The UAE has established itself as a global hub for wealth structuring and succession planning, with two world-class financial centres offering sophisticated foundation regimes: the Abu Dhabi Global Market (ADGM) and the Dubai International Financial Centre (DIFC). Both operate under common law frameworks, both offer robust asset protection, and both benefit from the same federal tax exemptions for qualifying family foundations.
So which one should you choose?
The answer depends on your specific circumstances: the nature of your assets, your residency status, your governance preferences, and your long-term objectives. This guide provides a detailed comparison to help you make an informed decision.
What is a Foundation?
Before diving into the comparison, it is worth clarifying what a foundation actually is. A foundation is an independent legal entity with its own distinct legal personality, similar to a company but without shareholders or owners. It does not issue shares or other legal titles of ownership, making it an “orphan” structure.
This is fundamentally different from a trust, where a trustee holds legal title to assets on behalf of beneficiaries. A foundation owns assets in its own name. It can sue and be sued. It can enter into contracts. And it exists in perpetuity, surviving the death of its founder.
Foundations are governed by two key documents: the Charter (which is publicly filed and contains the foundation’s name, purpose, and basic governance framework) and the By-laws (which remain private and contain the sensitive details such as beneficiary rights, distribution rules, and succession triggers).
ADGM Foundations: Overview
The Abu Dhabi Global Market introduced its Foundations Regime in 2017 under the ADGM Foundations Regulations. ADGM positions itself as a jurisdiction of choice for sophisticated, cross-border wealth structures, particularly those involving digital assets, complex family arrangements, or multi-jurisdictional holdings.
Key Features of ADGM Foundations
ADGM Foundations are classified as either “exempt” or “non-exempt.” A non-exempt foundation (the standard category for most private wealth structures) must appoint a licensed Corporate Service Provider (CSP) as its registered agent. This requirement ensures institutional-grade compliance infrastructure from day one, but adds to the cost structure.
ADGM has no minimum capital requirement for foundations, and there is no requirement for the founder or council members to be UAE residents. The foundation can hold assets anywhere in the world, making it particularly attractive for global portfolios.
The ADGM Courts, which operate under English common law, have jurisdiction over foundation matters. This provides predictability and familiarity for international families accustomed to common law jurisdictions.
DIFC Foundations: Overview
The Dubai International Financial Centre established its foundation regime under DIFC Foundation Law No. 3 of 2018. DIFC has been a financial centre for nearly 20 years and has developed a comprehensive ecosystem for family wealth management, including the DIFC Family Wealth Centre and dedicated court procedures for foundation matters.
Key Features of DIFC Foundations
Unlike ADGM, DIFC does not mandate a registered agent for all foundations. If the foundation leases its own office space within DIFC, it can operate without a third-party CSP. This flexibility can reduce ongoing costs for founders who prefer direct control.
DIFC Foundations benefit from a direct pathway to hold Dubai real estate in designated freehold areas. The DIFC has an existing MOU with the Dubai Land Department that allows foundations to hold property, with the possibility of reducing the standard 4% transfer fee to just 0.125% where the beneficial owner remains the same.
DIFC recently enhanced its foundation law with extensive “firewall” provisions, considered globally best-in-class, which protect settled assets from foreign judgments and claims that seek to circumvent DIFC laws.
Head-to-Head Comparison
The following table provides a detailed comparison across the factors that matter most when selecting a jurisdiction:
| Factor | ADGM | DIFC |
| Governing Law | ADGM Foundations Regulations 2017 | DIFC Foundation Law No. 3 of 2018 |
| Legal System | Common law (English law basis) | Common law (English law basis) |
| Registration Fee | USD 1,500 – 2,000 | USD 0 |
| Annual Fees (Regulator) | ~USD 1,000 – 1,500 | ~USD 900 – 1,400 |
| CSP/Registered Agent | Mandatory for non-exempt foundations | Optional (can lease own office) |
| Physical Office | Not required | Not required |
| UAE Residency | Not required | Not required |
| Minimum Initial Assets | None specified | USD 100 |
| Guardian Requirement | Optional during lifetime; mandatory post-death if no enforceable beneficiary rights | Optional during lifetime; mandatory post-death for purpose foundations |
| Tax Treatment | Family Foundation Exception (MD 261/2024) | Same framework (MD 261/2024) |
| Dubai Property | Via subsidiary structures | Direct holding; 0.125% transfer fee available |
| Annual Returns/Audits | Annual confirmation statement | No mandatory filing |
| Firewall Provisions | Strong | Recently enhanced (2024) |
Tax Treatment: The Family Foundation Exception
Both ADGM and DIFC foundations benefit from the same UAE corporate tax framework. Under Ministerial Decision No. 261 of 2024 and the subsequent Ministerial Decision No. 229 of 2025, qualifying family foundations can achieve effective tax transparency.
A foundation qualifies for the Family Foundation Exception if it meets the following conditions: the founder must be a natural person (or multiple natural persons), the foundation must be established primarily to manage, administer, protect and invest assets on behalf of natural person beneficiaries (who must be related to the founder by blood, marriage, or legal guardianship), and the foundation must not be formed or operated for a commercial or business purpose.
When these conditions are met, the foundation can elect to be treated as fiscally transparent. This means the foundation itself is not subject to UAE Corporate Tax; instead, income is treated as flowing through to the natural person beneficiaries, who are not subject to UAE income tax on such receipts.
Critically, this framework applies equally to both ADGM and DIFC foundations. The choice of financial centre does not affect your tax position.
When to Choose ADGM
ADGM is typically the stronger choice in the following scenarios:
Digital Asset Holdings: If your foundation will hold cryptocurrency, tokenised securities, or other digital assets, ADGM’s Virtual Asset Regulatory Authority (VARA) ecosystem and clear regulatory guidance on digital assets make it the natural choice. ADGM has positioned itself as the UAE’s primary hub for virtual asset regulation.
Global Asset Portfolios: For founders with assets spread across multiple jurisdictions and no specific concentration in Dubai real estate, ADGM’s focus on cross-border structuring and its regulatory alignment with international standards may be preferable.
Institutional Governance: The mandatory CSP requirement, while adding cost, ensures that your foundation has professional compliance infrastructure from the outset. For complex structures or founders who want institutional-grade administration, this is an advantage rather than a burden.
Non-UAE Residents: Founders who do not live in the UAE and have no intention of maintaining a physical presence benefit from ADGM’s streamlined approach for remote administration.
When to Choose DIFC
DIFC is typically the stronger choice in the following scenarios:
Dubai Real Estate: If a significant portion of your wealth is in Dubai property, DIFC’s direct pathway to hold real estate in designated freehold areas, combined with the potential 0.125% transfer fee (versus the standard 4%), provides meaningful cost savings and structural simplicity.
Cost Sensitivity: DIFC’s zero registration fee and optional CSP structure means lower headline costs. For straightforward structures where the founder wants to maintain direct control and minimise administrative expenses, DIFC offers a leaner option.
Established Ecosystem: DIFC has been operating for nearly 20 years and has developed a mature ecosystem including the DIFC Family Wealth Centre, specialised court procedures, and a large network of professional service providers. For founders who value an established track record, this longevity matters.
Islamic Inheritance Integration: While both jurisdictions can accommodate Islamic inheritance principles, DIFC has developed specific guidance and expertise in integrating Sharia-compliant provisions into foundation governance documents.
Common Misconceptions About ADGM and DIFC Foundations
“DIFC is cheaper.” Not necessarily. While DIFC has lower regulatory fees, the total cost depends on your structure. If you need a registered agent (which most private foundations do), the service provider fees will be comparable. And if you do not need a registered agent, you will need to lease office space in DIFC, which has its own costs.
“ADGM is only for crypto.” Incorrect. While ADGM has strong digital asset infrastructure, its foundation regime is equally suitable for traditional assets. Many ADGM foundations hold conventional investment portfolios, company shares, and real estate (outside Dubai).
“The tax treatment is different.” False. Both ADGM and DIFC foundations fall under the same federal tax framework. Ministerial Decision 261/2024 applies equally to qualifying family foundations in either jurisdiction.
“You need to live in the UAE.” Neither jurisdiction requires the founder, council members, or beneficiaries to be UAE residents. Both regimes are designed to serve international families.
Decision Framework
Use the following questions to guide your decision:
| If your situation includes… | Consider… |
| Significant cryptocurrency or digital asset holdings | ADGM |
| Dubai real estate as a major asset class | DIFC |
| Desire for mandatory institutional governance | ADGM |
| Preference for lowest possible regulatory fees | DIFC |
| Complex multi-jurisdictional structure | ADGM |
| Simple family wealth preservation | Either |
| Integration with Islamic inheritance principles | DIFC (slight edge) |
| Non-UAE resident founder with global assets | ADGM |
Both ADGM and DIFC offer world-class foundation regimes backed by robust common law frameworks, experienced courts, and favourable tax treatment. The differences are in the details: DIFC offers simplicity, lower headline costs, and direct Dubai real estate access; ADGM offers institutional governance, digital asset infrastructure, and cross-border sophistication.
The right choice depends on your specific circumstances. There is no universally “better” option, only the option that better fits your needs.
At CRYPTOVERSE Legal Consultancy, we advise on foundation structures in both ADGM and DIFC. We help clients analyse their asset profile, governance preferences, and long-term objectives to determine the optimal jurisdiction, and then execute the setup with precision.
Ready to structure your foundation?
Contact us for a confidential consultation.
FAQs
1. What is the main difference between an ADGM foundation and a DIFC foundation?
The primary difference lies in governance structure, cost flexibility, and asset focus. ADGM foundations require a licensed registered agent for most private structures and are preferred for complex, cross-border and digital asset holdings. DIFC foundations offer more flexibility in administration and provide a direct pathway to hold Dubai real estate.
2. Which is better for wealth structuring: ADGM or DIFC?
ADGM is typically preferred for global portfolios, institutional governance, and digital assets, while DIFC is often chosen for Dubai real estate ownership, lower regulatory costs, and simpler family wealth preservation structures.
3. Are ADGM and DIFC foundations tax-free in the UAE?
Qualifying family foundations in both ADGM and DIFC can benefit from the UAE Family Foundation Exception under Ministerial Decision No. 261 of 2024. When eligible, the foundation is treated as fiscally transparent and is not subject to UAE Corporate Tax.
4. Can an ADGM or DIFC foundation hold Dubai real estate?
A DIFC foundation can directly hold Dubai real estate in designated freehold areas and may benefit from a reduced 0.125% transfer fee. ADGM foundations typically hold Dubai property through subsidiary structures rather than direct ownership.
5. Which foundation is better for cryptocurrency and digital assets?
ADGM is generally the preferred jurisdiction for holding cryptocurrency, tokenised securities, and digital assets due to its mature regulatory ecosystem and alignment with the UAE’s virtual asset regulatory framework.
6. Do ADGM or DIFC foundations require annual audits or filings?
ADGM foundations are required to submit an annual confirmation statement. DIFC foundations do not have mandatory annual filing requirements, unless specified in the foundation’s governance documents or required by regulators.
7. How do I choose between ADGM and DIFC for my foundation?
The decision depends on factors such as asset type, governance preferences, cost sensitivity, real estate exposure, and long-term succession goals. A professional legal assessment is recommended to align the foundation structure with your wealth and family objectives.