For companies
United Arab Emirates: free zone or mainland?
For a permanent presence in the UAE an Italian company usually chooses between a free zone company and a mainland company, that is, in the ordinary territory of one of the Emirates. Today full foreign ownership is possible in both cases for most activities: the difference lies mainly in where, and with whom, the company can do business.
By Avv. Pier Giorgio Ometto · Updated 29 October 2026
See also: Options for entering the market · Company or branch in Saudi Arabia
In short
- Mainland: since 2021 the Commercial Companies Law (now Federal Decree-Law No. 32 of 2021) allows full foreign ownership for most activities, without a 51% UAE partner; limits remain for certain restricted or strategic-impact sectors.
- Free zones: areas with their own rules and authorities, designed for foreign investors and often specialised by sector. They suit international trade and services provided abroad.
- A free zone company wishing to sell on the domestic market must use the available tools, such as a local distributor or, in Dubai, the permits introduced in 2025 for operating on the mainland.
- The choice also affects taxation and should be assessed with a tax adviser.
Mainland
A mainland company can operate throughout the UAE and with public entities, subject to the required permits. For most activities foreign ownership can be total; for certain sectors identified by the federal authorities, limits on foreign participation or special licensing requirements remain. Branches of foreign companies no longer need to appoint a UAE national service agent.
Free zones
Free zones have their own licensing authorities and rules on incorporation, offices and visas. They are a good base for international trade, logistics and serving the wider Gulf region as a hub. To operate on the domestic market, specific tools are needed:
- a distributor or agent on the mainland;
- in Dubai, the solutions introduced by Executive Council Resolution No. 11 of 2025, which provides for a mainland branch, a free zone branch authorised to operate on the mainland or a temporary permit, with separate accounts for mainland activities.
Agents and distributors in the UAE
The Commercial Agencies Law (Federal Decree-Law No. 3 of 2022, in force since 15 June 2023) applies to exclusive agencies registered with the Ministry of Economy. The agent is generally a UAE national or UAE-owned company, with exceptions approved by the Cabinet. The law regulates termination, with a minimum notice period, and allows the parties to choose arbitration.
How to choose
- Customers mainly abroad or across the Gulf: free zone.
- Customers mainly in the UAE, including public entities: mainland.
- Initial test phase: local distributor, with a contract that provides a way out.
Our role
The firm helps the company choose its structure, prepares and negotiates contracts with distributors, agents and partners, and coordinates from Italy the local professionals who handle licences, incorporation and permits.
Frequently asked questions
Is a UAE partner still required on the mainland?
For most activities, no: since 2021 the law allows full foreign ownership. Limits remain for certain restricted or strategic-impact sectors.
Can a free zone company sell to customers in the UAE?
It can do so through a mainland distributor or agent or, in Dubai, with the permits introduced in 2025. This should be assessed according to the type of customers and activity.
Which is better for an Italian company selling machinery or furniture?
It depends on where the customers are. If sales are mainly in the UAE, possibly to public entities, the mainland is often more suitable; if the UAE is a base for the whole Gulf, a free zone may be enough, possibly with a local distributor.
Can the contract with a UAE distributor provide for arbitration?
Yes: the 2022 Commercial Agencies Law allows the parties to choose arbitration. Seat, rules and language should be chosen carefully.
Sources
- UAE Government portal, Full foreign ownership of commercial companies
- UAE federal legislation, uaelegislation.gov.ae
Avv. Pier Giorgio Ometto. The first contact can take place by phone, by video call or, at your request, at your premises.