Salaries Can Be Paid in Cryptocurrency, Dubai Court Rules
Conclusion
The Dubai Court has confirmed that if cryptocurrency is included as part of an employment contract in the UAE, it is legally binding and must be honored. This ruling marks a significant step in recognizing crypto payments as legal in the UAE. The decision was issued on August 18, 2024, in a landmark case by the Dubai Court of First Instance.
Dubai Court Ruling: Cryptocurrency as Legal Salary Payment in the UAE. Details of the Ruling. August 18, 2024.
Dubai is progressively embracing cryptocurrency, as highlighted by a recent ruling from the Dubai Court of First Instance. In case number 1739 of 2024, the court declared that cryptocurrency could be used as a legal form of salary payment under employment contracts. This decision reflects a shift from the court’s stance in 2023, where a similar claim was denied due to unclear valuation methods for the cryptocurrency involved.
In the 2024 case, the dispute involved an employee who was not paid a portion of their salary in EcoWatt tokens. Unlike the 2023 decision, the court ruled in favor of the employee, enforcing the cryptocurrency payment as specified in the employment contract, without requiring conversion to fiat currency. This ruling showcases Dubai’s forward-thinking approach to integrating digital currencies into its legal and economic framework, applying the UAE Civil Transactions Law and Federal Decree-Law No. 33 of 2021 for wage disputes.
Important Note: While this ruling is a significant milestone, Dubai has not officially declared cryptocurrency as legal tender for all transactions.
Types of Salary Payments
Companies generally use the following types of salary payments:
- Fiat: Traditional currencies such as USD, EUR, and AED.
- Crypto: Digital currencies like USDT, USDC, EURe, BTC, ETH, and XRP.
- Mixed: Some contracts stipulate that part of the salary is paid in fiat and part in cryptocurrency.
Advantages of Paying in Cryptocurrency
- Speed: Crypto payments are fast, typically taking seconds to a few minutes, making them ideal for paying freelancers in countries like Ethiopia or Vietnam, where traditional bank transfers can be slow and costly.
- Cost: Transaction fees are minimal compared to traditional banking fees.
Isn’t the risk of volatility high? Addressing Volatility:
- Stablecoins: If volatility is a concern, stablecoins like USDT and USDC, which are pegged to fiat currencies, can be used for payments, eliminating price fluctuations.
- Long-Term Value: For those concerned about fiat currency depreciation due to inflation, cryptocurrencies like Bitcoin, which have appreciated over time, may be preferred.
Tax Implications for Freelancers in the UAE
The UAE has a 0% personal income tax rate. For freelancers employed in Dubai but living abroad, crypto payments can offer tax advantages, making Dubai an increasingly attractive hub for crypto professionals.
