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Lease of office space when registering a company in Dubai, UAE – real or virtual office?

Where-and-how-to-register-an-offshore-companyFrom our experience there is quite a number of incorrect information and assumptions  in terms of relevant requirements with regard to office space or other business premises (warehouse, production premises, land plot for construction, etc. ) when  incorporating a company in Dubai and other Emirates in the UAE.

Hereby we aim to provide comprehensive overview and information with regards to such legal aspects and requirements relevant to various types of companies in the UAE .

Lease of office space by offshore companies

For offshore companies, registered in the UAE, lease of real office or other premises in the UAE is generally prohibited, and the address of such company is provided by registered agent of the company. Such address can be in any Emirate at the address of registration and location of the office of the registered agent of a company.

Lease of premises for onshore companies in FTZ

For onshore companies registered in Free Trade Zones of the UAE requirements for lease of office space or other facilities may significantly differ depending on the selected Free Trade Zone and type of activities of a company.

In some FTZ lease of virtual office provided by the administration of FTZ is permitted. In other FTZ there might be a mandatory requirement to lease real office or other business premises of a particular size.

It is also worth mentioning  the following four important aspects in terms of lease of office or other premises for companies in FTZ in Dubai and other Emirates in the UAE:

  1. A company can rent space only in such FTZ, where the company is registered.
  2. It is forbidden to share one office by several companies. There are few exceptions in some FTZ- if office matches the parameters of required minimum premises size per company and companies have same structure of shareholders.
  3. The type of leased premises must be in compliance with the company’s business. In case of office such premises shall have the status of office space, in case of warehouse such premises shall have the status of the warehouse space, etc. The use of living space for real business is strictly forbidden.
  4. Also it is important to note that the maximum number of visas company can obtain for its shareholders and employees in majority of cases directly depends on the size of the office / premises the company leases.

To summarize the above – the choice of the company premises in FTZ is very significant as it can directly influences the company’s business. For instance, if you initially selected FTZ that provides virtual office, and such FTZ is a couple of hours from Dubai, at the first stage such company can be an ideal solution, but it might become totally inappropriate, if business requires later, for example, real office in Dubai.

In addition, some FTZs simply might not have particular type of space, and having registered in such FTZ a company and having leased an office, upon a short period of time you can face the problem relating to lease of, for example, a warehouse or industrial premises, since such FTZ might generally not have premises of such type or all premises are occupied.

Lease of premises for onshore companies outside FTZ of the UAE – in Dubai and other Emirates of the UAE.

For such type of companies the lease of virtual space is prohibited and each company shall have its own separate premises. Moreover, for most activities, the minimum size of the office, if the business of a company generally  implies lease of office, shall not be less than 30 sq.m. Office or other premises requirements depend directly on company’s business activities.

Summary

When choosing a type of a company and place of its registration it is necessary to consider all options, and not just initial company registration fees. As outlined above, if you choose a low cost solution and later face problems associated with lack of required facilities for your business, you, in fact will waste your time and money.

Or other scenario – saving some money by registering a company with lower costs of incorporation one may later face a problem of unacceptably high lease rates of the required business premises.

Our company provides registration of all types of companies in the UAE, while choosing the most suitable options which meet all company’s requirements. i.e. price, location, type and leased premises, type of business, number of visas, etc.

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