Choosing the right legal structure is an important step when setting up a company in Dubai’s free zones. However, many foreign investors get confused between two key options: the Free Zone Establishment (FZE) and the Free Zone Company (FZCO).
In most cases, business setup consultants help new investors choose the right structure. Picking the wrong one can affect your business operations.
This guide will explain the differences between an FZE and an FZCO:
What is a Free Zone Establishment (FZE)?
An FZE is a company formed in a UAE free zone by a single owner. It offers benefits like 100% foreign ownership, tax exemptions, and easier business setup.
The FZE structure is suitable for small businesses and includes the following features:
- Single owner
- Limited liability
- Easy to manage
- Wide range of business activities to choose from
What is a Free Zone Company (FZCO)?
An FZCO is for companies with more than one owner and offers the same benefits as an FZE, like 100% foreign ownership and tax breaks. This setup is better for larger businesses or joint ventures.
Key features of an FZCO:
- Multiple owners (usually 2 to 5)
- Limited liability
- Access to various business activities in the free zone
Key Differences Between FZE and FZCO:
If you are unsure whether to choose an FZE or an FZCO, it’s best to consult business setup experts. Here are some main differences:
| FZE |
FZCO |
| Single owner |
Multiple owners |
| Lower capital required |
Higher capital required |
| Easier management |
More complex due to multiple owners |
| Quick decision-making |
Decisions require agreement from all owners |
How to Choose the Right Structure?
Consider these points when choosing your company structure:
- What business activities are allowed?
- How many owners will there be?
- What are the capital requirements?
- What are the tax and legal implications?
- Does the structure support your business goals?
Get Help from Business Setup Consultants
If you’re planning to start a business in a Dubai free zone, it’s important to know the legal structures available. This guide can help you understand the differences between FZE and FZCO.
For expert advice, contact a Trusted business setup consultant like TycoonDocuments. They can help with business licensing, choosing the right structure, and meeting legal requirements. Call us for a consultation today!
