What is the difference between FZE and FZCO?

FZE vs. FZCO: Understanding UAE Free Zone Business Options

When setting up a business in the UAE, you may come across two popular business structures: FZE (Free Zone Establishment) and FZCO (Free Zone Company). Both types offer benefits to investors looking to establish businesses in the UAE’s numerous free zones. However, understanding the key differences between FZE and FZCO is crucial for making the right choice. This article breaks down the main distinctions to help you decide which structure suits your business needs.

What is an FZE (Free Zone Establishment)?

A Free Zone Establishment (FZE) is a business entity that can be set up in one of the UAE's many free zones. An FZE is unique because it is a single-owner company, meaning that it can be owned by just one person or one legal entity. This makes it an attractive option for entrepreneurs or individuals who want full control over their business. The owner can be either a person or a company, but there can only be one shareholder in an FZE.

What is an FZCO (Free Zone Company)?

A Free Zone Company (FZCO) is another business structure available in UAE free zones. Unlike an FZE, an FZCO allows multiple shareholders, making it suitable for businesses that want to have two or more owners. The shareholders can be a combination of individuals or corporate entities, providing more flexibility in ownership.

FZCOs offer the same benefits as FZEs, such as full foreign ownership, tax exemptions, and profit repatriation. The main difference is the number of shareholders allowed in an FZCO. This structure is ideal for partnerships or businesses looking for more ownership diversity.

In summary, the main difference between an FZE and an FZCO is the number of shareholders each business structure allows. An FZE is a single-owner company, while an FZCO permits multiple shareholders. Both offer attractive benefits, including 100% foreign ownership, limited liability, and tax exemptions. The choice between the two will depend on whether you want to operate as a sole proprietor or as part of a partnership. Understanding these distinctions can help you make the right decision when setting up your business in the UAE’s free zones.

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