A free zone company can now move to the mainland — but only if both authorities agree

The law now allows the move, and makes it someone else's decision

A free zone company can now become a mainland company without being wound up. Since its 2025 amendment, the Commercial Companies Law lets a company transfer from a free zone to an emirate's mainland authority, or back, and keep its legal personality; the same provision covers moves between emirates. It does not make the move an application you win by paying. The company resolves to transfer, and two authorities — three for a joint stock company — decide whether it happens.

Conversion, a separate mechanism, is where the confusion starts: it changes a company's legal form — one corporate vehicle becoming another — not the authority that holds its commercial record. The transfer is what changes the authority. So the founder who has worked out, in month seven, that the customers are onshore may not have made a permanent mistake. Whether it can be undone this way is up to authorities he does not control, and the transfer provision fixes no timetable and no fee.

That is why the four other routes still matter: they are what remains when a transfer is unavailable or refused. Three leave the original company where it is; the fourth replaces it, and costs the bank account. This page sets out what a transfer requires, compares the four routes, and says where each is the wrong purchase. If the choice has not been made yet, the difference between a free zone and a mainland company is the comparison to read before this one.

What founders assume travels with them, and what actually does

The question is rarely asked as "can I change licensing authority". It is asked as "can I keep my visas", or "will the bank mind" — and the answer differs for each, because each is attached to something different.

Read down the middle column and the decision takes shape: everything expensive is attached to the legal entity or to its licensing authority. The branch, dual-licence and distributor routes keep both; a transfer keeps the entity but changes the authority; a new company loses both at once.

What a transfer requires, and who decides each part of it

A genuine mechanism for moving a company between authorities now exists, and it is worth describing exactly so nobody sells it to you as something it is not. The company decides by special resolution of its general assembly, or by an absolute majority of its partners. The rest is not in its hands:

• Both authorities' systems must permit the transfer.
• Nothing noted against the company in its commercial record may block it.
• Both authorities must approve it, as must the federal economy ministry or the Securities and Commodities Authority for a joint stock company.
• The decision must be published, in the way the authority decides.
• A company leaving a free zone must meet the mainland controls and regularise its status under the companies law.

An authority with no route for the transfer is a no, however strong the case, so get each authority's answer in writing before the resolution.

ADGM, the DIFC and RAK ICC have continuance rules of their own, under which a company from elsewhere can move in and keep its assets and obligations if the law it leaves allows; none of them is an entitlement. Federal law leaves moves between ADGM or the DIFC — the two financial free zones — and the rest of the country to Cabinet controls, so check that those are in force before planning around one. Between one free zone and another, company law gives no general route, and where the two zones' regulations provide none, leaving means a new entity, a new licence and new visas.

The four routes, compared on the axes that actually decide it

Three of the four are additive: you buy a second compliance stack and keep the first. One is substitutive, and substitution in the UAE means starting the bank relationship again.

A mainland branch keeps the company and buys you a second set of obligations

A branch is not a separate legal person. It is the same company, licensed to operate somewhere else — which is why the visas, the bank account and the contracts survive, and why the parent carries every liability the branch incurs.

Dubai set out the position in Executive Council Resolution No. (11) of 2025, which opened three ways for a free zone establishment to conduct activity inside the emirate:

• A branch licensed by the Department of Economy and Tourism, based on the mainland, holding its own premises and its own establishment file.
• A branch licensed to conduct emirate activity while remaining based in the zone — a lighter footprint, still a second licence.
• An activity permit for specified activities, valid for a defined short period of up to six months — the cheapest of the three and the one almost nobody is told about. Where that instrument came from, and how a published strategy turns into something you can actually apply for, is traced on a strategy announcement is not a licence you can buy.

Three conditions run through all of them and are routinely left out of summaries. You need prior approval from your own free zone authority and from the competent authority for the activity. Not every activity code has been approved, and the approved list is narrower than the resolution reads. And separate financial records must be kept for activity outside the zone — a second bookkeeping trail, not a second column in the same one.

Whether the branch also needs a local service agent depends on the emirate and the activity. Where one is required the appointment is administrative: no equity, no profit share, no management rights. Anyone describing it as a partnership is selling a product the law stopped requiring for most activities.

A dual licence is the shortest route and the one your activity is most likely to be excluded from

A dual licence is the branch route with the paperwork pre-negotiated between a specific free zone and a specific economic department. Where it exists it is the least disruptive of the four, and it exists in far fewer places than the phrase's popularity suggests.

Two questions settle it before you spend anything. Does your zone have a live arrangement in writing today, and is your specific activity code inside it? A generic answer to either is a no. For a one-person business weighing the same reach against a much lighter permission, a freelance permit against a dual licence sets out what each can carry.

A distributor solves the customer's problem and creates a legal one of your own

Most free zone rulebooks say the same thing in slightly different words: a free zone entity may sell elsewhere in the UAE only through an agent, a representative, a distributor, or a parent company holding the appropriate UAE licence. That is not a workaround the company performs. It is one the customer performs, by buying from somebody else.

It is the cheapest route on day one and the most dangerous in year three, because of what UAE law does to an agency once it is recorded. Federal Decree-Law No. 3 of 2022 governs commercial agencies, and a recorded agency attracts statutory protection an ordinary distribution contract does not: ending it is not purely a matter of what the contract says, disputes route through a dedicated committee, and the agent can obstruct imports of your own goods by anyone else. An unrecorded distribution agreement is an ordinary commercial contract governed by its own terms.

The difference is not visible in the title of the document you sign. Decide which one you are creating before signature, and treat the exit terms as the important clauses rather than the pricing.

Physical goods carry a second cost. Stock moving from a designated zone into the mainland is a customs import: someone must be importer of record with a customs client code, and duty and VAT fall due at entry. That someone is usually the distributor, and it is usually inside their margin rather than itemised.

Re-incorporating ends the problem when a transfer cannot, and the sequence decides what it costs

The three routes above keep a free zone company that is in the wrong jurisdiction. Where a transfer is unavailable or refused, only this ends it. It is also the route people execute in the wrong order, and the order is most of the cost.

Read the right-hand column on its own and the expensive mistake becomes visible before any of the steps do: every station except the last one runs while the free zone entity is still open, so the founder who cancels first has removed the thing the other five depend on.

Each station is the same step below, with the reason it cannot move attached to it.

1. Incorporate the mainland company and get the licence issued. Cancel nothing yet.
2. Open the mainland bank account while the free zone account is still working. A new entity has no trading history, no filed accounts and no incoming volume, so it is being onboarded on the weakest possible file. Start it early and read our corporate bank account page before you do.
3. Move contracts one counterparty at a time, by assignment or novation. Check for change-of-control and assignment clauses first; several will require written consent, and some customers will re-run their own supplier checks from the beginning.
4. Move people in the right direction: work permit and residence under the new entity first, then cancel the old visa. Cancelling first starts a grace period whose length depends on the visa category and puts your staff out of status while you wait.
5. Enrol the new entity for VAT and corporate tax in its own right. Thresholds are tested on the new company's own supplies; nothing carries over.
6. Only then close the free zone entity properly — licence cancellation, immigration file closure, clearances from the zone, final filings. Letting it lapse instead is the worst available outcome: attached visas become invalid and fines accrue. Our company liquidation page sets out a clean exit.

Two reliefs are worth asking about before assets move. Federal Decree-Law No. 47 of 2022 provides Qualifying Group Relief for transfers between members of a qualifying group and Business Restructuring Relief for the transfer of a business in exchange for shares, and both carry a clawback if the assets or the shares are disposed of within a defined period afterwards. Separately, the VAT Decree-Law treats the transfer of a whole or an independent part of a business to a taxable person as outside the scope of VAT. Neither is automatic and both have conditions. Ask before the first asset moves, not in the following year's return.

Nobody can quote you a price for any of these, and here is what to price instead

Any figure attached to these four routes is a guess dressed as a quotation, because the cost is driven by the activity, the emirate, the premises and the headcount, and three of those four are yours rather than the adviser's. A transfer is no exception: the provision sets no fee. What can be listed honestly is the shape of the bill.

Ask which of those columns a headline package price leaves out.

The three things a move puts at risk, in the order they hurt

The bank account is first, and it is not close. An account belongs to a legal entity, not to a founder or a group. A new company is a new onboarding: fresh due diligence, fresh source-of-funds evidence, fresh proof of substance, and no track record to point at. Nobody can promise you one. Even where the entity survives, expect the bank to re-open the file the moment the licence documents change.

Visas are second. They hang off the establishment card and immigration file of the authority that licensed the company. When the company is replaced, nothing transfers between a free zone file and a mainland one — each person is cancelled and re-issued, with a new work permit, entry permit or status change, medical, Emirates ID and residence stamping. That is a per-person cost and a per-person delay, and it is the item most often missing from the comparison a founder is shown. Where the company itself transfers, the provision is silent on this, so ask first. Our visa services page covers the sequence.

Contracts are third and the most survivable. A transfer leaves the contracting party unchanged; a new company needs each one assigned, novated or re-signed. What catches people is everything downstream: supplier vendor records keyed to a licence number, procurement listings, insurance, and, with a new company, the tax number printed on every invoice you have issued.

The tax consequence that runs five tax periods past the decision that caused it

This is what makes the branch and dual-licence routes look cheaper than they are.

Mainland-derived income is not qualifying income for a Qualifying Free Zone Person. The de minimis allowance for non-qualifying revenue is the lower of 5% of total revenue or AED 5,000,000 in a tax period. Cross it and the excess is not simply taxed at 9% — the status is lost for that tax period and for the four tax periods that follow.

So a free zone company that opens a mainland branch and succeeds at it can lose the reason it chose a free zone, for five tax periods, by winning onshore work. A Qualifying Free Zone Person also does not receive the AED 375,000 nil band a mainland company gets; non-qualifying income is taxed from the first dirham.

Three further conditions are cumulative and get skipped: adequate substance in the zone, arm's length dealings with documentation, and audited financial statements regardless of revenue. Qualifying and Excluded Activities are set by Ministerial Decision No. 229 of 2025, which replaced the 2023 list retroactively — any comparison still working from the older list describes a regime that no longer exists. Model this against your real revenue mix before choosing a route, starting from our UAE corporate tax page. Before any transfer, ask the Federal Tax Authority how the tax period of the move will be treated.

Going the other way is the harder half, and almost nobody writes about it

Mainland to free zone gets a fraction of the coverage. The transfer provision works in this direction too, and the zone's own system and approval decide it.

A mainland company can open a branch inside a free zone, and many zones license exactly that. What it does not obtain is the tax outcome people are chasing: the branch is not a separate taxable person, its results belong to the mainland parent, and a free zone address does not turn a mainland company's income into qualifying income.

Where no transfer is available, closure in this direction is heavier too. Winding up a mainland company involves a notarised liquidation resolution, an appointed liquidator's report, a newspaper notice, a statutory objection period, and labour and immigration clearances before the licence is cancelled — against a free zone exit, which is largely administrative with the zone. The direction that sounds like a downgrade carries the longer paperwork.

Where all four routes are the wrong purchase

The honest answer for a meaningful share of the people who ask this question is that none of the four should be bought this year.

The mainland branch is wrong when the onshore revenue is occasional. Two enquiries are not a market. A short-duration activity permit, where the emirate offers one, or declining the work, costs a fraction of a permanent second licence, a second set of books and a second audit trail.

The dual licence is wrong when most of your revenue will end up onshore. At that point you are paying to keep a free zone benefit you no longer qualify for. The correct answer is a mainland company — by transfer where both authorities allow it, otherwise by forming one and closing the free zone entity. See mainland company formation.

The distributor is wrong when the customer relationship is the business. Consultancies, agencies and anyone selling on reputation are handing over the only asset they have, to a counterparty whose position may become legally protected. For a manufacturer moving cartons it is often the right answer; for a services firm it rarely is.

Re-incorporating is wrong when the free zone entity holds something that will not move. A designated-zone customs position, a warehouse lease with four years to run, regulatory approvals tied to the entity, or a three-year banking relationship. Each of those is worth more than the licensing convenience, and the branch route exists precisely for this case.

And all four are wrong when the real problem is the activity, not the jurisdiction. If the licence does not permit what you actually sell, no amount of second licensing fixes it. Fix the activity first. Our free zone company page covers how the jurisdiction decision should have been sequenced.

Where we are the wrong purchase. Every one of these four routes bills a consultancy something, and the option that bills us least — the six-month activity permit, or waiting two quarters until the onshore revenue is real — is the one you are least likely to be offered. Ask any adviser, including this firm, for the option that earns them nothing, and judge the advice by whether it appears on the list.

What to settle before you pay for any of this

1. Name the customers. Signed onshore revenue, not forecast onshore revenue, decides whether any of this is worth doing.
2. Ask both authorities, in writing, whether a transfer is open to your company, and plan as if the answer is no until it is yes.
3. Check the activity code against the approved list, in writing, from the licensing authority — not from a package comparison.
4. Model the corporate tax outcome at your actual revenue mix, including the de minimis cliff and the five-tax-period consequence of crossing it.
5. Price the visas per person and the bank account as a delay, not as a fee.
6. Read the exit terms first on any distribution or agency arrangement.
7. Ask what happens if you do nothing for two quarters. For a large share of founders that is the correct answer, and it is the one nobody volunteers.

Frequently asked questions