Tax Residency for Expats in the UAE: Why Your Tax Bill Could Be Far Higher Than Expected

Expat professionals working in the UAE often believe that securing UAE tax residency is simply a matter of counting days. A common assumption is that spending enough time in the country, particularly under the 90-day or 183-day rules, automatically makes the UAE one’s tax home.

In some cases, that may appear straightforward. But where another country may also have a claim, the position becomes more complex. At that stage, UAE tax residency cannot be assessed through UAE rules alone. It also needs to be considered alongside the domestic tax laws of the other country and the relevant double tax treaty. When that wider picture is overlooked, individuals can find themselves unexpectedly exposed to tax elsewhere. That is why it is important to understand not only how the UAE tax residency framework works, but also how it interacts with other jurisdictions.

The UAE Day-Count Rules

The UAE defines tax residency under Cabinet Decision No. 85 of 2022. This decision introduced a formal framework for determining when an individual is considered a tax resident in the country.

Two day-based tests are particularly relevant.

• The first is the 183-day rule. A person who physically spends 183 days or more in the UAE during a twelve-month period may be considered a tax resident. This is the more straightforward route and resembles the residency tests used in many other countries.
• The second is the 90-day rule, which is often misunderstood. Under this provision, a person may qualify as a UAE tax resident if they spend at least 90 days in the country during a twelve-month period. However, this rule applies only if additional conditions are met. The individual must hold a valid UAE residence permit or GCC nationality, and they must also either have a permanent residence in the UAE or carry on employment or business activities there.

Thus, more broadly, actual residence, day-to-day presence, and genuine economic activity remain central to any tax residency assessment.

The Reality of Dual Residence

Dual residence arises when two jurisdictions simultaneously treat the same individual as a tax resident. This is not unusual for people who operate businesses across borders or divide their time between multiple countries. When dual residence arises, both countries may initially claim the right to tax the individual’s income. Each country applies its own domestic rules first. Only after that do international agreements come into play to determine how the conflict should be addressed. 

The UK Case

Under the UK’s Statutory Residence Test (SRT), a person is automatically a UK tax resident if they spend 183 days or more in the UK in a tax year, which is broadly similar in concept to the UAE’s 183-day rule. However, that is only one part of the analysis. Even where this threshold is not met, a person may still become a UK resident under the UK home test, the full-time work test, or the sufficient ties test.

There is also a further layer that is often overlooked in expat planning: the UK’s temporary non-residence rules. These rules are important because some individuals spend time in the UAE, meet the UAE day-count conditions, and assume that this is enough to secure UAE tax residency in a way that continues to protect them even if they later return to the UK for a few months. That assumption can be wrong.

Under HMRC guidance, the UK can still apply special rules where, among other conditions,

1. the individual had sole UK residence in four or more of the seven tax years before departure
2. their period of non-residence is five years or less.

In simple terms, a person with a clear UK residence history cannot assume that a period spent in the UAE automatically takes them fully outside the UK tax net. Moreover the calculation of dates could be complex. Split-year treatment, the timing of departure and return, and the interaction with UK tax years can all affect the result.

A person may therefore believe they have become a UAE tax resident and can return to the UK for a period without affecting that position, only to find that they have returned too early for UK tax purposes. If that happens, certain income and gains arising during the non-resident period may still be brought back into charge when they return to the UK. That is why time spent in the UAE should never be viewed in isolation.  This is particularly important for expats from the UK in the UAE because the personal tax difference is incomparable:

Tax Type	UAE	United Kingdom
Personal income tax	0%	Up to 45%
Capital gains tax	0% (for individuals)	Up to 24%, depending on asset type
Inheritance tax	None	40% above the applicable threshold
Tax on worldwide income	No personal income tax regime	Applies to UK tax residents

This has become even more significant in the UK following the abolition of the remittance basis from 6 April 2025 and its replacement with a residence-based system. We have also separately examined what that change means in one of our earlier articles here.

Double Tax Treaties

Double tax treaties become particularly important when dual residence needs to be tested.

For dual-resident individuals, treaties usually apply a sequence that looks at where the person has a permanent home, where their centre of vital interests lies, where they have their habitual abode, and, if needed, their nationality. If the position still remains unclear, the competent authorities of the two states may need to resolve it.

These tests matter because they examine the overall factual pattern of a person’s life, not just whether a numerical threshold has been met in one country.

The Importance of Planning

Because the difference in tax exposure can be so significant, expats living in the UAE, particularly those coming from countries with high income tax rates, should not take this issue lightly. This is especially true in relation to the UK expats living in the UAE.

It is important to seek expert advice and understand the wider legal and factual position before relying on a UAE tax residency outcome. A person needs to understand not only whether the UAE conditions are met, but also whether another country may still have a credible basis to claim residence, how the relevant treaty may apply, and whether the underlying facts support the intended position. In many cases, a simple assumption made too early can lead to a much more expensive problem later.

At AKW Consultants, we help clients look at the full picture before they start relying on a UAE tax residency position. That means assessing their residency position in detail, reviewing the relevant treaty framework, considering how another jurisdiction may view the same set of facts, and identifying what evidence should be in place from the outset. Our role is to help clients structure their position more carefully and reduce the risk of it being challenged later. The aim is to place them in a stronger position to secure and preserve the tax advantages that come with being treated as genuinely tax resident in the UAE.