[Contribution_Yoon Deokgeun] “The UAE: An Emerging Hub for High-Net-Worth Individuals”, The Law Times, February 2025

You can find the Law Times article contributed by Deokgeun Yoon, Specialist at Bonne Clef, in the section below.

Law Times

Deokgeun Yoon, Attorney at the Dubai Office of Trowers & Hamlins LLP and Foreign Correspondent for The Law Times

In recent years, the United Arab Emirates (UAE) has rapidly emerged as a global hub for high-net-worth individuals (HNWIs) and asset management. As of 2023, over 68,500 HNWIs—defined as individuals with over USD 1 million in liquid assets—reside in Dubai alone. In 2024, the UAE was projected to see the highest net inflow of millionaires globally, surpassing the United States and Singapore.

While several factors contribute to this success—world-class security, favorable tax conditions, the UAE’s effective COVID-19 response, and geopolitical shifts such as the Russia-Ukraine war—equally critical is the country’s legal and institutional infrastructure, particularly its support for the establishment and operation of family offices.

What is a Family Office?

A family office is a private wealth management advisory firm established to manage the investments and assets of a high-net-worth individual or family. The concept originated with European royalty and developed among American industrialist families, with roots tracing back 200 years to the Rothschilds.

In Korea, multi-family offices (MFOs) operated by securities firms, insurers, and banks are more common, while single-family offices (SFOs)—dedicated to a single family—remain relatively rare.

Family offices now play a growing role in global investment markets. The total assets under management by family offices worldwide are estimated at USD 6 trillion, surpassing the entire hedge fund industry. Unlike venture capital funds, family offices prioritize wealth preservation, allowing for longer investment horizons and greater flexibility, making them attractive, stable partners for companies. Consequently, family offices have become key drivers of innovation and growth in the startup ecosystem.

Legal and Regulatory Environment Supporting HNWI Inflows

(1) Tax Benefits and Legal Certainty in Free Economic Zones

The UAE imposes no personal income tax or capital gains tax. Although a corporate tax was introduced in 2023, economic free zones like the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM) still offer 0% tax rates, preserving their appeal to global investors.

Moreover, DIFC and ADGM operate under independent common law frameworks, separate from UAE mainland law. This legal certainty and investor confidence have positioned these jurisdictions as trusted hubs for international financial activity.

(2) Introduction of Foundation Structures

One of the most significant developments attracting family offices to the UAE has been the introduction of foundation regimes. These were rolled out in ADGM (2017), DIFC (2018), and RAK ICC (2019).

Foundations are legal entities without shareholders, making them ideal for wealth succession planning. Founders can tailor the structure to their needs via charters and bylaws, ensuring flexible governance. Other key benefits include:

• Asset ownership by the foundation itself, rather than by trustees (unlike traditional trusts);

• Privacy protections, with limited public access to information;

• Eligibility for both individuals and legal entities to establish foundations;

• No geographic limitation on where foundation board meetings are held.

In contrast, Korean law imposes stricter limitations. Under Korea’s Inheritance and Gift Tax Act, public interest foundations are generally exempt from gift tax only if they hold less than 10% of the voting shares, restricting their effectiveness for business succession planning.

(3) Additional Regulatory Support for Family Offices

The DIFC was the first Middle Eastern jurisdiction to introduce a dedicated SFO regime, exempting SFOs from regulation by the Dubai Financial Services Authority (DFSA) and from many compliance obligations applied to general businesses.

In 2023, DIFC launched the Family Wealth Centre, which provides structured support for estate planning, succession, and wealth management, accompanied by comprehensive guidelines.

Similarly, ADGM introduced the Restricted Scope Company (RSC)—a structure designed to protect privacy and simplify compliance. Like Singapore’s Variable Capital Company (VCC), RSCs are exempt from public disclosure and certain accounting obligations, making them ideal for family office operations.

Conclusion

The Korean government is also exploring trust reforms and family office development as part of its broader strategy to support business succession and HNWI services. While Korea may not replicate the UAE model exactly—given the latter’s unique demographic, with foreigners making up nearly 90% of the population—there is much to learn from the UAE’s agile legal and policy innovations aimed at attracting global wealth.