Asset protection
Assets are legally owned by the foundation and separated from the founder's personal and business liabilities.
Private wealth structuring
The Atlas Guide to DIFC Foundations
A foundation is a standalone legal entity for asset protection, wealth structuring, succession planning and charitable purposes, built to keep a family's assets and intentions intact across generations. This guide explains how it works and how we set one up.
What is a foundation?
A foundation is a legal structure established under the DIFC Foundations Law, designed for asset protection, wealth structuring, succession planning and charitable purposes.
Unlike a traditional trust, a foundation is incorporated as a standalone legal entity with its own legal personality. Its assets are ring-fenced from the founder's liabilities, and its governance and control are set out in a charter and by-laws.
The legal framework
The DIFC is a common law jurisdiction with an independent legal system based on English common law and internationally recognised commercial courts. Its foundations regime follows best practice in established foundation jurisdictions such as Jersey and Liechtenstein.
Benefits of a foundation
Foundations suit individuals, families and companies who want to protect assets and keep a purpose going across generations or over a long-term strategy.
Succession planning
Supports the orderly transition of wealth and control between generations, and can avoid the effect of forced heirship rules.
Tax efficiency
Benefits from the UAE's tax environment, with potential Corporate Tax exemption where the conditions are met and access to the UAE's double tax treaty network. The outcome depends on the structure and must be confirmed by tax advice.
Confidentiality
Private by default: the registers of founders and beneficiaries are not public.
Legal personality
A foundation can own property, hold bank accounts, enter contracts, and sue or be sued in its own name.
Flexible purpose
It can serve commercial, philanthropic or personal objectives, or a mix of them, set out in its charter.
Foundation vs trust
Both hold assets for the benefit of others, but they differ in legal status, governance and ownership. For a deeper comparison, read DIFC foundation vs trust.
| Aspect | Foundation | Trust |
|---|---|---|
| Legal structure | Independent legal entity (body corporate) | Private legal relationship |
| Legal status | Has its own legal personality | Not a separate legal person |
| Formation | Created by registration under the Foundations Law | Created by a trust deed or a will |
| Who creates it | Founder | Settlor |
| Who manages it | The Foundation Council, under the charter and by-laws | The trustee(s), under the trust deed |
| Beneficiaries | May have beneficiaries, a purpose, or both | Clearly named or defined |
| Who owns the assets | The foundation, in its own name | Legally the trustee(s); beneficially the beneficiaries |
How a foundation protects the founder
Ownership
The assets are no longer owned by the founder personally.
Legal shield
Strong protection from claims and creditors against the founder.
Control
The founder can keep influence through the charter, by-laws and Council, rather than by owning the assets.
Tax position
Potential for deferral or reduction of tax, where the structure is set up and run properly.
Privacy
A high level of discretion compared with holding assets directly.
How a foundation is structured
A foundation has four key parties, and it can hold operating and investment assets through dedicated SPVs.
Founder
The person or persons who set up the foundation and determine its initial charter and by-laws. The founder names the beneficiaries and can name a guardian.
Foundation Council
Holds and manages the foundation's assets and makes sure its purpose is fulfilled. Atlas helps you appoint qualified professionals to the Council.
Guardian
Supervises the Council and holds it to account. Optional for a foundation that exists for beneficiaries, but required where the foundation has a charitable or specified non-charitable object.
Beneficiaries or purpose
The foundation exists to benefit persons, to fulfil a purpose such as a family legacy, holding intellectual property or holding investments, or both.
Holding assets through SPVs. The foundation sits at the top and owns one or more SPVs, for example one holding a trading company, one holding real estate and one for other holdings. This separates the foundation from day-to-day economic activity, which helps with tax efficiency, and lets each asset be bundled, sold or brought in with partners and investors on its own.
If no beneficiaries remain, the charter decides where the assets go, usually to named designees. See how this works with property in holding Dubai real estate in a DIFC foundation.
Single family office: bespoke vs packaged
Many families pair a foundation with a single family office. A bespoke office is built around the family; a packaged office uses a provider's standard platform. Read more about family office setup.
| Criteria | Bespoke family office | Packaged family office |
|---|---|---|
| Customisation and flexibility | ||
| Control and decision-making | ||
| Compliance oversight | ||
| Privacy and confidentiality | ||
| Scalability | ||
| Tailored investment strategy | ||
| Regulatory compliance | ||
| Speed of decision-making | ||
| Exit and wind-down flexibility | ||
| Tax planning flexibility | ||
| Integration with other structures | ||
| Staffing flexibility |
Tick: advantage. Dash: limited.
Your partner in foundation setup
Atlas Corporate Services is a DFSA-registered corporate service provider in the DIFC. We handle the full formation and administration of foundations:
- Advising on the structure and tax set-up, with GTAG, our sister company in the GTAG/Assetica group, for the tax work
- Preparing the charter and by-laws and coordinating with the Registrar of Companies
- Helping appoint qualified Council Members and, where needed, a guardian
- Ongoing compliance, tax and governance support once the foundation is registered
Take the guide with you
The full guide as a five-page PDF, including the foundation structure diagram. Free, with no sign-up.
Download the PDF guideCommon questions about foundations
What is a DIFC foundation?
A DIFC foundation is a legal entity registered under the DIFC Foundations Law (DIFC Law No. 3 of 2018). It has its own legal personality, owns its assets in its own name and is run by a Foundation Council for the benefit of beneficiaries, a stated purpose, or both. It is used for asset protection, succession planning, holding family or business assets and charitable purposes.
How is a foundation different from a trust?
A foundation is a separate legal person created by registration, and it owns its assets. A trust is a relationship, created by a deed or a will, in which trustees hold assets for beneficiaries. Families often prefer a foundation because it can contract, hold bank accounts and own subsidiaries directly, and because its governance is set out in a charter and by-laws they can design.
Does a foundation need a guardian?
Under the DIFC Foundations Law, a guardian is required where the foundation has a charitable object or a specified non-charitable object, such as holding a family business. For a foundation that exists only for named beneficiaries it is optional, though many families appoint one so that someone independent supervises the Council.
Can a foundation hold a trading company or real estate?
Yes. A common pattern is for the foundation to hold operating and investment assets through separate SPVs, for example one for a trading company, one for real estate and one for other holdings. This keeps economic activity outside the foundation itself and lets each asset be sold or restructured on its own.
Is a foundation tax free?
Not automatically. A foundation may qualify for Corporate Tax exemption or be treated as transparent where the conditions are met and the right applications are made, but this depends on its activities and structure. Tax advice should confirm the position before the foundation is set up.
This guide is general information, not legal or tax advice. Atlas is a corporate service provider, not a law firm or tax adviser; get advice on your own circumstances before setting up a foundation.
Ready to set up a foundation?
Tell us what the foundation needs to hold and who it is for. We will come back with the structure we would suggest and the steps to register it.