From 1 June 2023, the UAE introduced a 9% Corporate Tax, which applies not only to companies but also to individuals if their activity is considered equivalent to a business.

The key threshold is AED 1,000,000 in annual income from business activity. Income below this level may remain tax-exempt — but only if specific conditions are met.

This overview is based on official guidance issued by the Federal Tax Authority (FTA) in Real Estate Investment for Natural Persons (October 2024).

Rental income earned as a private investment is not automatically treated as taxable business income.

What Qualifies as Investment Activity

Rental income is not subject to corporate tax if all of the following conditions are met:

  • The activity involves sale, leasing, or subleasing of real estate
  • The activity is conducted in the name of a natural person
  • No commercial license is held by the owner
  • The activity is outside a registered business structure, such as a sole establishment
  • No license is legally required for the activity itself

In this case, the income is classified as Real Estate Investment and is excluded from the corporate tax base, regardless of the total amount earned.

Pro Tip

The decisive factor is not the amount of rent, but whether the activity is legally classified as a business.

How the Model Works with a Property Management Company

If the property is rented through an agent or property management company, but:

  • The lease agreement is signed in the name of the individual owner
  • Rental income is paid directly to the owner
  • The commercial license belongs only to the intermediary

then the income retains its investment status.

No corporate tax liability arises, provided that the owner personally does not hold a license and is not conducting a registered business activity.

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Practical Example

An individual owns four apartments.

  • Two are rented short-term through a property management company
  • Two are rented long-term through an agency

The owner has not obtained a Holiday Homes license and has not registered a company.

→ In this scenario, all rental income qualifies as Real Estate Investment and is not subject to corporate tax.