Moving from a free zone to the mainland
My free zone licence is limiting my local sales. Can I convert to a mainland company?
The situation
There is no automatic conversion. Usually you set up a mainland company or branch and later wind up or keep the free zone entity, depending on your plans.
The law
- Federal Decree-Law 32 of 2021 on Commercial Companies: Allows branches and new companies on the mainland
- Art 18, Federal Decree-Law 47 of 2022: Mainland income of a free zone company is usually not qualifying income
What it means for you
Selling to mainland customers from a free zone company can break the Qualifying Free Zone Person status if the non-qualifying income passes the de minimis limit. A separate mainland company keeps the free zone entity clean. Example: a free zone trader with AED 2 million of mainland sales would breach the de minimis limit of AED 5 million or 5 percent of revenue only if its total revenue is small, so model both before deciding. Transfer assets between the two at market value.
What to do
- Map how much income comes from mainland customers.
- Test the free zone de minimis limit.
- Decide branch, new LLC, or both entities.
- Plan staff and visa transfers before the free zone renewal date.
We can do this for youMainland company setup in Dubai or Abu Dhabi: activity, legal form, trade licence, office and first registrations: AED 4,500