Almost every conversation about setting up in the UAE starts with a number. But a licence is not a product you buy on price: it decides whether you can sponsor a visa, where you may sell, and what a bank will let you open. Start with what the company has to do, and the choice usually makes itself.
The difference in one table
| Free zone | Offshore | |
|---|---|---|
| Residence visas | Yes, a quota depending on the package and space | No — an offshore company sponsors nobody |
| Physical presence | From a flexi desk to a warehouse, inside the zone | None; it is a registered entity, not a place |
| Where you may trade | Inside the zone and internationally; mainland sales go through a distributor or a branch | Outside the UAE, plus holding assets |
| Typical use | An operating business with staff | Holding shares, property or IP; international trade |
| Banking | A normal corporate account, with substance questions | Possible, but expect longer scrutiny |
Choose the free zone for the work, not the brochure
Zones are not interchangeable. Each publishes its own activity list, its own visa quota per square metre, and its own rules about how much physical space a licence carries. A media licence in a zone that does not list your activity is a licence you cannot use, and changing zone later means starting again.
- Check that your exact activity appears on the zone's list before anything is paid.
- Match the visa quota to the headcount you expect in two years, not today.
- Ask what the renewal costs, not only the first year — the second year is the real running cost.
- If you will invoice mainland UAE customers directly, say so early: it changes the answer.
What an offshore company is for
An offshore entity is a clean way to hold something — shares in another company, property where it is permitted, intellectual property — or to invoice outside the UAE. It has no office, no staff and no visas, and that is the point: it is cheap because it does less.
How the setup actually goes
- 1Fix the activity list and the shareholding first — everything downstream is derived from them.
- 2Reserve the trade name and get initial approval from the zone or authority.
- 3Sign the incorporation documents; some zones require them notarised or attested.
- 4Take the space — flexi desk, office or warehouse — and receive the licence and establishment card.
- 5Open the bank account, then apply for the visa quota and the shareholder's residency.
- 6Register for corporate tax, and for VAT if you cross the threshold.
The costs people forget
- Renewal in year two, which is when a cheap first-year package usually corrects itself.
- The establishment card and the visa allocation, separate from the licence.
- Medical, Emirates ID and insurance for every visa issued under the company.
- Accounting: a company with a licence has filing obligations whether or not it trades.
Questions people ask
Can a free zone company sell to customers in Dubai mainland?
Not directly as a rule. It sells through a mainland distributor, or opens a mainland branch. Services are treated more flexibly than goods, but confirm for your specific activity before assuming.
Does an offshore company pay corporate tax?
It is still a UAE entity and still has registration obligations; whether tax is due depends on where its income comes from and how it is structured. Get the position confirmed rather than assumed — the penalty is for not registering, not for owing nothing.
How long does it take?
A straightforward free zone licence is a matter of days once the documents are complete and the name is approved. What stretches it is attestation of foreign documents and bank onboarding, neither of which is under the zone's control.
Can I change zone later?
You can, but it is a new company in practice: a new licence, new bank account, and the visas move with it. Choosing correctly the first time is much cheaper than choosing quickly.
This article is general information, not legal or financial advice. Rules change — confirm your own position with a qualified professional before deciding.
