Spain to the UAE: What Spanish Companies Should Consider Before Setting Up in Dubai

Spanish companies arrive in the UAE for good reasons: access to the Gulf and wider Middle East, a straightforward corporate environment, and proximity to markets that are difficult to serve from Madrid or Barcelona.

What surprises many of them is that the difficult questions are rarely on the UAE side. Forming a company in Dubai is well-documented and comparatively quick. The complications tend to arrive later — and usually from Spain.

We advise Spanish and Latin American businesses on this route regularly. The pattern repeats: the UAE structure is set up correctly, the Spanish position is not considered until a tax authority asks about it, and by then the options have narrowed.

This article sets out the questions worth answering before you incorporate, rather than after.

1. The structure decision is not only a UAE decision

Choosing between a mainland company and a free zone entity is usually presented as a UAE question — licensing, ownership, where you can trade, which activities are permitted. Those matter, and we have written about them in detail in our guides to setting up a company in Dubai and how corporate tax applies to free zones.

What is often missed is that the structure you choose also shapes how the arrangement is viewed from Spain: how the entity is characterised, whether it is treated as genuinely resident in the UAE, and what the Spanish side will expect to see documented.

The practical point is sequencing. A structure chosen purely for UAE convenience can create friction in Spain that is expensive to unwind later. Both jurisdictions should be considered at the same time, not one after the other.

2. Permanent establishment: the risk most often overlooked

This is the single issue we see cause the most difficulty.

A UAE company can still create a taxable presence in Spain — a permanent establishment — depending on how it actually operates. It is not determined by where the company is registered, but by where activity genuinely takes place: where decisions are made, where contracts are effectively concluded, whether there is a fixed place of business, and whether someone in Spain habitually acts on the company’s behalf.

Common patterns that deserve scrutiny:

• Directors who remain resident in Spain and make key decisions from there
• Contracts negotiated in Spain and merely signed in Dubai
• An office, warehouse or staff in Spain serving the UAE entity
• A Spanish agent or representative concluding business for the UAE company

None of these is automatically fatal. But each is a factual question that can be tested, and the answers depend on evidence — board minutes, travel records, where meetings genuinely take place, employment arrangements. That evidence is far easier to create as you go than to reconstruct under scrutiny.

The equivalent question for individuals — when a person, rather than a company, stops being tax resident in Spain — is covered in our Spanish-language guide to residencia fiscal en los EAU.

3. The Spain–UAE tax treaty does not do the work on its own

Spain and the UAE have a double taxation agreement, and it is a genuine advantage of this corridor.

But a treaty is a framework for resolving competing claims, not an exemption. To rely on it you generally need to show that the UAE entity is genuinely resident there and entitled to the treaty’s benefits — which usually means documentation, including a tax residency certificate from the UAE authorities. Our guide to the UAE tax resident definition sets out what that involves.

Two practical observations. First, treaty benefits are claimed, not automatic. Second, they are claimed with evidence, and that evidence needs to exist for the period in question — obtaining it retrospectively, once a question has already been raised, is considerably harder.

4. “But isn’t Dubai a tax haven?” — an outdated label worth retiring

This question still shapes how many Spanish advisers — and some Spanish clients — approach the UAE, and the premise is out of date.

The UAE is not included in Spain’s current list of non-cooperative jurisdictions. It was removed from the old “tax haven” list following the entry into force of the Spain–UAE double taxation agreement, and it does not appear on the current list established by Order HFP/115/2023, as amended in June 2026. The official list published by the Spanish Tax Agency does not include the UAE.

This matters in practice. The special anti-haven measures Spanish law attaches to listed jurisdictions — the harsher presumptions and restrictions that genuinely complicate structuring — do not apply to the UAE by default.

What it does not mean is a free pass. Everything else in this article — permanent establishment, residence, substance, related-party dealings — applies with full force, and Spanish authorities examine UAE structures on those grounds rather than by labelling the jurisdiction. The right conclusion is not “the UAE is waved through”; it is that a properly built Spain–UAE structure is assessed on its facts, which is exactly why the facts are worth building deliberately.

5. Substance: the UAE side has its own expectations

The UAE has its own requirements around economic substance for certain activities, explained further in our note on ESR in the UAE, and its own corporate tax regime with registration obligations.

The point worth making here is that substance is not only a UAE compliance exercise. Real presence in the UAE — an office, staff, decisions genuinely taken there — is also the strongest evidence available if the Spanish side ever asks where the business actually operates.

Companies that treat substance as a box-ticking exercise on the UAE side often find they have nothing persuasive to show on the Spanish side. The two questions have the same answer, and it is worth building that answer deliberately.

6. Transactions between related entities

Where a Spanish parent and a UAE subsidiary trade with each other — management fees, service charges, licensing, intra-group financing — those arrangements attract attention from both sides.

The expectation, broadly, is that related parties deal with each other on terms comparable to independent parties, and that this is documented. Arrangements that shift profit without a clear commercial rationale are exactly what both authorities are equipped to examine.

This is worth getting right at the outset. Documentation created contemporaneously is credible; documentation created after a query is not.

7. Questions worth answering before you incorporate

• Where will the company’s decisions genuinely be made, and who will make them?
• Will any director or key decision-maker remain tax resident in Spain?
• Where will contracts actually be negotiated and concluded?
• What real presence will exist in the UAE — premises, employees, operations?
• What will flow between the Spanish and UAE entities, and on what basis?
• What documentation will exist to support all of the above, from day one?

If several of these are unresolved, the structure is not ready — regardless of how straightforward the UAE incorporation is.

Why this is worth doing properly

The Spain–UAE corridor works well when it is structured deliberately. The businesses that run into difficulty are rarely those that did something aggressive; they are usually those that treated the two jurisdictions as separate problems and dealt with them months apart.

How we help

Rubert & Partners is the longest-established Spanish-speaking legal practice in the United Arab Emirates. Through our Spanish Desk and Spanish Tax Desk, we advise Spanish and Latin American companies on both sides of this route: the UAE structure, and how it will be viewed from Spain.

That means considering the structure and the Spanish position together, documenting the arrangement so it holds up if examined, and anticipating the points of friction before they become a procedure.

We advise in Spanish, English, French and Arabic.

If you are considering the UAE from Spain, or already operate here and want your position reviewed, contact our team on +971 4 238 0965 or through our contact page. We respond within 24 hours.

This article is general information, not legal or tax advice. Cross-border structures depend heavily on specific facts and should be assessed individually.