Investing in real estate in Dubai is becoming increasingly attractive for Slovak and Czech investors seeking to diversify their portfolios and generate passive income. The growing number of expatriates, infrastructure development, and a stable property market make Dubai a promising destination for foreign investment.

Before making an investment, it is crucial to fully understand the legal regulations, fees, and tax obligations associated with property ownership. Without knowledge of these aspects, an investor may face risks, for example with off-plan projects where payments are made according to construction phases, or if the property is not properly registered.

Fortunately, the system in Dubai is relatively straightforward, transparent, and well-regulated. The Dubai Land Department (DLD) oversees all transactions, ensures buyer protection, and enforces the use of escrow accounts for off-plan projects. Transparent rules and clear fees (e.g., DLD fee, Oqood registration, service charges) allow investors to accurately plan costs and minimize legal or financial risks.

Freehold Zones – Where Foreigners Can Own Property

In Dubai, there are special freehold zones where foreign investors can fully own real estate. These are selected areas designated by the government where foreigners have the same rights as local owners. In these zones, investors can freely buy, sell, or lease property, providing a high level of legal certainty and investment security. Well-known areas include Dubai Marina, Downtown Dubai, Palm Jumeirah, Jumeirah Village Circle, and Dubai Silicon Oasis.

Dubai Land Department (DLD) – The Main Regulator

The Dubai Land Department is the central authority overseeing all real estate transactions in Dubai. The DLD manages ownership registration, monitors transaction transparency, and ensures investor protection. Every property purchase, whether a completed project or an off-plan property, must be officially registered with the DLD. This system ensures that ownership rights are legally valid and protected under local law.

Escrow Accounts – Protecting Funds in Off-Plan Projects

When buying off-plan properties, i.e., projects under construction, the buyer’s payments are held in escrow accountsmanaged by a bank or regulated financial entity. Funds are released to the developer gradually, according to the achievement of specific construction milestones, such as the completion of foundations or the main structure. This mechanism minimizes the risk of losing money in case of developer failure or bankruptcy.

Verifying the Developer and the Contract

Before making an investment, it is essential to verify whether the developer is registered with the DLD and whether the project has all necessary approvals. The contract should clearly define the payment plan, guaranteed construction milestones, and conditions for refunding money in case of issues. This ensures that your investment is legally protected and transparent.

Legal Framework for Foreign Investors

Dubai has a clearly defined legal framework that allows foreign investors to safely own property. The system is regulated by the Dubai Land Department (DLD) and includes mechanisms such as freehold zones for foreigners, escrow accounts for off-plan projects, and mandatory contract registrations. This framework ensures investor protection, transaction transparency, and minimizes risks associated with property purchases.

Mandatory Fees When Buying Property in Dubai

When purchasing property in Dubai, every investor must account for several mandatory fees regulated by local authorities to ensure transaction transparency. These fees are fixed, and their amount depends on the type of property, its value, and the method of purchase.

DLD Fee (4% of Property Value)

The most important fee is the Dubai Land Department (DLD) fee, usually around 4% of the property value. This fee is mandatory for all transactions and guarantees official registration of ownership. It is paid once at the time of ownership transfer, whether it is a ready property with a Title Deed or an off-plan project registered via Oqood.

Contract Registration Fee (Oqood for Off-Plan Projects)

For off-plan properties (under construction), it is necessary to register the preliminary sales agreement through the Oqood system, managed by the DLD. The registration fee depends on the project and the construction phase. Registration via Oqood ensures legal protection for the buyer and officially confirms their entitlement to the property during construction.

Notary and Administrative Fees

In addition to the above, investors should budget for smaller fees such as document verification, official ownership transfer, or contract drafting. These are generally modest amounts (usually a few hundred dirhams) but should still be included in the investment budget.

Service Charges After Purchase

Once ownership is acquired, regular service charges must be paid. These fees cover the operation and maintenance of common areas in the building or residential complex-from security and cleaning to pool and landscaping maintenance. The amount is calculated based on the property’s square footage and depends on the location and project standard. Average annual costs are within the rates regulated by the DLD. For luxury projects with extensive services, these fees can be higher, so it is important to verify them in advance to avoid surprises when planning the property’s cash flow.

Taxes in Dubai

Dubai is highly attractive for foreign investors also because of its favorable tax environment. Individuals do not pay income tax or property rental tax, and the same applies to capital gains from property sales. Value Added Tax applies to new projects and services. This tax generally covers new properties, construction services, or additional project fees, but does not apply to the secondary market of completed properties.

Slovak investors should also consider additional costs, such as property management and maintenance fees, as these affect the overall return on investment. Overall, the tax framework in Dubai is simple and predictable, reducing administrative burden and increasing the attractiveness of investing.

No Income Tax for Individuals

Individuals in Dubai are not subject to income tax. This means that rental income is not taxable. Investors only pay the necessary administrative fees related to registration, record-keeping, or property management. This system reduces the tax burden and simplifies planning the return on investment.

No Tax on Rental Income and Capital Gains

Rental income and capital gains from property sales are not taxed in Dubai. This is a significant advantage for investors, as in most European countries, these incomes are part of the tax base and subject to income tax or capital gains tax. The absence of such taxes increases net returns and simplifies investment planning. It also makes Dubai attractive for investors seeking a stable and long-term profitable real estate portfolio.

VAT (5%) on New Projects and Services

Khalid Al Bustani: The UAE tax system takes into account the sustainable competitiveness of the real estate sector.

Bin Mejren: 85 percent of the components in Dubai’s real estate sector are currently exempt from tax.

Dubai, United Arab Emirates, March 20, 2018: The Federal Tax Authority and the Dubai Land Department confirmed that the recently introduced VAT in the UAE will have a limited impact on the real estate sector.

The FTA and DLD stated that all real estate transactions, except for the sale of vacant commercial properties and commercial property leases, will either be VAT-exempt or subject to 5 percent VAT. Leased commercial properties are not considered taxable supplies upon sale and therefore are not subject to VAT, according to the Government of Dubai.

What Slovak Investors Should Watch

Slovak and Czech investors should pay attention to local regulations concerning property registration at the Dubai Land Department, mandatory fees, and rules for using property management services. When purchasing off-plan properties, it is crucial to ensure that the project is managed through official escrow accounts, which protect the invested funds until agreed construction milestones are reached, minimizing the risks associated with unfinished projects.

Legal Obligations of the Buyer

Buyers in Dubai have several legally required responsibilities that ensure transaction transparency and protect their rights. Buyers must provide essential documents, including a valid passport and, if financing via a mortgage, proof of income. When reserving a property, a reservation agreement is signed, defining the basic terms of the purchase and the deposit.

Required Documents for Purchase

A valid passport is necessary for all property purchases in Dubai. If a mortgage is used, proof of income from a bank or employer must also be provided. Signing the reservation agreement with the developer is an essential step that outlines the transaction terms, deposit amount, and deadlines for subsequent payments. This marks the buyer’s first official commitment to the developer.

Landlord Obligations – Ejari Registration

Investors planning to rent their property must register the lease through the Ejari system, an official platform recording all rental contracts in Dubai. Registration provides legal protection for both landlord and tenant, simplifies dispute resolution, and is required for officially reporting rental income.

Financing and Legal Differences Compared to Slovakia

The process of financing property purchases in Dubai differs in some respects from Slovakia or the Czech Republic. Significant differences occur with off-plan projects, where phased payments according to construction milestones are made via escrow accounts. The legal structure of the purchase agreement is also detailed and regulated by the Dubai Land Department. Understanding these differences is crucial for a smooth transaction and risk minimization.

Investor Protection – Key Considerations

Investors should pay attention to several areas that reduce risks and ensure a secure investment process. The purchase agreement should clearly define the payment schedule, developer responsibilities, and refund mechanisms in case of issues. Verifying the developer in the DLD registry provides additional security and reduces legal risks.

Risk of Unfinished Projects – Escrow System

For off-plan properties, a primary risk is the developer not completing the project. To mitigate this, all buyer payments are held in official escrow accounts. Funds are released to the developer only upon reaching agreed construction milestones, protecting the investor’s capital and allowing transparent monitoring of project progress.

Clear Purchase Agreement and Transparent Terms

The purchase agreement should detail all payment plan conditions, construction milestones, developer responsibilities, and dispute resolution mechanisms. A clear and comprehensive contract is key to a safe transaction and significantly reduces legal and financial risks.

How Trim Real Estate Helps – Legal Assistance for Slovaks

Trim Real Estate offers full support for Slovak and Czech investors. Services include developer and project verification, review of the purchase agreement, and oversight of proper escrow account use. This assistance enables investors to safely and efficiently invest in Dubai real estate without legal or financial complications.

Comparison: Dubai vs Slovakia

Investing in real estate in Dubai and Slovakia differs in several key areas, particularly regarding taxes, fees, and the legal environment.

In Dubai, there is no personal income tax, rental income tax, or capital gains tax, whereas in Slovakia, rental income and property appreciation are subject to taxation. This difference allows investors in Dubai to achieve higher net returns on their investments.

Taxes and Fees When Buying

The Dubai Land Department has confirmed that property registration fees, currently set at 4%, will not be increased. It also stated that there are no plans to raise these fees in the near future. These fees are collected from sellers during the completion of their real estate transactions.

The Department emphasized that decisions regarding increases in various property-related fees are issued by the Dubai Executive Council. The Council issued Directive No. 30 of 2013, which determines property fees, including registration fees, according to the Government of Dubai.

In Slovakia, fees associated with purchasing property are different. In addition to property tax, buyers must account for registration fees in the land registry and notary services, which can vary depending on the transaction and type of property. The administrative process is often longer and less standardized, which can increase costs and the complexity of the transaction.

Service Charges

After purchasing property in Dubai, owners pay regular service charges. These fees cover the maintenance of common areas, security, concierge services, and landscaping. The amount depends on the location, type, and size of the property, but the fees are clearly defined and regularly invoiced, reducing uncertainty for the owner.

In Slovakia, maintenance fees for common areas are generally managed by the homeowners’ association. Fees can vary widely and are often not strictly regulated, which can lead to greater variability in costs and unpredictable expenses for the owner.

Advantages of Dubai Compared to Slovakia

Dubai offers several key advantages for investors. There is no rental income tax or capital gains tax, which increases net returns. Fees related to property purchase and management are transparent and clearly defined. The legal framework, regulated by the Dubai Land Department and secured through escrow accounts for off-plan projects, protects investors from risks and ensures a secure process.

These factors make Dubai an attractive destination for foreign investors seeking stable passive income, a transparent legal framework, and clearly defined property ownership costs. Compared to Slovakia, Dubai offers higher predictability of returns and lower administrative risk.

FAQ – Frequently Asked Questions

Which taxes apply when buying property in Dubai?

The main fee is DLD 4%, along with Oqood for off-plan projects and administrative fees. There is no income or capital gains tax.

How much is the DLD fee, and who pays it?

The DLD fee is typically 4% of the purchase price and is paid by the buyer.

Is rental income taxed in Dubai?

No, rental income and capital gains are not taxed.

What are service charges, and how are they calculated?

Service charges vary by property type and location, averaging 5-10 AED per square foot per year.

Is buying property in Dubai legally safe for Slovaks?

Yes, the system is regulated by the DLD, all off-plan payments are held in escrow accounts, and contracts are legally binding.

Want to know exactly which fees and legal steps to expect? Trim Real Estate can provide a detailed overview.