# What is FZE (Free Zone Establishment)?

Country: United Arab Emirates

An FZE is a Free Zone Establishment, a single-shareholder Free Zone entity, equivalent to a sole shareholder LLC. Used by solo founders incorporating in a UAE Free Zone.

## Current rate (Annual)

0% Corporate Tax on Qualifying Income (if QFZP); 9% otherwise

## Example

A solo founder incorporates a IFZA FZE with AED 50,000 share capital, holds 100% of shares, runs a remote consultancy, and qualifies for QFZP on non-UAE customer income.

## How FZE (Free Zone Establishment) works in United Arab Emirates

An FZE is the single-shareholder equivalent of an FZCO. It gives a solo founder all the benefits of Free Zone incorporation: 100% foreign ownership, limited liability, QFZP Corporate Tax eligibility, without requiring a co-founder or second shareholder.

**When to use an FZE vs FZCO**

- FZE: solo founders, single-shareholder ventures, holding entities
- FZCO: co-founder teams (2+ shareholders), joint ventures, investor-backed companies

Note: some investors prefer FZCO structures for governance reasons. If you plan to bring in investors or co-founders, an FZCO is more flexible from the start.

**Formation process**

1. Choose a Free Zone and activity type
2. Reserve a trade name (checked for uniqueness within the zone and UAE namespace)
3. Submit Memorandum of Association, shareholder passport/Emirates ID, proof of address
4. Choose office type (flexi-desk, hot desk, or dedicated office)
5. Pay formation fee and first year license fee
6. Receive trade license and certificate of incorporation

Timeline: 1-5 business days for most Free Zones once documents are submitted.

**Visa entitlements**

An FZE entitles the holder to UAE residence visas: the number depends on the Free Zone and office space type. A basic flexi-desk typically supports 1-3 investor visas. Larger office spaces unlock more visa quotas. The shareholder is usually issued an investor visa; employees can be sponsored on employment visas.

**Annual obligations**

- Trade license renewal (annually with the Free Zone Authority)
- UBO register update (if ownership changes)
- ESR notification (if in a Relevant Activity)
- Corporate Tax return (within 9 months of financial year-end)
- VAT return (if registered, quarterly)

Source: https://u.ae/en/information-and-services/business/establishing-business

## Related terms

- [FZCO (Free Zone Company)](https://accounts-os.com/ae/glossary/fzco)
- [Free Zone (UAE)](https://accounts-os.com/ae/glossary/free-zone-uae)
- [QFZP (Qualifying Free Zone Person)](https://accounts-os.com/ae/glossary/qfzp)