FZE VS FZC IN Dubai: A Complete Guide

Dubai is the number one business center globally. Location, stable economy, and a variety of investor-friendly policies are the main reasons that business people from all corners of the world come to Dubai. Sometimes, when potential investors wish to set up a business in free zones of Dubai, the two most common forms of company will be FZE - Free Zone Establishment and FZC - Free Zone Company.

If you're looking to begin a Free Zone business, it is important to know the distinction between an FZE and an FZC. In this article, we will cover everything you need to know, in simple terms - what the ownership rules are, the benefits, the process for setup, and the significant differences.

What are Free Zones in Dubai

Free Zones in Dubai are specifically designated areas to do business in, where foreign investors can have 100% ownership of their business without the requirement of a local sponsor. Free Zones usually focus on specific industries such as trading, media, logistics, technology, and even healthcare.

Once a business has registered in a Free Zone, the owner will enjoy the following benefits:

• 100% foreign ownership
• Repatriation of all profits 
• No import or export duties within the Free Zone
• Ease of setting up the business
• Ease of obtaining a visa and a business license or dedicated license.

What is an FZE - Free Zone Establishment?

An FZE, or Free Zone Establishment, is a company registered within a Free Zone that has only one shareholder. A shareholder can be an individual or a company. 

An FZE is analogous to a single-owner business or a one-person company. An FZE is treated as an independent legal entity so it can enter into contracts, own assets, and be liable for its obligations.

Key Features of an FZE:

• It can have one shareholder, an individual or a company.
• It has authority and is registered under a Free Zone.
• It has a license - commercial, professional, or industrial.
• It has an independent legal identity from the owner.
• The minimum share capital of an FZE is dependent upon the Free Zone chosen.

What is an FZC - Free Zone Company?

A Free Zone Company - FZC is the type of entity formed in a Free Zone having two or more owners. The exact number of shareholders varies with the particular Free Zone, from a maximum of five to fifty or more.

An FZC, similarly to an FZE, is a separate legal entity and can carry out those activities approved by the Free Zone authority.

Some notable features of an FZC include:

•  The ability to have two or more shareholders, either individuals or companies.
•  Have a legal identity separate from its owners.
•  Minimum share capital is determined by the Free Zone.
•  Can conduct multiple business activities under one license.

Major Differences Between FZE and FZC

Benefits of Setting Up in a Dubai Free Zone 

If you choose an FZE or FZC, then both have their own benefits to attract investors. Here are some of the benefits:

100% Foreign Ownership 

Foreign entrepreneurs can fully own their business without needing a UAE national partner. 

Tax Benefits 

Most of the Free Zones offer low corporate and personal income tax. This can be a benefit if you have a limited budget. 

Full Profit Repatriation 

You can transfer 100% of your profit and the capital back to your home country without any restrictions. 

Simplified Setup Process 

The Free Zone has an efficient and transparent registration process. If you have the right documents, then you can complete a business setup in a few days. 

Strategic Location 

Dubai is a good location for logistics and trade because the Free Zones in Dubai are located near airports and seaports.  

Easy Visa and Office Options 

Entrepreneurs can also get an investor visa, employment visas for staff, and flexible office space options like flexi-desks. 

How to Choose Between FZE and FZC

You can choose between an FZE and an FZC according to your business goals. Here are some simple points to help you decide:

• You can choose FZE if you want full control and are the only investor.
• Choose FZC if you have business partners or multiple shareholders.
• If you plan to expand in the future by adding investors, then you can start at FZC.
• If you want simpler management and decision-making, then FZE is a deal.

Business Setup Process in Dubai Free Zones

The procedure for establishing both FZE and FZC is not complicated. Below is the basic process:

Step 1: Choose Your Free Zone

You can set up your business in 30 Free Zones in Dubai, and every Free Zone has different benefits. You can set up your business in Internet City, JAFZA, Dubai South, and Dubai Silicon Oasis. 

Step 2: Select Business Activity

You are free to select your primary business activity from such as trading, consulting, e-commerce, manufacturing, or media.

Step 3: Choose Company Type - FZE or FZC

You have the option to choose an FZE or an FZC. If you have one shareholder, then you can choose FZE, and if you have two or more shareholders, then you can choose FZC.  

Step 4: Application and Documents

You have to provide proper documents like passport copies, business plan, and shareholder details.

Step 5: Obtain Business License

Your company is allowed to operate as soon as you secure the business license.

Step 6: Open a Corporate Bank Account

The step that follows is the firm registration, after which a bank account for your Free Zone business is to be opened.

Why Choose Flyingcolour Business Setup?

Setting up a company in the Free Zone of Dubai is not very easy; you need the right guidance for this. Flyingcolour Business Setup has years of experience in helping entrepreneurs and investors to establish successful businesses in Dubai and the UAE. Our team will help you in:

• Choosing the right Free Zone
• Deciding between the FZE and FZC
• Manage the documents and approvals
• Open a bank account
• Handle a visa and office setup

Conclusion

Both the FZE and FZC offer excellent opportunities for investors in Dubai Free Zones. The choice also depends mainly on whether you want to start alone or with a partner. Dubai is the best place to start your company to get benefits like full ownership, tax advantages, and a supportive business environment.

If you are planning to set up an FZE and FZC, then you can reach Flyingcolour® today. Our expert them will help you to choose the right structure, complete the paperwork. We will help you to start your successful business journey in Dubai. 

Frequently Asked Questions About  FZE VS FZC IN Dubai

1. What is the difference between the FZE from the FZC?

As for the number of shareholders, that is the main difference. One single person can be a shareholder of the FZE, while the FZC can have at least two or more.

2. Is it permissible for a non-national to be the sole owner of an FZC or FZC in Dubai?

The answer is yes, the foreign investors will enjoy the benefit of 100% foreign ownership in the Dubai Free Zone area.

3. How much time does it take to start FZE or FZC?

You can start FZE or FZC in  3 to 7 days. It also depends on the Free Zone and the document approval process.

4. Can I convert my FZE into an FZC after some time?

Yes, you can convert your FZE into an FZC by adding a shareholder. You also have to update your business license.

5. What are the licenses you need to start FZE and FZC?

You need different types of licenses, like commercial, professional, industrial, and service licenses.