Setting up a company in Dubai’s free zones is one of the most attractive options for entrepreneurs worldwide. With tax benefits, 100% foreign ownership, and simplified setup processes, Dubai free zones empower startups and established businesses alike. If you’re still exploring the basics, check out our guide on How to Start a Business in Dubai Free Zone. However, one of the most common questions investors face is: Should I register as an FZE or an FZCO in Dubai?
Both structures have distinct advantages depending on your ownership goals, budget, and long-term strategy. In this guide, we’ll break down the difference between FZE and FZCO in Dubai, highlight their pros and cons, and help you decide which is the right fit for your business.
What is an FZE in Dubai?
A Free Zone Establishment (FZE) is a limited liability company that requires only one shareholder—either an individual or a corporate entity. It offers full control over management decisions while limiting liability to the company’s share capital. Available in free zones such as DMCC, DSO, and DIFC
Key Features of FZE in Dubai:
- Single shareholder (individual or corporate)
- Limited liability structure
- Full ownership and decision-making authority
- Independent legal entity
- Available in free zones like DMCC, DSO, and DIFC
Best Suited For:
- Solo entrepreneurs
- Consultants and freelancers
- Small businesses seeking low-cost setups with full control
What is an FZCO in Dubai?
A Free Zone Company (FZCO) is also a limited liability company but requires a minimum of two shareholders (up to 50). These shareholders can be individuals, corporates, or a mix of both. Popular in free zones like JAFZA, DAFZA, and Dubai South.
Key Features of FZCO in Dubai:
- Requires 2–50 shareholders
- Shared decision-making and ownership flexibility
- Liability limited to share capital
- Ideal for partnerships and joint ventures
- Common in free zones like JAFZA, DAFZA, and Dubai South
Best Suited For:
- Partnerships and joint ventures
- Trading companies
- Businesses planning long-term scalability
| Feature | FZE | FZCO |
|---|---|---|
| Shareholders | 1 | 2–50 |
| Ownership | Individual or corporate | Individual, corporate, or both |
| Liability | Limited to share capital | Limited to share capital |
| Decision-making | Sole authority | Shared authority |
| Setup Cost | Lower | Higher |
| Scalability | Limited | High |
| Best for | Solo entrepreneurs | Partnerships & larger ventures |
Not sure whether a free zone or mainland structure is best? Read our blog on the Benefits of Free Zone vs Mainland Company in Dubai.
Pros & Cons of FZE
Pros:
- Full ownership and operational control
- Lower initial setup cost
- Simplified compliance
Cons:
- Limited scalability
- Restricted business activities in some free zones
Pros & Cons of FZCO
Pros:
- Shared decision-making
- Greater scalability and investment opportunities
- Flexible ownership options
Cons:
- Higher setup and maintenance costs
- More complex compliance requirements
Setup costs can vary across free zones. For a detailed breakdown, see our guide on the Cost of Business Setup in Dubai.
How to Choose Between FZE and FZCO in Dubai
The decision depends on your business goals, ownership preference, and growth strategy.
- Choose FZE if you want full ownership, low cost, and simplicity.
- Choose FZCO if you’re planning to scale, collaborate with partners, or attract investors.
Factors to consider:
- Budget
- Growth potential
- Share transfer flexibility
- Ownership control
FAQs
1. What is the difference between FZE and FZCO in Dubai?
FZE requires only one shareholder, while FZCO requires at least two. Both offer limited liability but differ in scalability and ownership flexibility.
2. Which is cheaper: FZE or FZCO?
Generally, an FZE is cheaper to set up and maintain than an FZCO, making it ideal for startups and solo founders.
3. Can foreigners own 100% of an FZE or FZCO in Dubai?
Yes, both FZE and FZCO structures allow 100% foreign ownership in Dubai free zones.
4. Which free zones offer FZE and FZCO?
Popular free zones include DMCC, DSO, JAFZA, DAFZA, and Dubai South. Availability may vary depending on business activity.
Conclusion + Call-to-Action
Choosing between FZE vs FZCO in Dubai comes down to your ownership needs and long-term vision. While an FZE is perfect for entrepreneurs who want complete control, an FZCO offers flexibility, shared responsibility, and scalability for growing businesses.
👉 Ready to start your free zone company in Dubai?
Contact our business setup experts today for a free consultation and take the first step towards your UAE business journey.
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