal Decree-Law No. 47 of 2022 it is deductible only to the extent it matches the market value of the service, and the arm's length standard and transfer pricing documentation rules apply.
Does an overseas employee create a permanent establishment for my UAE company?
An overseas employee can, depending on what they do. A person who habitually concludes contracts for the company, or a home used for the company's business most of the time, are the usual triggers. The worker's country and any tax treaty with the UAE decide the answer.
What is the OECD 50% working-time benchmark for home offices?
The OECD's 2025 commentary says a home would generally not be a place of business of the enterprise if the individual worked there for less than 50% of their total working time over any twelve-month period. The commentary is guidance for interpreting treaties, not the law of any country.
Does an employer of record remove permanent establishment risk?
No, not by itself. An employer of record changes who the legal employer is, but a permanent establishment depends on what the person does for your business in that country.
Does the UAE withhold tax on payments to an overseas contractor?
This guide did not confirm the UAE withholding tax position for payments to non-residents for services performed abroad, so check it with a UAE tax adviser. The worker's country taxes the contractor's income under its own rules.
Can my overseas hire use the UAE remote work visa instead?
Only if they fit its terms. The remote work visa is for people whose employer or business is outside the UAE, with an income requirement of USD 3,500 a month. A person employed by your UAE company does not fit that description on its face, so check eligibility first.
References
[1] United Arab Emirates. Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations, Articles 6(1), 17(6) and 22, in an English translation marked as not official (original 2021 text). faolex.fao.org
[2] CMS. Expert Guide to Remote Working, United Arab Emirates, 15 June 2026: remote work abroad, governing law, visa and permit position, gratuity and health insurance. cms.law
[3] UAE Ministry of Finance. Cabinet Decision No. 100 of 2023 on Determining Qualifying Income for the Qualifying Free Zone Person, Articles 3, 5 and 8. mof.gov.ae
[4] Deel. Advertised pricing for employer of record, contractor management and contractor of record, read 13 October 2026. deel.com
[5] Remote. Advertised pricing for employer of record, contractor management and contractor of record, read 13 October 2026. remote.com
[6] Cabinet Resolution No. 1 of 2022, Executive Regulations of Federal Decree-Law No. 33 of 2021, Article 5 on work models, read in a reproduction. uae.shushin.io
[7] Abu Dhabi Global Market. Employment Regulations 2024, section 11, Remote Employees. adgm.thomsonreuters.com
[8] Abu Dhabi Global Market. Employment Regulations 2024, section 4, Visa and permits. adgm.thomsonreuters.com
[9] Abu Dhabi Global Market. Employment Regulations 2024, section 75, Short title, application and commencement. adgm.thomsonreuters.com
[10] DIFC Courts Pro Bono Programme. Frequently asked questions on the DIFC Employment Law, application of the law (undated). difccourts.ae
[11] DMCC. Employment contracts at a glance (undated). dmcc.ae
[12] Teamed. United Arab Emirates country hiring guide, advertised employer of record price and deposit, reviewed 13 June 2026. teamed.global
[13] Skuad. Employer of record in the United Arab Emirates, advertised price, 7 October 2026. skuad.io
[14] Playroll. Relocating from Dubai, typical employer of record fee range, 25 March 2026. playroll.com
[15] FMC Group. Employer of record cost in Dubai, quoted market fee ranges (2026). fmcgroup.com
[16] Federal Tax Authority. Corporate Tax Guide on Free Zone Persons (CTGFZP1), May 2024: substance, non-core activities and outsourcing. tax.gov.ae
[17] UAE Ministry of Finance. Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, Articles 1, 24, 28, 33, 34, 36 and 55, unofficial English translation (December 2022). mof.gov.ae
[18] OECD. The 2025 Update to the OECD Model Tax Convention, Commentary on Article 5, paragraphs 44.1 to 44.21, adopted 18 November 2025. oecd.org
[19] UAE Ministry of Finance. Announcement of amendments to the ministerial decisions on tax groups and on the participation and foreign permanent establishment exemptions, 23 December 2024. mof.gov.ae
[20] BusinessDubai.ae. Internal package pricing by free zone and visa count dated 24 September 2026, the marginal cost of each visa derived from it, and the corporate tax figures that accompany those prices. businessdubai.ae
