One question decides whether this engagement is lawful: **does the individual hold a permit that allows them to provide these services?** A person on a spouse visa, a visit visa, or another employer’s sponsorship cannot simply invoice you. The exposure falls on the client as well as the individual.
Engaging a Consultant
Freelancers, contractors and the permit question
One question decides whether this engagement is lawful: does the individual hold a permit that allows them to provide these services? A person on a spouse visa, a visit visa, or another employer’s sponsorship cannot simply invoice you. The exposure falls on the client as well as the individual.
| Item | Detail |
|---|---|
| Client | [COMPANY NAME], licence [NUMBER] |
| Consultant | [NAME] |
| Engaged as | [Licensed company / Freelance permit holder / Individual] |
| Permit or licence held | [DETAIL] — copy obtained [DATE] |
| Covers these services? | [Y/N — checked against the activity list] |
| Services | [DESCRIBE BY OUTCOME] |
| Period | [DATE] to [DATE] |
| Fees | AED [AMOUNT] per [day / month / project] |
| VAT | [Registered and charges 5% / Not registered] |
| Classification assessed | [DATE] — see Section 2 |
| Governing law | [Emirate of ______ / DIFC / ADGM] |
1. The Permit Question
| The consultant is… | Position |
|---|---|
| A licensed UAE company | Check the trade licence covers these activities. Contract with the company, not the individual |
| A freelance permit holder | Check the permit covers this field of activity and is current |
| On a Green Visa as a freelancer | Self-sponsored; confirm the permit position for the services |
| Employed elsewhere, moonlighting | Requires a part-time work permit — an employer NOC is not sufficient |
| On a spouse or family visa | Requires a work permit to work, whoever sponsors the residence |
| On a visit or tourist entry | Cannot lawfully work. Do not engage |
| Outside the UAE, working remotely | Different analysis — check withholding, permanent establishment and their local rules |
| A Golden Visa holder | Still needs a work permit to be employed; for independent services check the permit position |
1.1Obtain and keep a copy of the licence or permit, and check the activity list. A licence that exists is not the same as a licence that covers the work.
1.2The most common informal arrangement in the market is an individual on a family visa invoicing for services with no permit. It is unlawful for both sides, and the client is the party with assets.
2. Employee or Contractor
Work through this honestly. If most answers point to employment, engage them as an employee and obtain a work permit.
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These notes accompany the template and explain the drafting choices, the compliance points and the mistakes most often made with this document. They appear as a final page in the Word file, intended to be deleted before the document is executed.
An individual cannot lawfully provide services in the UAE without a permit that allows it — a freelance permit, a Green Visa arrangement, a company licence, or a part-time work permit if employed elsewhere. A spouse visa or a visit entry does not permit work. The exposure falls on the client as well as the individual, and the client is the party with assets.
Obtain the trade licence or permit and read the activity list against the services you are buying. A consultancy licence does not necessarily cover the specific field, and a mismatch causes problems with invoicing, VAT and regulators.
Where the consultant is employed elsewhere and moonlighting, the correct instrument is a part-time work permit, not a letter from their employer saying they do not object. This is the most commonly confused point in the whole area.
Contracting with the consultant’s licensed company rather than the individual strengthens the contractor characterisation, simplifies the tax and VAT position, and provides a counterparty with a licence to check.
A consultant working full time at your premises, on your systems, under your direction, for an extended period is an employee in substance whatever the contract says. The permit exposure and the retrospective employment liability both land on the client.
Unlike an employee, a contractor retains intellectual property they create unless it is assigned in writing. This is the most common gap in consultancy arrangements and it surfaces years later in due diligence, sometimes on the core product.
Contractors building quickly may incorporate open source under licences requiring source disclosure. That is a serious problem for a client expecting proprietary work. Require identification and consent before delivery.
A schedule setting out deliverables and milestones supports contractor status. One setting out hours to be worked under supervision undermines it. This is a drafting choice with real consequences for the classification analysis.
Company email identity, a title on the org chart, appraisals, fixed hours and a permanent desk all point to employment. Where an engagement genuinely needs that, employ the person and get the permit.
A VAT-registered consultant charges 5% in addition and must issue a valid tax invoice with all required particulars for the client to recover input tax. Where they are not registered, no VAT should appear on the invoice at all.
Where the consultant is outside the UAE, consider whether any withholding applies to the payment and whether the arrangement creates a presence issue in their jurisdiction or yours. Take advice rather than assuming the UAE position travels.
An indemnity from an individual with no assets is uncollectable, and it does nothing about a regulatory finding or a permit contravention attributed to the client. Get the permit position right first.
An arrangement that was genuinely a contractor engagement at the start drifts towards employment as the person becomes embedded. Reassess anything running beyond twelve months rather than letting it continue by inertia.
Where the consultant is licensed in a free zone, check whether their licence permits providing services to a mainland client — and where you are the free zone party, whether buying those services affects your own qualifying income analysis.
Reflects UAE law current as of {{DATE OF USE}}. Freelance permit categories, part-time work permit requirements, Green Visa conditions, VAT rules and withholding provisions all change — confirm the consultant’s permit position with MOHRE or the relevant zone before engaging, and take advice on any long-running or full-time arrangement.
This is a ready-to-use template provided for convenience. Laws and requirements change, and every situation is different — please have it reviewed by a qualified professional (a lawyer, corporate secretary, or accountant as relevant) before you rely on it.