In this article, we would analyze whether a freelance permit is a suitable option for those who consider working for themselves from different perspectives.

Both options follow a similar concept that allows an individual to obtain a residence visa and business license/permit (”License”). License is to be renewed annually for both freelancers and business owners. After obtaining a License, its owner may start operating relevant business activities, namely signing commercial agreements with counterparties, marketing services via media channels, opening bank accounts, etc. The main limitation for freelance permit holders is that they can’t hire employees and rent an independent office. However, there are more aspects to consider below.

Generally, a selection between the two options will be depending on the initial conditions of an individual, and also on his goals. Thus, the choice of an individual, who has an existing company outside the UAE, and wishes to expand operations in the UAE would be apparent - he will opt for company registration. Whereas the individual who has few clients, and might potentially expand the clientele through referrals or other channels is also obvious - he will opt for a freelance permit. Another substantial difference between these two is that Freelance Permit allows only professional activities based on the educational and practical background of the applicant, which means he wouldn’t be able to conduct trading activity as such. A freelancer cannot rent an independent office either, however, there are plenty of co-working spaces to select.

Opening the bank account

The process of opening bank accounts for a freelancer follows a similar pattern, as in the case of opening a  corporate account for a conventional company: required documents are identical.  As a matter of fact, opening a bank account may be a complex process that would require additional documentation in almost every case.

Due to the lower complexity of a business model pertaining to freelance activities, it is normally easier to open a bank account for freelancers. To a certain degree, the approval relies highly on the provided bank statement (also known as the source of funds/income), and if a freelancer has Agreements with other individuals, or legal entities, receiving the regular fixed payments, it increases the positive response from the bank. Existing relationships with one of the UAE banks on a personal level would make the application stronger. Case to case, banks might request signed commercial agreements for account opening, however, not always. 

Opening a bank account for a company owner is similar, but takes longer and is more complex. It might require additional documents and requests. For example, a CV of the owner, utility bills, the corporate documents for other companies of the owner, including companies which are based abroad.   

Activities

As shortly outlined above, there is a specific list of professions for freelancers to qualify, which covers limited areas and are mainly from  IT, media, and education. For instance, such professionals, as back-end, or front-end developers, social media marketers, fitness coaches, nutritionists will highly likely benefit from obtaining the freelance permit, which is offered from a number of UAE’s Free Zones located in Dubai and the Northern Emirates.

A business license, on the other hand, offers an almost unlimited diversity of activities. Examples include consulting, trading, manufacturing, retail, and other regulated and non-regulated areas. The popular niches in the UAE are retail, travel and tourism, consulting, and general trading. 

Resident visa duration

Some individuals’ decision-making process mainly relies on the duration of issued residency, and in this case, a freelance visa might last as long as three years depending on a certain Free Zone and the Emirate issuing the visa. For business owners, the visa also lasts three years. 

Thus, the freelance permit will be most suitable for individuals, whose values at the moment are: residency, mobility, request for cost-optimization, independence from bearing responsibilities for employees, exploring the market, etc.

The core values of a potential business owner are globalization, scale, expansion, a necessity in workload delegation, request for developing a brand, opening a branch, a startup, etc.

If you would like to have advice or assistance with opening a freelance or business license in the UAE, please contact us.

Marsel Shadmanov

Head of Corporate Services at Garant Business Consultancy DMCC

Phone +971 4 421 4335

Email info@garant.ae