The UK-UAE Double Tax Treaty: Eligibility, Provisions, and Tax Implications

This treaty applies only to specific income categories and includes defined residency criteria, tax relief mechanisms, and dispute resolution provisions.

In this guide, we explain the key provisions of the UK-UAE double tax treaty, outline which types of income are covered, clarify who qualifies for tax relief, and walk through the process of applying for treaty benefits.

This overview reflects the latest legislative updates in both countries, including the UK’s 2025 reforms to non-domiciled taxation and the UAE’s corporate tax framework introduced in 2023.

What Is the UAE-UK Double Tax Treaty?

The primary purpose of bilateral tax treaties is to protect individuals and businesses from taxation on the same income in two jurisdictions, typically through methods like tax credits and tax exemptions.

The UAE-UK double taxation agreement (DTA), which has been in force since 2016, establishes which jurisdiction has the primary right to tax specific types of income and outlines mechanisms for resolving taxation disputes between the two countries.

The treaty has also been modified by the OECD Multilateral Instrument (MLI), effective from 1 January 2020, which introduced anti-abuse provisions and clarified how certain articles are interpreted in practice.

Since the treaty applies exclusively to tax residents of either or both jurisdictions, it also outlines the criteria for determining tax residency status in both the UK and the UAE.

What Are the Tax Obligations in the UAE and UK?

The UAE includes low or zero tax on most types of income, regardless of your residency status. For instance, the UAE has a zero-tax policy on the following types of income:

• Salaries and wages
• Capital gains
• Real estate
• Inheritance

However, since 1 June 2023, the UAE imposes a 9% federal corporate tax on businesses with annual taxable profits exceeding AED 375,000. This marks a shift from the UAE’s traditionally zero-tax environment. The UAE’s double tax treaties with other countries, including with the UK, help mitigate the impact of this corporate tax on cross-border business income.

The UK is a higher-tax jurisdiction that taxes individuals and businesses based on their residency status. UK tax residents are generally subject to taxation on their worldwide income and gains, while non-residents are liable for tax only on income sourced within the UK.

Under the UK tax law, income refers to earnings from sources such as employment, pensions, real estate, business activities, and investments.

Who Is Eligible To Claim Tax Relief Under the UK-UAE Tax Treaty?

To claim tax relief under the double tax treaty between the UK and the UAE, you must be a tax resident of either jurisdiction.

You’re considered a UAE tax resident if you meet the following conditions, as clarified under Ministerial Decision No. 27 of 2023, which introduced a statutory definition of tax residency for natural persons:

• You spend over 183 days annually in the UAE.
• The centre of your personal and financial interests is in the UAE, and you maintain a primary residence in the country.
• You’re a UAE or GCC national or hold a valid residency visa, are physically present for over 90 days in the UAE, and most of your financial and primary residence ties are in the UAE.

Meanwhile, you’ll be treated as a UK tax resident if you pass the UK’s Statutory Residence Test, which comprises three tests:

1. Automatic UK test: You qualify as a UK tax resident if you spend more than 183 days in the UK in a single tax year or if your only home is in the UK for at least 91 consecutive days and you stay in that home for at least 30 days or more per tax year. You may also pass the test if you maintain full-time employment in the UK for 365 days, and at least one day falls within the year for which you’re determining tax residency.
2. Automatic overseas test: You pass the test if you spend 16 days or less in the UK after having been a UK resident in one or more of the preceding tax years, or if you spend less than 46 days in the UK and weren’t a UK resident for the previous three tax years. You also qualify if you work full-time in a foreign country and spend 91 days or less in the UK, and at least 61 of those days aren’t spent working.
3. Sufficient ties test: You’re eligible if you spent over 90 days in the UK in one or both of the prior two tax years preceding the year under consideration and have sufficient family, work, and accommodation ties in the UK.

Passing the automatic UK test or the sufficient ties test qualifies you as a UK tax resident, meaning you will be subject to tax on your worldwide income, including income sourced from the UAE. Conversely, meeting the automatic overseas test would classify you as a UK non-resident, subject only to UK tax on UK-sourced income.

From 6 April 2025, the UK abolished the remittance basis of taxation. Individuals who become UK tax residents after a period of non-residency may instead qualify as Qualifying New Arrivals (QNRs). QNRs are eligible for a four-year exemption on foreign income and gains, provided these remain offshore and are not brought into the UK.

Additionally, the UK has introduced a Temporary Repatriation Facility (TRF) for former non-domiciled individuals who held unremitted foreign income or gains prior to 6 April 2025. Under the TRF, qualifying individuals can remit these sums to the UK between 6 April 2025 and 5 April 2027 at a flat tax rate of 12%, without triggering further income or capital gains tax.

These changes significantly affect UK tax planning for internationally mobile individuals and require careful consideration when determining how and when to establish or resume UK tax residency.

What Are the Residency Rules for Legal Entities in the UK and the UAE?

A legal entity is considered a UAE tax resident if registered or effectively managed within the country. Meanwhile, a business will be treated as a tax resident in the UK if it’s incorporated in the UK.

If both jurisdictions have the right to tax your corporate income, leveraging the UK-UAE DTA will help you avoid or mitigate the impact of double taxation. This typically occurs when a company taxable in one jurisdiction has a permanent establishment (PE)—an office or a branch—in the other contracting jurisdiction.

What Happens if You Are a Resident in Both the UK and the UAE?

If you meet the tax residency criteria in both jurisdictions, your residency status will be resolved according to Article 4(3) of the UK-UAE tax treaty.

This article applies OECD tie-breaker rules, which consider the following factors in descending order:

If you are a national of both or neither country and none of the above factors is decisive, the tax authorities of the UK and the UAE will resolve your residency status through mutual agreement.

Which Categories of Income Are Covered by the UK-Dubai Double Tax Treaty?

The UK-UAE double tax treaty contains provisions that apply to the following types of income:

1. Employment income
2. Capital gains
3. Income from immovable property
4. Business income
5. Dividends
6. Interest
7. Royalties
8. Other income

Employment Income

The tax treaty between the UK and the UAE stipulates that a resident of one contracting state is generally subject to taxation on employment income in that state.

However, residents of one contracting country exercising employment in the other country may also be taxed in that other country. The DTA includes an exemption from this rule if you’re a UAE tax resident working in the UK for fewer than 183 days per year. In this case, your employment income is only taxable in the UAE (meaning it’s exempt from tax), provided the following conditions are met:

1. Your remuneration is paid by an employer who isn’t a resident of the UK.
2. Your salary isn’t paid by your employer’s permanent establishment in the UK.

The same rules apply to UK tax residents working in the UAE for 183 days or less within 12 months. Their employment income is only taxable in the UK, as long as it is not paid by an employer who is a UAE resident or a PE in the UAE.

Capital Gains

Taxation of capital gains under the UK-UAE tax treaty includes provisions that determine which jurisdiction has the primary taxing rights on earnings derived from the disposal of property, shares, and business assets, as outlined in the table below:

Income From Immovable Property

UK expats regarded as UAE tax residents who earn income from using or renting immovable property in the UK may be subject to tax in the UK. Similarly, UK residents deriving income from immovable property in the UAE will be liable for tax in the UAE. However, as the UAE does not impose taxes on rental income, this typically results in no tax liability.

The definition of immovable property will depend on the specific laws of each contracting state. In any case, immovable property will include land, farmland, buildings, and equipment used in agriculture and forestry.

These rules apply to both individuals and businesses generating a profit from immovable property.

Business Income

The UK-UAE treaty states that businesses located and operating in one jurisdiction will only be taxed in that jurisdiction.

However, if they have a permanent establishment (PE) in the other contracting country, like a UK business with a PE in the UAE, that other country (the UAE in this case) can tax the profit generated by the PE. Under the treaty, PEs are treated as distinct and separate enterprises and taxed as independent companies engaged in the same or similar activities as the primary business.

Businesses with a PE in the UAE may also need to comply with the UAE’s Economic Substance Regulations, which require entities conducting certain activities to demonstrate adequate economic presence in the UAE through local operational substance and annual reporting.

The UK-UAE double tax treaty allows businesses to deduct executive and general administrative expenses associated with the PE from their tax bill, regardless of the PE’s location. It also includes tax exemption for the purchase of goods and services by the PEs in either the UK or the UAE.

Dividends

For the purpose of the UAE-UK tax treaty, dividends include income derived from shares and other rights in a company, as well as any income treated as dividends under the local tax laws of the jurisdiction where the company is based.

If a company from one contracting state pays dividends to a resident of another contracting state, the dividends are taxable in that other state. For instance, if a UAE company pays dividends to a UK resident, only the UK can tax those dividends.

However, if a UAE company derives profit from the UK, the UK can’t tax the dividends paid by the company unless one of the following conditions applies:

1. The dividends are paid to a UK resident
2. The shares that generate the dividends are related to the permanent establishment of a UK company in the UAE

If the dividends are generated from an investment vehicle that earns profit from immovable property exempted from tax, the country where the company is a tax resident can tax the dividends at a rate of up to 15%.

If the dividends are received by a pension scheme in another country, they remain tax-free in the country where the company paying out the dividends is located.

Interest

The tax treaty between the UAE and the UK defines interest as income from all types of debt claims, including mortgages, and earnings from government securities and bonds.

Interest arising from one contracting country (for instance, the UK) and beneficially owned by a resident of the other contracting country (the UAE) is taxed in that other state (the UAE).

Still, the UK as the source country can also tax that same interest if the beneficial owner is a UAE tax resident that falls into one of the following categories:

• The government or one of its political subdivisions, local authorities, statutory bodies (government institutions), or its central bank
• A company whose shares are actively traded on the stock market
• A pension scheme
• An independent financial institution

However, if a resident of the UK conducts business in the UAE through a PE and is the beneficial owner of interest derived from that business, the payments will be taxed as business profits rather than interest in the UAE. The same applies to UAE residents conducting business in the UK.

An exception applies if there is a special relationship (like a business partnership) between the payer and the recipient of interest payments, and the amount of the interest paid exceeds the amount which the payer and the beneficial owner would typically agree on if there were no special relationship in place. In such cases, the excess amount is taxed based on the tax laws of each contracting state.

Any excess interest payments made between related parties that exceed arm’s-length pricing may be recharacterised and taxed under Article 9 of the treaty, in line with OECD transfer pricing principles.

Royalties

Royalties, for the purposes of the UAE-UK tax treaty, include payments received for the use or the right to use copyrights of scientific, artistic, and literary work. They are only taxable in the country in which the recipient is a resident.

However, if you are a resident of one contracting jurisdiction and operate a business in the other contracting jurisdiction through a PE and receive royalties connected to that PE, those royalties are taxable as business profits in the country where the PE is based.

Like with interest payments, any excess over the amount of royalties the payer and the recipient would agree on if they weren’t in a special relationship (business, family, or similar) is taxed according to the tax laws of each jurisdiction.

Where royalties are paid between related entities, and the amount exceeds what would have been agreed upon by independent parties acting at arm’s length, the excess may be recharacterised and taxed in accordance with Article 9 of the treaty and OECD transfer pricing rules.

Other Income

The double tax treaty between the UAE and the UK also includes special tax provisions regarding the following types of income:

• Government services: The salaries, wages, and similar compensation paid by the government to an individual for government-related services are only taxable in the country in which they’re sourced. If the government provides a salary for government-related work in another country, the income will be taxable in that other country if the employee is its citizen or moved there for reasons unrelated to work.
• Pensions: Government pension plans are only taxable in their country of origin. However, if an expat is a resident and a citizen of the other country, their pension will be taxed only in that other country.
• Directors’ fees: A resident of one country earning directors’ fees in the other country, serving as a member of the board of directors, will be taxed in the country where the company is based.
• Shipping and air transport: Companies earning income from operating ships or aircraft in international traffic are taxed in the country where the company is located.

How To Apply for Tax Relief Under the UK and UAE Double Tax Treaty?

Applying for tax relief under the UAE-UK tax treaty includes the following steps:

1. Obtaining a tax residency certificate (TRC): You must acquire a TRC to confirm your tax residency in either the UK or the UAE. This legal document applies to both individuals and companies and can be obtained from HMRC in the UK or the UAE’s Federal Tax Authority.
2. Gathering other required documents: You will also need to submit a declaration form specifying the type of income for which you are claiming treaty relief, as well as supporting documents such as audited financial statements, proof of residency, and contract details relevant to the income.
3. Completing the relevant forms: You must complete the tax relief application form issued by the HMRC in the UK or the FTA in the UAE, providing all personal, income, and residency details, along with documentation of the treaty article under which relief is sought.
4. Engaging in the Mutual Agreement Procedure (MAP), if applicable: In June 2025, the UAE Ministry of Finance issued updated guidance on the Mutual Agreement Procedure (MAP) for resolving tax disputes under Article 25 of the UK-UAE double tax treaty. This process allows individuals or entities subject to taxation not in accordance with the treaty to seek resolution through bilateral negotiation between the UK and UAE tax authorities. Taxpayers must submit a MAP request within three years of first receiving notification of the tax action they believe breaches the treaty.