Free zone companies in the UAE
A free zone company gives 100% foreign ownership and a straightforward setup — the structure most owners use, and it can serve customers across the UAE and abroad. Here is what it is, the FZE, FZCO and FZ-LLC forms, and what it means at the bank.
Talk to us about your structureSee all company typesWhat a free zone company actually is
A free zone company is a limited-liability company licensed by a free zone authority rather than by the Dubai mainland. It is a separate legal entity from its owners — the company holds the contracts and the liability, and your personal assets sit behind it. It gives 100% foreign ownership as standard, with no local partner.
- A limited-liability company licensed by a free zone, not the mainland — your personal assets are protected.
- 100% foreign ownership is standard; share capital varies by free zone — some set no minimum, others a nominal or activity-based figure.
- Often no office needed — many owners run a free zone company from home or on the move, so there is no rent overhead. It is a big part of the appeal.
- One owner is an FZE (Free Zone Establishment); two or more is an FZCO (Free Zone Company) — and some free zones use a free zone LLC (FZ-LLC) for the same entity.
- Serves customers in the UAE and abroad — selling physical goods into the mainland needs a mainland route.
- Which free zone you pick matters — cost and banking vary; that is a separate decision (we link it below).
Free zone company vs mainland LLC
A free zone company suits most businesses. The reasons to look at a mainland company instead are specific — set out below.
| Free zone company | Mainland LLC | |
|---|---|---|
| Ownership | 100% foreign | 100% foreign (most activities) |
| Where it trades | Serves customers in the UAE and abroad; physical goods into the mainland go through a mainland route | Directly across the UAE market |
| Premises | Often just a shared desk, not your own office — less space, lower cost | A registered office tenancy (Ejari in Dubai) |
| Best for | Businesses serving clients abroad, in the UAE, or a mix | Mainland-only activities (e.g. real estate), large teams, or clients who require a mainland licence |
A free zone company works for most businesses serving the UAE and abroad; a mainland company comes in for specific reasons, set out further down. See how both sit next to branch, sole establishment and holding on the types of company in the UAE page.
The free zone company, in full
FZE, FZCO or FZ-LLC — what the difference is
The two are the same structure with a different number of owners. A Free Zone Establishment (FZE) has a single owner; a Free Zone Company (FZCO, sometimes FZC) has two or more. Both are limited-liability companies that are legally separate from their owners, and both give 100% foreign ownership. The choice follows your shareholding, not the other way round — if you are setting up alone you will usually be an FZE, and you can bring in shareholders later. Some free zones label the same entity a free zone LLC (FZ-LLC); it is the same family of limited-liability company, with the exact naming and detail set by each free zone authority.
Is a free zone company the same as an LLC?
It is a limited-liability company, but not a mainland LLC. Both protect your personal assets; the difference is who licenses them and where they can trade. A mainland LLC is licensed on the mainland and sells directly into the UAE market; a free zone company is licensed by a free zone and is built to trade internationally and within its free zone. People often call both “an LLC” loosely — the distinction that matters is the trading reach, not the label.
What a free zone company can and cannot do
A free zone company can work with clients in the UAE and abroad, trade with other free zones (moving goods between them usually carries no customs duty), and trade internationally. Your visa — and visas for your staff and family — come through the company’s establishment card, the document that lets it sponsor people for UAE residence; the number you can issue is set by the free zone and your package, and once you are putting several people on visas the package and desk size start to matter.
Selling physical goods into the UAE mainland is the exception: those goods count as imports, so 5% customs duty and VAT apply and they go through a mainland route. Since March 2025 a Dubai free zone company can also apply to Dubai’s Department of Economy and Tourism — the government department that licenses mainland businesses — for a mainland branch licence or a permit, rather than only selling through a distributor. The department decides which activities qualify, and the route does not cover financial firms in the Dubai International Financial Centre (a separate free zone for financial businesses).
When a free zone company is fine — and when you’d look at mainland
The honest test is simple: it is where you carry on the work, not where the client sits. Here is what falls either side of the line.
Clearly fine for a free zone company
IT consultancy
- You have an IT consultancy in a free zone.
- You visit a mainland client’s office to discuss a network upgrade.
- You return to your free zone office.
- You prepare the proposal, do the work remotely, hold Teams meetings and invoice the client.
That is exactly how many IT consultancies operate.
Marketing agency
- You have a free zone marketing company.
- You meet a mainland client in Business Bay to discuss their advertising campaign.
- All creative work, reporting and account management is done from your free zone office.
- The client pays your free zone company.
Again, normal consultancy activity.
Starting to look like you need a mainland licence
Permanent on-site IT team
- You have a free zone IT company.
- Four engineers work every day from the client’s Dubai office, with their own desks.
- They rarely attend your free zone office.
- The client’s site has effectively become your operating base.
At this point you look less like a consultancy and more like a mainland operation.
Recruitment company with a sales office
- You have a free zone recruitment company.
- You rent a small office in mainland Dubai, branded in your company name.
- Staff work there every day, meeting candidates and employers.
- It functions as your Dubai sales office.
That is hard to argue is merely “servicing mainland clients” — you are running a mainland establishment.
If that sounds like your setup, it does not mean the UAE is harder — it means the licence needs to match where the work actually happens. Running lean from home or a desk is fine; it is a fixed, staffed base on the mainland that changes the picture. Sometimes that is a mainland company; sometimes it is a free zone company with a mainland branch or permit alongside it. We’ll make sure everything is in the right place during the first meeting before we start work.
Talk to us about free zone vs mainlandTax and VAT on a free zone company
A free zone company is inside the UAE tax system. VAT (currently 5%) applies as it would elsewhere once your UAE turnover passes the level where VAT registration becomes compulsory (currently AED 375,000 a year). Separately, a free zone company can qualify for a 0% corporate-tax rate on its qualifying income (the “qualifying free zone person” rules) — but only if it meets strict conditions, and never automatically just because you are in a free zone. Not every free zone company qualifies, so rather than leave it as a maybe, we tell you whether the 0% is realistic for your activity. The detail sits on the UAE corporate tax page.
Choosing a free zone is a separate decision
There are more than forty free zones in the UAE, and the right one depends on your activity, your customers and how the company will bank — not the headline licence price. We keep that as a separate decision so it gets proper attention: see the full list, compared, on the free zones in Dubai page. Cost moves with the free zone, the activity and the number of visas, so we set the exact figure in the first conversation.
Is a free zone company right for your business?
A free zone company is at its simplest when your clients are mostly outside the UAE, and it still works well when you serve both — in practice many owners start with clients abroad and pick up UAE clients as they settle in, and one free zone company covers that. For most owners it is the simplest, quickest base: 100% foreign ownership and a structure banks understand. You would move to a mainland company for the reasons set out above. Most real situations are settled in one conversation that starts from what the business does. We set the company up, handle the licence, residency and the bank, and you deal with the same person from the first call onwards.
Frequently asked questions
What is a free zone company in the UAE?
A free zone company is a limited-liability company licensed by a UAE free zone authority rather than the mainland. It is a separate legal entity that gives 100% foreign ownership and is built to trade within its free zone and internationally. A single-owner company is an FZE; two or more owners make an FZCO.
Is an LLC a free zone company?
Not quite. Both are limited-liability companies, but a free zone company is licensed by a free zone, while an LLC usually means a mainland company licensed by the Department of Economy and Tourism. They protect your personal assets the same way; the difference is who licenses them and where they can trade.
What is the difference between an FZE, an FZCO and an FZ-LLC?
FZE and FZCO differ by the number of owners: a Free Zone Establishment (FZE) has one owner, a Free Zone Company (FZCO, sometimes FZC) has two or more. Some free zones call the same kind of entity a free zone LLC (FZ-LLC). All are the same family of limited-liability company with 100% foreign ownership; the label and detail vary by free zone.
How do I set up a free zone company in the UAE?
You choose the free zone and activity, reserve the name, submit owner documents, receive the licence and establishment card, then issue visas and open the bank account. We handle the sequence and, importantly, check the activity with the bank before the free zone is chosen so the account does not stall later.
Can a free zone company do business in mainland UAE?
It can serve customers across the UAE and abroad. The limit is mainly on physical goods sold into the mainland market — those are treated as an import, so 5% customs duty plus VAT apply and they go through a mainland route — and on a few activities that must be licensed on the mainland. Since March 2025, under a Dubai resolution, a Dubai free zone company can apply to Dubai’s Department of Economy and Tourism (the government department that licenses mainland businesses) for a mainland branch licence or a permit, rather than only through a distributor; the department decides which activities qualify. You would choose a mainland company mainly for a mainland-only activity, a large team, a particular bank, or clients who require a mainland licence.
Is VAT applicable to free zone companies in the UAE?
Yes — VAT (currently 5%) applies to a free zone company as it would to any UAE business once your UAE turnover passes the level where VAT registration becomes compulsory (currently AED 375,000 a year). The 0% corporate-tax rate for a qualifying free zone company is separate, applies only if strict conditions are met, and is not automatic.
Which free zone should I choose?
It depends on your activity, where your customers are and how the company will bank — not the cheapest licence. We keep this as its own decision; the full list of free zones, compared, is on our free zones in Dubai page, and we talk it through with you.
How much does a free zone company cost?
It varies with the free zone, the activity and the number of visas, so a single headline number is misleading. The cheapest licence is rarely the cheapest outcome once banking and renewal are accounted for. We set the exact cost in the first conversation, before any work starts.
Where to read next
Free Zones in Dubai →
The full list of UAE free zones, compared — which one fits, once you have decided on a free zone company.
What Is an LLC in the UAE? →
The mainland company, and when it fits better than a free zone.
Types of Company in the UAE →
Free zone company next to mainland LLC, branch, sole establishment and holding.
How to Open a UAE Business Bank Account →
Why the free zone you pick is really a banking decision.
UAE Corporate Tax for Foreign Owners →
Where free zone income can qualify for 0%, and where VAT still applies.
Not sure if a free zone company fits?
A short, no-cost conversation: you tell us what the business does and where it trades, and we tell you the structure that fits — and why.
Talk to us about your structure