Walk into almost any Web3 company in Dubai and you’ll find that a large part of the engineering team is in India. Bengaluru, Hyderabad, Pune and Ranchi produce some of the world’s best blockchain developers, and Dubai companies rely on them heavily. The question is how to pay them, and how to own what they build.
Paying Indian developers from a Dubai Web3 company raises Indian legal questions on employment status, intellectual property, tax on tokens and salaries, and foreign exchange. This guide explains each, and the structures that work best in practice.
Contractors, EOR or an Indian subsidiary
There are three common structures for Indian developers working for a Dubai Web3 company. The first is engaging them directly as independent contractors, paid in fiat or tokens under a services agreement. The second is using an Indian employer of record (EOR), which employs them, runs payroll and handles compliance. The third is setting up an Indian subsidiary that employs the team and provides development services to the Dubai company at cost plus a markup.
Contractors are quick and flexible but carry misclassification risk. Under India’s labour codes, in force since 21 November 2025, a full-time developer who works exclusively for you, follows your schedule and is integrated into your team may be treated as an employee, bringing statutory benefits and termination protections into play.
An Indian subsidiary gives the most control, but it must stay within its role. If it starts operating crypto services for Indian users, it may become a virtual digital asset service provider requiring FIU-IND registration under India’s anti-money laundering law.
| Factor | Independent contractors | Employer of record (EOR) | Indian subsidiary |
|---|---|---|---|
| Speed and flexibility | Quick and flexible | Fast to start; the EOR runs payroll and compliance | Slower: incorporation and continuing compliance |
| Control | Limited | Moderate | Most control |
| Main risk | Misclassification under the labour codes if the developer works exclusively, on your schedule, as part of the team | Cost and reliance on the EOR | May become a virtual digital asset service provider needing FIU-IND registration if it operates crypto services for Indian users |
| How IP reaches the Dubai company | Written assignment from each developer | Written assignment from the employer to the Dubai company | Written assignment from the subsidiary, with services priced at cost plus a markup |
Owning the code: IP assignment under Indian law
Intellectual property is often the most valuable thing Indian developers create, and Indian law has specific rules. Under India’s Copyright Act, 1957, employees’ work made in the course of employment generally belongs to the employer, but independent contractors own the copyright in their code unless they assign it in writing.
Section 19 of the Copyright Act adds traps that standard templates often miss. If an assignment doesn’t state its duration, it’s deemed to be five years. If it doesn’t state its territory, it’s presumed to cover only India. And if the assignee doesn’t exercise the rights within a year, the assignment can lapse unless the agreement says otherwise. A Dubai Web3 company should use a present, worldwide, full-term assignment that expressly excludes these defaults.
Open-source contributions need attention too. Web3 code is often published under open-source licences, but the company still needs to own the copyright to choose the licence, relicense later, or protect proprietary components. Where an EOR or Indian subsidiary employs the developers, the IP must flow from the employer to the Dubai company under a written assignment.
Tokens as compensation: the Indian tax position
Paying Indian developers in tokens is common in Web3, but Indian tax applies at two points. Tokens received for services are income in the developer’s hands when received, valued at their fair market value. When the developer later sells or swaps the tokens, any gain is taxed at India’s flat 30% rate for virtual digital assets, with no deductions except cost of acquisition and no set-off of losses.
India’s 1% TDS on transfers of virtual digital assets can also apply, and where the developer is employed by an Indian entity or EOR, the employer may need to withhold tax on token compensation through payroll. Valuing illiquid or locked tokens is difficult, so agree a valuation approach in writing and keep records.
Vesting schedules should be designed with Indian tax in mind. Large token unlocks can create big taxable amounts in a single year, so some Dubai Web3 companies spread vesting more evenly or allow developers to sell part of each unlock to cover tax. Many Indian developers don’t realise the tax consequences of token grants, especially for vesting tokens that become valuable later. India’s tax department actively contacts taxpayers who don’t report crypto, so a short explanatory note for your Indian team protects them and your company’s reputation. Termination terms deserve care too, including what happens to unvested tokens and access to repositories when a developer leaves.
Fiat payments, FEMA and banking
Payment timing and currency should be set out in the contract, including who bears bank charges and exchange rate movements between dirhams, US dollars and rupees. Paying Indian developers in fiat is simpler. Foreign currency payments for services exported from India are permitted through banking channels, and contractors typically invoice in US dollars or dirhams and receive the money in their Indian bank accounts. Export of services may also qualify for GST benefits, depending on the contractor’s registration.
Paying in stablecoins or other crypto instead of fiat raises foreign exchange questions. India’s foreign exchange law expects export proceeds to be received through authorised channels, and receiving payment in crypto, then converting it through P2P markets, can create compliance and banking problems for the developer, including bank account freezes if tainted funds pass through their accounts.
Data protection also matters. Indian developers often access user data held by the Dubai company, so contracts should include confidentiality and data handling terms, and the Dubai company should consider UAE data protection rules for data it controls. Indian developers holding tokens, equity or options in the Dubai company also have foreign asset disclosure obligations in Schedule FA of their Indian returns, and may need to comply with India’s overseas investment rules for equity holdings.
Getting it right and remedies
A Dubai Web3 company with Indian developers should choose the right structure for each person, use contracts drafted for Indian law, secure IP assignments that satisfy Section 19, decide whether to pay in fiat, tokens or both, and give its team clear information about Indian tax. If problems surface, they can usually be fixed: confirmatory IP assignments can repair gaps before a funding round, contractors can be moved to an EOR or subsidiary, and Indian developers can correct tax filings through updated returns. Disputes over unpaid fees or unvested tokens are governed by the contract, so dispute resolution clauses matter. With the right setup, paying Indian developers from Dubai is straightforward and sustainable.
Related reading: hiring contractors in India from the US, hiring developers in India from the UK, IP assignment for UK start-ups with Indian developers, ESOPs for Indian startups, Dubai vs GIFT City for Web3 businesses, why India may still tax Indians in Dubai on crypto and building a Web3 startup with an Indian team; also paid in crypto in Dubai: Indian tax for professionals.
Quick answers
Do Indian developers own code they write for a Dubai company?
Contractors own their copyright unless they assign it in writing in a way that satisfies Section 19 of India’s Copyright Act.
How are tokens paid to Indian developers taxed?
As income when received, at fair market value, and again at 30% on any gain when sold, with 1% TDS on transfers above thresholds.
Should a Dubai Web3 company set up an Indian subsidiary?
Often yes, once the Indian team is large or long-term, provided the subsidiary stays within a development role.
What are the Section 19 traps in an IP assignment?
If the assignment does not state its duration it is deemed to be five years, if it does not state its territory it is presumed to cover only India, and it can lapse if the rights are not exercised within a year, unless the agreement says otherwise.
Can a Dubai company pay Indian developers in stablecoins?
It raises foreign exchange questions, because India’s law expects export proceeds to arrive through authorised channels. Receiving crypto and converting it through P2P markets can create compliance and banking problems for the developer.
Final word
Halverton & Co. is an Indian law firm advising Indian founders, investors, NRIs and crypto businesses in Dubai and across the UAE on Indian law, including contractor and employment structures, IP assignment, token compensation tax and FEMA compliance for Indian Web3 teams. We practise in Jharkhand, Maharashtra and before the Supreme Court of India, and work alongside UAE-licensed counsel, who advise on UAE law. Halverton & Co.: Where tech needs law! If you have a question about Indian law, write to us at office@halvertonandco.com, or get in touch.
This article reflects developments reported up to early October 2026. It is for general information only, is not legal advice, and does not create an advocate-client relationship. Halverton & Co. is an Indian law firm and does not advise on UAE law; UAE-law points should be confirmed with UAE-licensed counsel.
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