Understanding the UAE’s Updated Family Foundation Guidance: Key Questions Answered

Question 01

What is the June 2026 CTGFF update?

The June 2026 CTGFF is the Federal Tax Authority’s updated Taxation of Family Foundations Corporate Tax Guide. It provides further clarification on the Corporate Tax treatment of Family Foundations, trusts, holding structures, SPVs and family offices.

Question 02

Does the June 2026 update fundamentally change the Family Foundation tax framework?

No. The June 2026 update does not fundamentally alter the Family Foundation tax framework that was first introduced in May 2025. The core conditions for a Family Foundation to qualify for fiscally transparent treatment as an Unincorporated Partnership remain unchanged, and structures that were fully compliant in accordance with the prior version of the CTGFF will generally continue to qualify.

The update is best characterised as a set of targeted clarifications and practical additions, addressing gaps and ambiguities that had arisen in practice since the tax framework’s inception, rather than a substantive overhaul of the underlying rules.

Question 03

What key developments from the June 2026 update merit careful attention by families?

The most notable development is the revised position relating to the joint ownership of SPVs by two or more Family Foundations. Families that received advice prior to 5 June 2026 to the effect that the co-ownership of structured entities by multiple Family Foundations precluded fiscally transparent treatment, should now seek updated guidance, as they may now qualify for fiscally transparent treatment in accordance with the updated guidance.

More broadly, stakeholders with ownership structures involving asset transfers into a Family Foundation, a family office within the structure, or recent acquisitions or disposals of corporate entities, should review their arrangements in light of the new provisions introduced by the update.

Question 04

What changes does the June 2026 update introduce for multi-tier private wealth structures?

The key developments are applicable to multi-tier private wealth structures, i.e. where a holding company and/or SPVs are ultimately owned by one or more Family Foundations.

Previously, where a corporate entity (such as a SPV) was jointly owned by two or more Family Foundations, the “wholly owned and controlled” condition was not considered to be met and disqualified that entity from being treated as fiscally transparent.

The June 2026 update reverses this prior position: a juridical person can now be “wholly owned” jointly by more than one Family Foundation. Provided that one of those Family Foundations controls the entity and all the relevant conditions of Article 17(1) of the Corporate Tax Law are met, the entity may apply to be treated as a fiscally transparent Unincorporated Partnership.

This presents a significant planning opportunity for structures where assets are co-held between two or more Family Foundations.

Question 05

How does the update address the beneficiary condition for wholly-owned subsidiaries?

The June 2026 update clarifies that the “beneficiary condition” within Article 17(1)(a) of the Corporate Tax Law is automatically considered to be met at the level of “wholly-owned” subsidiaries, on the basis that such entities serve the same holistic purpose as the Family Foundation.

This is especially relevant for holding companies and SPVs that exist purely to hold or manage assets within such ownership structures, providing greater certainty for multi-tier private wealth structures.

Question 06

Is a case-by-case assessment still required for each entity in a multi-tier structure?

Yes. Each multi-tier private wealth structure still requires a case-by-case assessment. Each entity must independently satisfy the relevant conditions, including ownership and control requirements, and ensure that it does not undertake activities that would be considered a business in its own right.

Question 07

Can an LLC be treated as a Family Foundation for the purposes of fiscally transparent treatment?

No. In accordance with the June 2026 update, LLCs are not considered to be a “similar entity” to a Family Foundation and therefore cannot directly apply to the FTA to be treated as fiscally transparent on that basis.

However, this does not mean all LLCs are excluded from multi-tier private wealth structures. An LLC that is wholly owned and controlled by one or more Family Foundations may still be eligible to apply for fiscally transparent treatment as a juridical person wholly owned by one or more Family Foundations.

Question 08

How does the June 2026 update address the Corporate Tax treatment of asset transfers into a Family Foundation?

The June 2026 update introduces dedicated guidance on the Corporate Tax treatment of asset transfers into a Family Foundation. Any gains or losses arising on such transfers may be subject to Corporate Tax depending on the circumstances, in particular, whether the transferor is or becomes a “Taxable Person”¹ as a result of the transfer.

Where the transferor is a “Related Party”¹ of the Family Foundation (this includes the founder), the transaction must satisfy the arm’s length standard.

However, where the transferor is a natural person and the assets that were transferred qualify as “Personal Investments” or “Real Estate Investments” (as defined within the Corporate Tax Law), such transfer would fall outside the scope of Corporate Tax.

Question 09

How are Single-Family Offices and Multi-Family Offices treated within the June 2026 update?

A Single-Family Office (“SFO”) or a Multi-Family Office (“MFO”) may be a juridical person wholly owned and controlled by a Family Foundation.

However, given that SFOs and MFOs typically conduct business activities, they are unlikely to satisfy all the conditions of Article 17(1) of the Corporate Tax Law, in particular the “no Business Activity” condition, and will generally be subject to Corporate Tax on all their income, including management fees.

Where an SFO or an MFO is established as a Free Zone Person and earns “Qualifying Income”¹ from “Qualifying Activities”¹, such as wealth and investment management services or fund management services, it may benefit from a 0% Corporate Tax rate.

Question 10

What regulatory requirements must a Family Office meet to qualify for the 0% Corporate Tax rate?

To qualify, the SFO or MFO must be subject to regulatory oversight by a competent authority in the UAE, specifically the UAE Central Bank, the Financial Services Regulatory Authority of the Abu Dhabi Global Market (FSRA), or the Dubai Financial Services Authority of the DIFC (DFSA).

Families should be aware that this stipulated regulatory oversight requirement may conflict with their preference for confidentiality.

Question 11

What are the Corporate Tax consequences when an entity enters or exits a Family Foundation structure?

The CTGFF introduces a new section (Section 7.9) addressing the Corporate Tax treatment when a juridical person enters or exits the parameters of a Family Foundation structure, whether by becoming wholly owned and controlled by a Family Foundation, or by ceasing to be so.

Importantly, no adjustment is made to the tax base cost of any asset(s) held by the relevant entity as a result of such a change in status. The periods during which the entity is treated as a fiscally transparent Unincorporated Partnership are disregarded for the purposes of any base cost calculation.

This is a key consideration for Family Foundations contemplating the acquisition or disposal of corporate entities within their ownership structure.

Key Takeaway

Whilst the CTGFF does not fundamentally change the UAE’s Family Foundation tax framework, it provides important clarification on several practical issues that frequently arise in private wealth ownership structures. The updated CTGFF is particularly relevant for asset ownership structures involving multiple Family Foundations, SPVs, family offices, asset transfers and corporate reorganisations. Families, founders, family offices and advisers should take this opportunity to review existing arrangements and assess whether they continue to achieve the intended legal, governance and tax outcomes in light of the CTGFF.

For further information on the UAE’s Family Foundation tax framework and its implications for private wealth structures, please contact Sunita Singh-Dalal, Aakriti Sharma, Myriam Fellag or Farah Baidas.

¹ As defined in the CTGFF (June 2026).