The United Arab Emirates is amongst one of the most popular destinations for expats looking to retire.
The warm, year-round weather, stable economy and affordable luxury lifestyle are just a few of the many reasons that the UAE is becoming such a sort after retirement spot.
If you’re interested in relocating to Dubai, Abu Dhabi, Ajman or any of the seven emirates, you may have already started thinking about the financial prospects.
With recent positive changes to retirement visas, there are more reasons than ever to make the move and invest your money in your retirement.
There is a lot to think about and take into consideration, so we’re going to break it down into an expat guide to retiring in the UAE!
This will be broken down into the following:
In 2019 the UAE introduced a new residency visa to those looking to retire in the sunshine.
The new residency rules state that expatriates over the age of 55 will be granted a five-year retirement visa if they meet a set of clauses, with the possibility of renewal, for those retirees who wish to stay longer, should they still meet the eligibility criteria.
This is great news for expatriates who meet any one of the following criteria:
For expats that have lived in the country for a long time and maybe even raised children, the new visa means you will no longer have to move back home to retire.
Making long-term investments or commitments in the UAE is now a possibility without the fear of being repatriated once you reach the retiring age of 55 and above.
This is the latest in a string of initiatives the government has recently announced to boost the country’s economy and entice expats to make long-term financial investments.
For a long time, living in the UAE has been seen as a short-term plan with a goal to earn money and accumulate savings for the future.
The announcement of the 5-year residence visa for retirees is shifting the dynamics for expats in the UAE.
The opportunity to retire in the UAE, has made real estate and property investing a more appealing option as it means you can live in the country for longer and manage the properties easier.
If you’ve been hesitant to start planning your retirement, start a business or invest in a home in the UAE, now is the time to start planning for your future.
Let’s talk about tax.
It’s no secret that the tax-free lifestyle in the UAE is extremely attractive to most.
In fact, the UAE, Australia, Canada and New Zealand were cited as the most popular retirement destinations.
Retiring in the UAE provides you with the opportunity to grow your own personal wealth as well as being able to purchase property, start a business and plan for your family's future.
If you’re a UK expat, once you reach the retirement age of 55, normal UK pension rules allow 25% of your pension to be paid tax free, with the remaining 75% subject to income tax.
Thanks to the tax treaty that was signed between the UK and the United Arab Emirates in 2016, payments received from a UK pension plan by a resident of the UAE, will only be subject to tax in the UAE.
As the UAE does not tax personal income, it means you will not pay any tax on the payments from your UK pension!
This means you can fully encash your pension, tax free if you satisfy the Statutory Residence Test 2013 in the UK, which means an individual must be no longer regarded as a non-UK resident.
Whilst the UAE is a popular location for individuals looking to advance in their career or start a business, it’s also a good retirement option. In the UK, the highest rate of income tax you could pay is up to 45%, which is a large chunk of anyone's salary or source of income. When you reach the retirement age of 65, this income tax could also be taken from your state pension.
There a couple of different options available to expats in the UAE when making financial plans for your pension.
Qualifying Recognised Overseas Pension Scheme (QROPS)
A popular option for many expats in the UAE, and indeed expats in general, is to set up a QROPS. Expats in the UAE can simply transfer their pension into a QROPS once they lose the tax benefits of saving in the UK, and can make further contributions towards their retirement.
It’s common to set up a QROPS in a third party jurisdiction, this is common practice for international retirement planning.
SIPPs is a type of personal pension for individuals who are comfortable making their own investment decisions.
SIPPs tend to be more suitable for people who have knowledge in investing and who have a larger amount of funds.
You can use your SIPP to invest as much or as little money as you want, with as much or little risk as you decide to generate you income.
Ai Investment Group specialises in implementing the best retirement plans for your investment. We work with you to manage your wealth and investment opportunities to maximise your assets.
QNUPS is an overseas pension scheme in which cash and assets that are not eligible for UK tax relief can be contributed.
If you are looking at acquiring a new residency visa, one of the potential requirements is that you have to have an active income of more than AED 20k per month. If you opt for a QNUPS pension, then this could assist you in obtaining this all-important visa.
The creation of the QNUPS legislation has provided significant investment and savings opportunities for British nationals, both expats and UK residents.
A QNUPS can offer a great chance to top up the overall amount of assets and capital that needs to be set aside for a comfortable retirement. Many individuals don’t have enough capital within their existing pension scheme to provide them with the level of income they will require once they have stopped working.
There are plenty of options available to expats retiring in the UAE, recent changes to visa laws mean that now is one of the best times to plan your retirement in the region.
To get the most out of your retirement post-employment, it requires meticulous planning and investing for the future you have always dreamed of.
We can help manage your wealth to get the most out of your assets, whether you’re planning to invest, save or just need help managing your taxes