Expert talks about new tax agreement between Russia and UAE

A new agreement between Russia and the United Arab Emirates, designed to avoid double taxation, comes into force on January 1, 2026. For the first time, the document covers the private sector and regulates the income of individuals and legal entities in both countries. Mikhail Yusubov, Legal Director of Kalinka Ecosystem, spoke about the pros and cons of the agreement.

The new agreement has several key benefits. Firstly, the 10% rate on dividends, interest and royalties is a significant reduction compared to Russian standard rates, creating tax advantages when structuring investments and holdings.

The second important point concerns the item “Other income”. Now they can be taxed in the source country, which requires a particularly careful approach to B2B services and transactions between Russian and Emirati companies.

When migrating to work and switching to remote work, you should take into account the payment of personal income tax (PIT). Moving to the Emirates itself does not exempt you from paying PIT in Russia if you continue to work for a Russian company, even if your tax residency changes. However, this applies specifically to work activities.

- The agreement included important concessions. Income from renting and selling real estate in the UAE is subject to taxation only in the UAE, - explains Mikhail Yusubov. - Even if a citizen remains a tax resident of the Russian Federation, he is not obliged to pay personal income tax in Russia on such income.

Companies in the United Arab Emirates free zones are considered residents for treaty purposes, although tax credit is not always available, depending on the structure and applicable regime.

The potential exclusion of the UAE from the Russian Ministry of Finance's offshore list after the agreement comes into force will provide additional preferences - in particular, a zero tax rate on dividends for Russian parent companies.

In 2023, Russians were among the top 5 buyers of real estate in the Emirates among foreign buyers. In 2024, demand changed. The dollar exchange rate against the ruble increased, and for Russians earning in foreign currency, the cost of real estate increased several times, which cooled demand. In addition, new offers appeared in other countries at attractive prices.

Clients are waiting for the real estate they bought in the United Arab Emirates to be completed and start generating income. At the same time, in the ultra-expensive segment - from 10 million dollars - developers are seeing increased activity among Russians.

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