Dubai

The tax treaty for the avoidance of double taxation between the French government and the government of the United Arab Emirates was signed on July 19, 1989 and was amended in 1993 to now also include a multilateral convention to prevent base erosion and profit shifting since the entry into force 1^er January 2019 (the " Convention ").

The objectives of this Convention are multiple.

First, both countries wish to promote their economic relations and cooperation in tax matters.

Furthermore, they wish to eliminate double taxation with respect to certain taxes expressly covered by the Convention^[1].

However, the Convention has provided a safeguard: the scheme or strategies put in place by taxpayers, whether individuals or legal entities, must not have the sole and exclusive aim of obtaining tax relief provided for by the Convention.

The French and Emirati taxes covered by the Convention are limited to^[2] :

– income tax including in the case of real estate sales;

– tax on companies registered in France or the UAE;

– the solidarity tax on real estate assets; and

– inheritance tax.

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Germany announced last February that it had purchased tax data of millions of people living in Dubai.

Questioned by The Echoes, the General Directorate of Public Finances has also confirmed that the sharing of this data with the French tax authorities has already taken place.

The French authorities are now seeking to identify potential fraudsters in this data and the presence of "undeclared income" and "unknown assets" of people wanting to evade tax in their country. This will include verifying whether French entrepreneurs who have gone to Dubai have paid the "exit tax" which applies to unrealized capital gains made in France and abroad (1).

This article will outline the concept of Exit Tax in order to inform French expatriates residing in Dubai about their compliance or not with French tax law due to their change of tax residence from France to the Emirates.

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