Private foundations for succession planning, consolidating family shareholdings and property, and protecting assets — set up in DIFC, ADGM or RAK ICC in the UAE, or as a Private Interest Foundation in Panama, with the Indian tax and disclosure position addressed from the start.
A private foundation is a legal entity in its own right, created by a founder who endows it with assets, governed by a council under a charter and private by-laws, and run for the benefit of named beneficiaries or a stated purpose. Unlike a company it has no shareholders, so nobody owns it; unlike a trust it is a registered legal person that can hold assets, open bank accounts and contract in its own name, which banks, registrars and courts in civil-law countries find far easier to deal with.
For families with businesses and assets in more than one country, that combination solves practical problems: shares in operating companies, property and investment accounts can be consolidated under a single entity that continues seamlessly on the founder's death, without probate in each country, without the fragmentation of forced-heirship rules, and with the founder able to retain defined powers during his or her lifetime.
We set up foundations in the three UAE jurisdictions that have modern foundation laws — DIFC, ADGM and RAK ICC — and in Panama, whose Private Interest Foundation has been the civil-law standard for three decades. We also advise on the Indian side, which is where most structures set up by Indian families go wrong.
All three are onshore UAE entities with full legal personality, 100% foreign founders permitted, and no requirement for the founder or beneficiaries to be resident in the UAE.
Established under DIFC Foundations Law No. 3 of 2018 in the Dubai International Financial Centre. English-language common-law framework, DIFC Courts, and the most established option for holding Dubai real estate (with Dubai Land Department recognition) and shares in UAE and international companies. Registered office in DIFC through a licensed corporate service provider.
Established under the ADGM Foundations Regulations 2017 in Abu Dhabi Global Market, where English common law applies directly. Cost-effective, well regarded by international banks, with ADGM Courts for disputes. Suited to holding shares, investment portfolios and Abu Dhabi property, and widely used for family offices.
Established under the RAK ICC Foundations Regulations 2019 in Ras Al Khaimah International Corporate Centre. The most economical of the three, with a registered agent model, flexible governance and the ability to hold shares in UAE mainland, free zone and offshore companies, and freehold property in designated areas. Well suited to holding structures where cost and privacy matter.
| Feature | DIFC | ADGM | RAK ICC |
|---|---|---|---|
| Governing law | DIFC Foundations Law No. 3 of 2018 | ADGM Foundations Regulations 2017 | RAK ICC Foundations Regulations 2019 |
| Legal system / courts | Common law; DIFC Courts | English common law; ADGM Courts | UAE law with RAK courts; arbitration commonly chosen |
| Minimum initial assets | USD 100 (nominal) | USD 100 (nominal) | Nominal |
| Council | Minimum two members (individuals or corporate) | Minimum two councillors | One or more council members |
| Guardian | Optional; required for charitable or specified non-charitable purpose foundations | Optional; required for purpose foundations | Optional |
| Registered office / agent | Registered office in DIFC via a licensed CSP | Registered office in ADGM via a licensed CSP | Licensed RAK ICC registered agent |
| Public information | Name, registered office and council; by-laws and beneficiaries private | Name, registered office and council; by-laws and beneficiaries private | Name and registered agent; council and beneficiaries private |
| Typical set-up time | 2–3 weeks | 2–3 weeks | 1–2 weeks |
| Relative cost | Higher | Medium | Lower |
UAE corporate tax treatment
A foundation is in principle a taxable person under the UAE Corporate Tax Law. However, a foundation established for the benefit of identifiable natural persons or for public benefit, that does not carry on a business, and whose main purpose is not tax avoidance, can apply to the Federal Tax Authority to be treated as a Family Foundation — tax-transparent, like an unincorporated partnership — so that its income is treated as the beneficiaries' income and passive investment income and capital gains are not taxed at the foundation level. Ministerial Decision No. 261 of 2024 extended this treatment to companies wholly owned by a qualifying family foundation. We prepare the application and maintain the conditions each year.
The civil-law foundation that most other jurisdictions modelled theirs on — Law 25 of 1995, in continuous use since.
A Panama Private Interest Foundation (Fundación de Interés Privado) is created by a founder — who may act through a nominee — by registering a foundation charter at the Panamanian Public Registry. The charter records the name, the foundation council, the registered agent and the stated initial endowment (a minimum of USD 10,000, which need not be paid in immediately); the regulations, which name the beneficiaries and set out how assets are distributed, are private and are never filed.
The foundation council manages the assets (a minimum of three natural persons or one corporate member), and the founder may appoint a protector with veto or supervisory powers. The foundation cannot carry on commercial business directly, but it can own shares in companies that do, hold property, investment accounts and intellectual property, and receive income from them. Under Panama's territorial system, income from assets and activities outside Panama is not taxed there.
The statute contains express asset-protection provisions: foundation assets form a separate patrimony that cannot be attached for the founder's personal debts (with a three-year claw-back for contributions made in fraud of creditors), and foreign forced-heirship rules are not recognised against the foundation's regulations. Panama was removed from the FATF grey list in October 2023 and applies modern beneficial-ownership and accounting-records obligations.
| Item | Position |
|---|---|
| Governing law | Law 25 of 1995 (Private Interest Foundations) |
| Minimum endowment | USD 10,000 stated; not required to be paid in at formation |
| Council | Three natural persons or one legal entity |
| Protector | Optional |
| Public record | Charter (name, council, agent); regulations and beneficiaries private |
| Tax | Territorial — no Panamanian tax on foreign-source income |
| Annual franchise tax | USD 350 in the first year, USD 400 thereafter |
| Set-up time | 5–10 working days |
| Registered agent | Mandatory — Panamanian law firm |
The assets include UAE property or shares in UAE companies; you or the family are UAE residents or plan to be; you want a structure banks in the Gulf and Europe recognise readily; a common-law court (DIFC/ADGM) and an FTA family-foundation ruling are worth the higher cost; or you want the foundation and the family office in the same place.
The assets are outside the UAE (shares in international companies, portfolios, real estate elsewhere); cost and speed matter; you want the beneficiaries kept entirely off any register; the family is spread across several civil-law countries; or the structure is a long-term succession vehicle rather than an operating holding company.
Many families use both: a Panama or RAK ICC foundation at the top for succession, holding a DIFC or ADGM entity that in turn holds the operating businesses and UAE property.
Who the beneficiaries are, what assets will go in and where they are, which powers the founder wants to keep, and the Indian residency and FEMA position of everyone involved.
DIFC, ADGM, RAK ICC or Panama; council and guardian/protector composition; distribution rules, succession events, reserved powers and dispute mechanisms drafted into the by-laws or regulations.
Due diligence on founder, council, guardian and beneficiaries; charter and by-laws finalised; registered agent or corporate service provider engaged.
Filing with the DIFC or ADGM Registrar, RAK ICC, or the Panamanian Public Registry; certificate of registration and apostilled documents issued.
Transfer of shares, property or accounts into the foundation; bank account opening; UAE corporate tax registration and family-foundation application where relevant; Indian disclosures scheduled.
The Indian side of a foreign foundation
For families with members resident in India, four questions decide whether the structure works. First, FEMA: a resident individual cannot freely settle Indian assets or fresh remittances into a foreign foundation — the permissible routes under the Overseas Investment Rules and LRS are limited and contributions by residents may need specific RBI approval, so foundations are most often established with assets already held abroad or by NRI family members. Second, Indian tax on the founder and beneficiaries: a resident founder who retains control may be taxed on the foundation's income, and distributions to resident beneficiaries can be taxable under the income-from-other-sources provisions. Third, POEM for any companies the foundation holds. Fourth, disclosure: every resident who is a founder, council member, guardian or beneficiary must report the foundation in Schedule FA of the Indian return, with a ₹10 lakh penalty per year under the Black Money Act for non-disclosure. We map all four before a charter is drafted.
A trust is a relationship, not an entity: legal title to the assets sits with the trustee. A foundation is a registered legal person that owns its own assets and is managed by a council. Civil-law countries (including the UAE outside DIFC/ADGM, and most of continental Europe, Latin America and the Middle East) recognise foundations more readily than trusts, banks find them simpler to onboard, and the founder can retain defined powers without undermining the structure in the way that retained powers can undermine a trust.
Yes, within limits. The charter and by-laws can reserve powers to the founder — to amend the by-laws, add or remove beneficiaries, appoint and remove council members and approve distributions — and the founder can sit on the council. The more control is retained, the weaker the asset-protection and tax-separation arguments become, particularly for an Indian resident founder, so the balance is a design decision we discuss with you at the outset.
A DIFC foundation can hold freehold property in Dubai with Dubai Land Department recognition; ADGM foundations can hold property in Abu Dhabi and, through arrangements with DLD, in Dubai; RAK ICC foundations can hold freehold property in designated areas including through a subsidiary. Registration fees and the DLD's requirements for foundations apply and we check the position for the specific property before structuring.
By default yes, at 9% on taxable income above AED 375,000. A foundation that meets the family-foundation conditions can apply to the FTA to be treated as tax-transparent, in which case its passive income and gains are not taxed at the foundation level. A foundation that runs a business, or one whose beneficiaries are companies rather than individuals, will not qualify.
Yes. Panama modernised its beneficial-ownership, accounting-records and AML rules and left the FATF grey list in October 2023; the foundation law itself has been stable since 1995 and is well understood by banks and courts worldwide. What matters is that the structure has a real purpose, is properly documented and is fully disclosed in the countries where the family members live.
A RAK ICC or Panama foundation with a straightforward holding purpose typically costs a few thousand US dollars a year including registered agent, renewal fees and basic compliance; DIFC and ADGM foundations cost more because of their licence fees and registered office requirements. We provide a full first-year and recurring cost schedule for each option before you choose.
Share the family picture and the assets involved; we will recommend a jurisdiction, a governance design and the Indian steps within one week.
