1. The UAE corporate-tax reforms of 2023 introduced a 9% federal corporate tax above a profit threshold but left the personal tax position essentially unchanged. UAE residents continue to pay no personal income tax, no capital gains tax and no inheritance tax.
2. DIFC and ADGM Foundations are the workhorse holding structures for UAE-resident UHNW families. Each has its own statute, its own court, its own foundation register and its own operational culture.
3. PPLI sits naturally on top of a Foundation in this configuration. The Foundation holds the family's businesses and certain illiquid assets; the policy holds liquid investment wealth; the death-benefit nominations align with the children's residences.
4. The drafting attention should be on the children's tax regimes, not the principal's. The principal's residence delivers no tax friction. The children's residences deliver all of it.
5. A single policy structure rarely fits a multi-jurisdictional family. Two or three policies, each drafted to a particular branch of the family, ordinarily produces a materially better outcome.
Consider Mr Patel - Indian by origin, a UAE resident for thirty years, the founder of a regional logistics business with a family fortune in the low nine figures. His wife is British by nationality. Their three adult children have settled, respectively, in London (a son working in finance), Lisbon (a daughter who took up Portuguese residence under the former NHR regime and intends to remain), and Sydney (a younger son who has emigrated permanently). Mr Patel intends to retire to the UAE, to leave the principal share of the business to a family-office structure that will continue after his death, and to provide meaningful liquid wealth to each of his three children in their respective lifetimes and on his death.
The complications are obvious to a practitioner who has seen the pattern. The London son is, on current facts, a UK Long-Term Resident or close to becoming one. The Lisbon daughter sits within an NHR regime that has closed to new arrivals; she has the remaining unexpired portion of her ten-year window and may or may not transition to IFICI thereafter. The Sydney son is within Australia's worldwide-income regime, which treats foreign trusts and foreign discretionary structures with significant caution. The wife is a British national and will, on current rules, become a Long-Term Resident for IHT purposes if she returns to live in the United Kingdom. The principal's wealth compounds inside the UAE on a 0% tax base. Each child, when the wealth reaches them, will be on a different tax base. The structuring problem is to deliver the wealth to each child in a manner that is efficient at the receiving end.
The UAE has, over the last decade, evolved a private-client architecture that is now comparable in seriousness to the offshore-financial-centre incumbents. `Three points are worth recording.
The federal corporate tax introduced in 2023 levies 9% on corporate profits above an AED 375,000 (approximately US$102,000) threshold. The tax is levied at the entity level and is, in most family-investment configurations, an immaterial overlay: investment income passing through a Free Zone qualifying entity may, on satisfaction of the qualifying-income conditions, be taxed at 0%. Investment income held by an individual is not within the corporate-tax net at all. There form has made the UAE a less extreme outlier on the global tax map; it has not made the UAE a tax jurisdiction in any meaningful sense for individuals.
TheDIFC Foundation regime, in force since 2018 under the DIFC Foundations Law (LawNo 3 of 2018), and the ADGM Foundation regime, parallel under the ADGMFoundations Regulations 2017, have given UAE residents a serious onshore vehicle for holding investment wealth and for governance and succession purposes. The Foundation is a civil-law construct: an orphan structure with no shareholders, governed by a charter, operated by a council, with founders, beneficiaries (or purposes) and a registered office in the relevant financial centre. The DIFC and ADGM versions are independent, with their own laws, their own registries, their own courts and their own professional infrastructure. A UAE-resident family choosing between the two ordinarily decides on a combination of the family's existing professional relationships, the preferences of the corporate-services provider engaged, and the comparative comfort of the family with the courts of each.
TheFoundation, in our practice, performs two roles. The first is the holding of operating-business equity and other illiquid assets, with the council operating in place of a board of directors and with the family represented through an appropriately drafted role (founder, council member, protector, beneficiary).The second is the holding of a PPLI policy where the family wishes to layer the wrapper above a holding structure rather than holding the policy individually.
The Federal Personal Status Law for Non-Muslims (Federal Decree-Law No 41 of 2022) introduced a choice-of-law option permitting non-Muslim residents of the UAE to elect the law of their nationality for personal-status matters including succession. The DIFC and ADGM wills services have, since their introduction, allowed non-Muslim residents to register wills under common-law principles administered by the courts of the respective financial centre. The combination has materially improved the succession-planning landscape for international UAE residents over the last several years; the historic concern that succession ofUAE-situs assets would default to the Sharia regime is, for most non-Muslim international residents, no longer the binding concern it was a decade ago.
PPLI sits naturally as the wrapper for liquid investment wealth in this architecture. The principal is on a 0% personal tax base; the policy is held by the principal (individually or through a Foundation); the death benefit is paid to nominated beneficiaries on the principal's death. The tax friction the wrapper saves is primarily at the children's end, not the principal's.
For a child resident in the United Kingdom and approaching Long-Term Resident status, a PPLI policy nominated in the child's favour delivers the death benefit outside the deceased's estate (the principal's UAE estate generates no UK IHTin any event), outside probate, and into the child's hands as a tax-free receipt under the ordinary insurance-proceeds analysis. The child, holding the proceeds, is then taxed on the arising basis on the post-receipt income and gains of the funds — but the wealth has reached the child cleanly, without the inefficiency of an estate transmission. Where the child wishes to wrap the proceeds in his or her own UK-resident PPLI structure, the wealth can be deployed straight into the new wrapper, with the child's planning continuing under his or her own residence. The structure passes the wealth between generations cleanly.
For a child resident in Portugal under the unexpired NHR regime, aPortuguese-compliant PPLI policy nominated in the child's favour delivers the death benefit outside Imposto do Selo on succession (the insurance carve-out applies in the great majority of cases) and free of Portuguese personal income tax at the moment of receipt. Where the child wishes to retain the wealth in aPortuguese-compliant wrapper post-receipt, the proceeds may be deployed into afresh policy or used to settle a discretionary structure with the daughter as beneficiary, depending on her preferred configuration. The preferred outcome, on most facts, is to ensure that the post-receipt wealth begins life inside a wrapper rather than as a directly-held cash balance.
Australia is the most demanding of the three children's jurisdictions. The controlled-foreign-trust rules and the foreign-investment-fund regimes apply with full force; the Australian Tax Office's view of foreign discretionary structures is well-known to be sceptical. The PPLI structure for a UAE principal with an Australian-resident child requires the wrapper's death-benefit nomination to operate cleanly into the child's hands without the wrapper being characterised during the principal's lifetime as a structure in respect of which the child is a controlling interest holder. Drafted with care, the structure works; drafted carelessly, it draws the underlying portfolio into the Australian regime prematurely. The drafting question is one for specialistAustralian advice in concert with the carrier's compliance team.
Where the family is structurally multi-jurisdictional, as in the Patel example, the instinctive question is whether a single policy with three named beneficiaries— one in each jurisdiction - can serve the configuration. The instinctive answer, in our view, is no. A single policy drafted to satisfy three different country-compliance regimes simultaneously is an exercise in compromise. The drafting must satisfy the highest of the three death-benefit floors; the country-compliant overlay must address each jurisdiction's substantive position; the carrier's compliance team will decline most of the available bespoke drafting because it cannot provide three sets of guarantees on a single contract.
The structurally cleaner answer is three policies, each drafted to a single child's residence, each held by Mr Patel as policyholder, with the relevant child as nominated beneficiary. The total implementation cost is higher than a single-policy structure; the operational running cost is broadly similar (three policies running in parallel, each with its own carrier line and custodian relationship); the outcome at each child's end is materially better. We have placed multi-policy structures of this kind for several MENA-resident principals, and the structure has performed exactly as intended on the facts as they have unfolded.
Where the family wishes to layer a Foundation above the policy structure, the configuration is straightforward: the DIFC or ADGM Foundation acts as policyholder of record on each policy; Mr Patel sits within the Foundation governance as founder and council member; the children sit as beneficiaries of the Foundation; on Mr Patel's death, the Foundation continues, the policy proceeds are paid to the Foundation as policyholder, and the council distributes the proceeds to the children in accordance with the charter and any related guidance.
The Foundation overlay is appropriate where the family wishes to retain governance control over the wealth post-Mr Patel's death - for example, where the principal's view is that the wealth should be released to the children over a period rather than immediately, or where the children's situations are evolving and the principal wishes the council to exercise discretion in light of facts unknown at the time of policy issuance. The overlay is unnecessary where the family's preference is for direct receipt by the children on Mr Patel's death; the policy nominations will, in that case, achieve the outcome on their own.
MrsPatel, the British-national wife, deserves separate consideration. If she remains in the UAE as a long-term resident, her UK IHT exposure is confined to her UK-situs assets in the event of her death; her global wealth is otherwise outside the UK net. If she returns to the UK as a resident and accumulates ten years of UK residence in any twenty, she becomes a Long-Term Resident with worldwide IHT exposure. Her holding of any policy on her own life, or any beneficial interest in Mr Patel's policies, becomes potentially relevant to her own UK IHT position. Pre-relocation planning - restructuring Mrs Patel's interests in the family wealth before she becomes a UK Long-Term Resident - is the conventional answer; the drafting requires care.
Two configurations do not fit the architecture this paper describes. The first is the UAE principal whose wealth is wholly in active operating businesses he himself manages. PPLI is not the right wrapper for active operating equity; theFoundation is the correct vehicle for the equity and the policy is appropriate only for investment wealth held outside the businesses. The second is the UAE principal whose children are all in jurisdictions hostile to the wrapper - for example, principal residence in the United States or in jurisdictions whose tax law does not recognise the insurance-proceeds carve-out. In those cases the architecture has to be reworked from first principles and PPLI may not be the answer at all.
It depends on whether the family wishes governance control over the wealth post-death (Foundation) or direct receipt by the children (principal as policyholder). The drafting of the policy and the Foundation differs accordingly. We have placed structures in both configurations.
Cash or in-specie, depending on the carrier's appetite and the underlying assets.Where the principal already holds a discretionary portfolio at a private bank, in-specie funding is ordinarily available, with the same custodian and the same manager continuing inside the wrapper.
Yes. The policy permits beneficiary nominations to be amended over the life of the contract. Where a child relocates to a different jurisdiction during the principal's lifetime, the country-compliant overlay of the relevant policy can be reviewed and amended. The drafting should anticipate the possibility at issuance.
The wrapper's death-benefit nomination operates outside the principal's estate; the child, on receipt of the proceeds, holds the proceeds as a UK-resident, with the post-receipt income and gains taxable on the arising basis. If the child wishes to shelter the proceeds in his or her own UK-tax-deferred wrapper, the proceeds may be deployed into a fresh policy held by the child.
Recognition is jurisdiction-specific. The major civil-law systems that recognise the HagueTrusts Convention will ordinarily recognise the Foundation as a comparable vehicle for substantive purposes; the recognition for tax purposes is a separate question and depends on the relevant tax authority's view of the structure's transparency or opacity. Specialist input on the receiving jurisdiction is required before any structure goes live.
The configuration this paper describes - UAE-resident patriarch, children abroad - is one of the more favourable starting points in international tax planning.The principal's own residence delivers no tax friction. The wealth compounds inside a 0% jurisdiction. The structuring problem is at the receiving end: how the wealth reaches each child in his or her own jurisdiction in a manner that is tax-efficient at that end. The structures available - Foundations for governance, PPLI for liquid investment wealth, country-compliant drafting foreach child's residence, registered wills under the relevant DIFC or ADGM regime - are mature, well-understood and operationally clean. The principal who places them in time has given his children a meaningfully better outcome than the principal whose family discovers, on the day after his death, that the structuring has been postponed by a decade. The cost of placing the structures is small. The cost of not placing them is, in most configurations, far larger than the saving.
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