A foundation is broadly defined as a legal entity without members and with its own organisation, the ownership of which is to achieve a certain specific purpose by means of endowment made. It comes into existence when ownership of assets is transferred to the foundation by the Founder. A Foundation enjoys legal personality which fulfils similar functions as those of a trust, but with the administrative flexibility of a company.

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A foundation is governed by its charter and by-laws. A DIFC foundation is managed by a foundation council and / or by the founder, if the latter wishes to have reserved powers. Also, a DIFC foundation will require to be supervised by a guardian if it is established for a purpose such as a charitable purpose foundation.

 

DIFC Foundations are governed by the DIFC Foundation Law No. 3 of 2018 (DIFC Foundations Law) and offer a flexible, secure, and effective solution for asset protection, legacy planning and wealth management.

 

Key Foundation Persons

 

Founder

The Founder is the individual or entity that establishes the Foundation. A minimum of 1 Founder is needed. The Founder can be an individual over the age of 18 or a body corporate.

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Council Members

Council members act as the governing body, similar to a board of directors in a company.  heir duties include implementing the foundation’s charter and By-Laws, making decisions regarding the Foundation’s investments, disbursements, and other activities, ensuring compliance with relevant laws and regulations, and protecting the foundation’s assets. The foundation shall have at least 2 council members. Council members and can be individuals over the age of 18 or a body corporate. The council member cannot be a Guardian.

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Guardian

The Guardian is an individual or entity appointed to oversee the Foundation Council and ensure that the Foundation adheres to its stated purpose and governance principles. The Guardian can be an individual over the age of 18 or a body corporate. The appointed Guardian cannot act as a council member.

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Registered Agent

A registered agent is a corporate service provider, licensed by the DIFC Authority (Premier Management Services (DIFC) Limited) to facilitate the registration and ongoing compliance of the Foundation, and that is also registered with the DIFC Financial Services Authority as DNFPB (designated non-financial business or profession). A foundation may appoint a registered agent to process the application and registration of the foundation.

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Qualified Recipients

Qualified Recipients are the individuals or entities that benefit from the Foundation’s assets and activities, Qualified recipients are usually passive but are the ones for whom or which the foundation has been created.

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Registered Address

A foundation can lease an office in the DIFC area or share the office of the registered agent.

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Key aspects 

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1. Holding of real estate in Dubai - A DIFC Foundation is allowed to hold real estate in Dubai. There is an MOU between DIFC and the Dubai Land Department. There is a reduced transfer fee of 0.125% when gifting a property to the DIFC foundation.

2. Holding of virtual assets - As per the Digital Assets Law DIFC Law No. 2 of 2024, a foundation can also hold virtual assets. As per the law, a digital asset is intangible property and is neither a thing in possession nor a thing in action.

3. Taxation or Non-Taxation - All juridical persons incorporated in the UAE shall abide by the UAE corporate tax law. A DIFC foundation is considered to be a juridical person and is taxable as a normal company in the UAE. Nevertheless, Article 17 of the corporate tax law makes special provisions for family foundations, which enables them to apply to be treated as an unincorporated partnership, which is transparent for corporate tax purposes, making the foundation similar to individual ownership. To enable an application to be treated as an unincorporated partnership, the foundation must qualify as a family foundation.

4. Re-domiciliation of DIFC foundation - DIFC foundations offer flexibility to move their legal home from another jurisdiction to  or from DIFC to another location. This feature helps families or businesses keep the same legal structure even if they shift their operations or change regulatory needs.

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