CVML Law Firm

Preserving Wealth in the GCC: The Strategic Role of DIFC Foundations

CVML

Published on September 30 , 2025

Wealth in the Gulf Cooperation Council (GCC) region is deeply connected to family, legacy, and continuity. Yet, many families face the challenge of ensuring their assets are protected, efficiently transferred, and aligned with their long-term vision. Traditional structures—such as offshore companies or simple wills—often fall short of addressing the complex needs of high-net-worth families and entrepreneurs operating across borders for legacy purpose when it comes to businesses located in the region.

This is where the Dubai International Financial Centre (DIFC) Foundation regime emerges as a pivotal solution.

What is a DIFC Foundation?

A DIFC Foundation is a modern legal structure designed to hold and protect assets, much like a trust, but with the legal personality of a corporate entity. Governed by the DIFC Foundations Law (2018), it is fully recognized within the DIFC’s common law framework and offers a transparent, regulated platform for wealth planning.

The foundation is an orphan structure, as it has no shareholders. Instead, the foundation is managed by a Council (with at least 2 council members), and governed by the charter, by-laws and founder’s letter of wishes (if any), ensuring that assets are managed and distributed according to the founders’ wishes—both during their lifetime and beyond.

Why is the DIFC Foundation Key for Succession Planning in the GCC?

  1. Alignment with Sharia and Family Needs: Unlike offshore structures that may clash with local inheritance rules, the DIFC Foundation allows founders to balance Sharia principles with their personal succession goals. This hybrid flexibility is particularly valuable in multi-generational family businesses where different stakeholders may have different expectations.
  2. Asset Protection and Risk Management: By separating ownership from management, a foundation shields assets from personal or corporate liabilities. This ensures that family wealth remains intact even in the event of disputes, bankruptcies, creditor claims or divorce proceedings. For families, this provides peace of mind that wealth will remain within the structure and accessible only under the governance rules established at inception.
  3. Continuity Beyond Borders: GCC families often hold assets across multiple jurisdictions. DIFC Foundations provide a neutral, internationally respected hub for consolidating global wealth (i.e., real estate, shares, investments) under a single, secure umbrella.
  4. Family Foundation Tax Treatment and Transparency: A key advantage of DIFC Foundations is the possibility to benefit from the family foundation tax regime under the UAE Corporate Tax Law, subject to application. When approved by the Federal Tax Authority (FTA), a DIFC Foundation can be treated as a transparent vehicle for tax purposes:
  5. The foundation itself is not subject to corporate tax on income derived from assets held for the benefit of natural persons.
  6. Income is instead taxed (if applicable) at the level of the founder(s) or ultimate individual beneficiary(-ies), natural persons being not subject to income tax in the UAE for their private investments.
  7. The regime is designed specifically for succession planning and family wealth management, providing certainty, efficiency, and compliance with international standards.
  8. Importantly, the recognition enhances the foundation’s credibility with banks and regulators, as it removes the ambiguity that often surrounds offshore structures.

This special treatment positions DIFC Foundations as the most tax-efficient and internationally compliant solution for GCC families seeking to consolidate and protect their wealth in a well-regarded financial hub.

  • Governance and Control: Founders may retain broad powers during their lifetime, including but not limited to set clear rules for asset management and distribution. With council members, guardians, and by-laws, the foundation promotes professional governance, reducing the risk of conflict between heirs or business partners, including after the passing of the founder.

A Strategic Tool for GCC Families and Entrepreneurs

In practice, the DIFC Foundation is much more than a legal structure. It is a strategic platform for wealth preservation, succession, governance, and asset protection, allowing families to grow their legacy with clarity and security.

For entrepreneurs, it also offers a way to separate personal wealth from business risks while ensuring that future generations benefit from the fruits of their success.

Takeaways Succession planning is not only about transferring assets; it is about protecting values, vision, and stability for generations to come. The DIFC Foundation stands out as the most robust, flexible, and future-proof structure for GCC families who want to safeguard their wealth while respecting local frameworks and international standards. By integrating a DIFC Foundation into their wealth strategy, founders may ensure that their legacy remain both protected and purposeful for next generations.

Alejandra Esmoris | PARTNER – HEAD OF PRIVATE CLIENTS