New Zealand


The Polynesian Maori and Moriori are considered to be the pioneers of New Zealand who supposedly started the reclamation of the islands in 11-14 centuries. Although the first European who saw the shores of New Zealand in 1642, was a Dutch seafarer Abel Tasman, it was a voyage of James Cook in 1768 which set the stage of dynamic reclamation of the lands by Europeans. In 1840, due to the growing interest of France to New Zealand’s colonization, Great Britain appointed its governor in the country, and on February 6 she signed the Treaty of Waitangi which became the basis of a new state and is followed till today. According to the Treaty, New Zealand become a part of British Empire, but it was also guaranteed that Maori could still enjoy their rights (including property rights). In the middle of the 1850s, New Zealand got the rights of limited autonomy, and by the end of the 1890s obtained independancy. The British colony of New Zealand became an independent dominion in 1907. However, the country gained it full independence only in 1986, when as a result of constitutional crisis Constitution Act of 1986 was adopted.

Service packages

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Service item Express Standard Optimum
Company registration
Legal address per year
Secretarial services for the first year
Fees and duties for the first year
Apostilled bound set of incorporation documents
Compliance fee
Nominee service per year
Bank Account Pre-approval
Price

3 900 USD

7 850 USD

8 350 USD

I want to order «»

Contact method: and / or

Core Services

3 900 USD

— Incorporation

including incorporation tax, state registry fee, including Compliance fee

Included

— Annual government fees

Companies Office incorporation fee

1 620 USD

— Corporate legal services

including registered address and registered agent, NOT including Compliance fee

140 USD

—Delivery of documents by courier mail

DHL or TNT, at cost of a Courier Service

500 USD

— Apostilled set of Statutory documents

Optional services

3 950 USD

Nominee director services (for 1 year)

Paid-up “nominee shareholder” set includes the following documents

Related services

Tax Certificate

Company’s tax residence certificate for access to double tax treaties network

Certificate of Good Standing

Document issued by a state agency in some countries (Registrar of companies) to confirm a current status of a body corporate. A company with such certificate is proved to be active and operating.

Compliance fee

Compliance fee is payable in the cases of: renewal of a company, liquidation of a company, transfer out of a company, issue of a power of attorney to a new attorney, change of director / shareholder / BO (except the change to a nominee director / shareholder)

250 USD

Basic

simple company structure with only 1 physical person

50 USD

For legal entity in structure under GSL administration

additional compliance fee for legal entity in structure under GSL administration (per 1 entity)

100 USD

For legal entity in structure not under GSL administration

additional compliance fee for legal entity in structure NOT under GSL administration (per 1 entity)

350 USD

For client with high risk Status

Cost of incorporation, including first year servicing 3900
Cost of nominee director services per year, including an apostilled set of documents 3950
Cost of annual service, starting from the second year 1620
Open account in 28693
Country 26732

General information shortly

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Total area Population Capital Unemployment Corruption perceptions index rank
268,680 sq.km 4,504,083 (2013) Wellington 6.2% 1 (2013)
Location southwestern Pacific Ocean
National currency New Zealand dollar
Conditional reduction of currency NZD
Against USD 1.21
Climate, average max and min t° temperate with wide regional contrast. The hottest months are December, January and February; the coldest are June, July and August. Average temperature in July varies from +12°С to +5°С, average temperature in January varies from +19°С to +14°С.
Time difference from Moscow + 9 hours
Dialing code +64
State language English, Maori, NZ Sign language
Ethnic groups 56.8% - European; 8% - Asian; 7.4% - Maori; 4.6% - Pacific islanders; 9.7% - mixed; 13.5% - other
Literacy rate 99 %
Credit rating AA+
Government type constitutional monarchy
Executive branch Cabinet lead by the Prime Minister
Legislative branch Parliament consisting of the Queen and the House of Representatives (120 seats)
Judicial branch Supreme Court; Court of Appeal; High Court
GDP per capita rank 22 (2013)

Corporate info

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Shelf companies permitted Legal system Incorporation timescale for a turnkey company Cyrillic alphabet permitted in company name Local registered office
Yes common law No Yes
Types of entity Sole trader; Partnership; Limited partnership; Private company; Public company; Trust
Incorporation timescale for a new company 1 day
Company suffix Limited; Tapui (Limited)
Sensitive words names having royal, national, international, commercial or other significance
Local registered agent No
Information to be kept at the registered office Minutes of all meetings and resolutions of shareholders; Share register and the register of Director's interests; Minutes of all meetings and resolutions of directors and directors committees; Certificates given by directors under Companies Act; Full names and addresses of the current directors; All written communications to all shareholders, including annual reports; Copies of all financial statements and group financial statements (these must be in English); Accounting records for the current accounting period
Seal required, type of seal not required
Redomiciliation (to, from) permitted permitted

Director and secretary

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Minimum number of directors Residency requirements for directors Corporate directors permitted Disclosure to local agent Disclosure to public
1 No No Yes Yes
Directors’ meetings/frequency/location No requirements
Company secretary required No
Residency requirements for a secretary No
Qualified secretary required No
Corporate secretary permitted No

Shareholder and beneficiary

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Minimum number of shareholders Residency requirements for shareholders Corporate shareholder permitted Disclosure to local agent Disclosure to public
1 No Yes Yes Yes
Meetings/frequency/location Yes / annually / no requirements
Beneficiary info disclosure to No

Shares and share capital

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Minimum authorized share capital Minimum issued share capital Minimum paid share capital Authorized capital payment deadlines Bearer shares permitted
No requirements 1 share 1 share No requirements No
Issued capital payment deadlines At the moment of registration
Standard currency NZD
Standard authorized share capital 10000
Standard par value of shares No
Shares with no par value permitted Yes

Taxes

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Min. rate for corporate tax Capital gains tax VAT Withholding tax Exchange control
28% Regular rate 15% 0-15-30%/15%/15% No
Personal tax 10,5-39%
Corporate tax (in detail) Corporate income tax is levied at a flat rate of 28%.
VAT. Details GST is similar to VAT. The tax rate is 15%.
Other taxes Employee Benefit Tax, Social Contributions, Property Taxes
Stamp duty No

Accounts

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Requirement to file accounts Publicly accessible accounts Audit required Requirement to file Annual Return Publicly accessible Annual Return
No No Yes Yes No
Requirement to prepare accounts Yes
Double tax treaties network 40
Tax Exchange Information Agreement network 20
OECD member Yes
Offshore/onshore status according to the RF laws No

GENERAL INFORMATION

General info

New Zealand is an island country in the southwestern Pacific Ocean. The country geographically comprises two main landmasses – that of the North Island, and the South Island.
Total area of the country is 268,680 sq. km. The population is 4,504,083 people (2013). The European form the largest ethnic community (56,8%), Asian comprise 8%, Maori – 7,4%, Pacific islanders – 4,6%, people of mixed descent – 9,7%, other – 13,5%.
The capital is Wellington.
The official languages are English, Maori, NZ Sign language.
The currency is New Zealand dollar (NZD). 1 USD is equal to 1.21 NZD.
Climate of New Zealand is temperate with wide regional contrast. The hottest months are December, January and February; the coldest are June, July and August. Average temperature in July varies from +12°С to +5°С, average temperature in January varies from +19°С to +14°С.
Time difference with Moscow is +9 hours.
Literacy rate is 99%.
Calling code is +64.

History

The Polynesian Maori and Moriori are considered to be the pioneers of New Zealand who supposedly started the reclamation of the islands in 11-14 centuries. Although the first European who saw the shores of New Zealand in 1642, was a Dutch seafarer Abel Tasman, it was a voyage of James Cook in 1768 which set the stage of dynamic reclamation of the lands by Europeans.
In 1840, due to the growing interest of France to New Zealand’s colonization, Great Britain appointed its governor in the country, and on February 6 she signed the Treaty of Waitangi which became the basis of a new state and is followed till today. According to the Treaty, New Zealand become a part of British Empire, but it was also guaranteed that Maori could still enjoy their rights (including property rights).
In the middle of the 1850s, New Zealand got the rights of limited autonomy, and by the end of the 1890s obtained independancy.
The British colony of New Zealand became an independent dominion in 1907. However, the country gained it full independence only in 1986, when as a result of constitutional crisis Constitution Act of 1986 was adopted.

Government Type

New Zealand is a constitutional monarchy with a parliamentary democracy. The basic system is closely patterned on that of the Westminster System, although a number of significant modifications have been made.
The head of state is the Queen of New Zealand. Elizabeth II reigns since February 6, 1952. The status of the monarch is determined by the constitutional priciple – «reign but not rule», therefore she does not exercise political influence but keeps political neutrality. The Queen is represented by the Governor-General, whom she appoints on the advice of the Prime Minister for a five-year term.
Executive power is exercised by the government – the Cabinet which is led by the Prime Minister. The Prime Minister is the Parliamentary leader of the governing party or coalition, and is known as the head of government. The New Zealand Cabinet is responsible to the Parliament of New Zealand, from which its members are derived.
Legislative power is formed by the bicameral New Zealand Parliament which consists of the Queen and the House of Representatives. The House of Representatives has 120 seats. It is democratically elected for a 3-year term. A Government is formed from the party or coalition with the majority of seats.
Judiciary branch is represented by Supreme Court of New Zealand as well as High Court of New Zealand and Court of Appeal of New Zealand. Ther are also 66 District courts and a whole system of special courts including Family Court, Youth Court, Environment Court, Employment Court, etc.

Economy

New Zealand has a modern, prosperous and developed market economy, which is based on agriculture, processing and food industry, and tourism. New Zealand’s economy is export-oriented. Its main trade partners are Australia, the USA, Japan and China.
New Zealand's GDP (nominal) per capita in 2013 was 40465 US dollars (ranks 22d in the world). Unemployment rate is 6.6%. Public sector has a small part in the economy – in 2008 there were only 19 state-owned enterprises. Most of the population (65%) works in the service sector.
In 2012 New Zealand ranked first in the list of the best countries to do business in, prepared by Forbes magazine. In 2013 the country took the lead in the world by corruption perception index.
New Zealand is a member of numerous international and regional economic organizations. The most influential are OECD, WTO, APEC, IEA.

CORPORATE INFORMATION

Legal system

The legal system of New Zealand is based on English common law.
There is no codified Constitution in New Zealand, but there are some constitution acts.
Companies in New Zealand are governed by Companies Act 1993.

Types of entity

The principal forms of business organization in New Zealand are:
  • Sole trader;
  • Partnership;
  • Limited partnership;
  • Private company;
  • Public company;
  • Trust.

The most common structure is the private limited liability company.

REGISTRATION

Company name

There is a range of requirements to the company name in New Zealand:
  1. The last word in the company name must be either Limited or Tapui (Limited).
  2. It cannot be identical or almost identical to another company name. Certain words and phrases can be disregarded when determining whether names are identical or almost identical. The words and phrases are: the definite article ("the") when it is the first word in a name; certain words appearing at the end of a name: 'Limited', 'Tapui (Limited)', 'Unlimited'; the following abbreviations whenever they appear in a name: '&' for 'and'; 'no' for 'number'; 'co' or 'coy' for 'company'; 'N.Z.' or 'NZ' for 'New Zealand'; 'Bros' for 'Brothers'; the typeface and case (upper or lower) of letters, accents, spaces between letters and punctuation marks. 'Almost identical' is more difficult to define but the Registrar’s policy is that it means a name in which the key words and/or the order in which they appear make that name virtually indistinguishable from another. Each name reservation will be considered in light of its own individual circumstances. In general, a year marker - for example, '(2010)'; a number - for example, 'No. 1' or geographic marker - for example, '(Nelson)' is sufficient to distinguish one name from another. For the purposes of determining whether two names are almost identical, names containing a marker will not be almost identical to those without. For example, 'Clothing Company Limited' and 'Clothing Company (2010) Limited' are not almost identical.
  3. It cannot be offensive or contain certain words that are restricted or protected by other legislation. For example, company names which include words or phrases protected by the Flags, Emblems and Name Protection Act 1981 or by any other enactment will not be approved. These include names having royal, national, international, commercial or other significance.
  4. The only symbols that may be used in a company name are those that are used in the proper context – for example, The $2 Shop Limited. Numbers that are used in a name are likely to be accepted where they act as a year marker or a numerical marker. For example, XYZ No. 1 Limited and XYZ No. 2 Limited or XYZ (2202) Limited and XYZ (2009) Limited.
  5. Plurals, that is adding the letter 's' to the end of a word, is not enough to make a name significantly different.

Registration

The following steps are required to incorporate a GmbH in Switzerland:
  1. To reserve a company name online (www.business.govt.nz/companies) for application fee of NZ$10.22. The reserved name is available for registration for 20 working days. You can extend your name reservation for a further 20 working days. If the name is not used or withdrawn within 20 working days, the name will be forfeited and you will need to reapply and pay another NZ$10.22 application fee.
  2. Go back online and apply for the company to be registered by completing forms on company details (such as names of shareholders and directors and company addresses and address of communication) and pay the registration fee. When the application is processed, the founder will receive a notification by email along with the appropriate director and shareholder consent forms, which are generated by the Companies Office. The applicant must then fax the signed director and shareholder consent forms within 20 working days, after which the application will expire. The certificate of incorporation will be issued via email in a few minutes when the last consent form is accepted.
  3. You can apply online for a company IRD (Inland Revenue Department) number and register for GST (Good and Service Tax) at the same time as incorporating a company online with the New Zealand Companies Office.

The formation of a new company in New Zealand takes 1 day.

Local registered office

Each company in New Zealand must have a registered office, an address for service, and an address for communication. The address of the registered office and the address for service must be physical addresses in New Zealand. That is, a street address, not a Post Office Box or DX address. The address for communication may be a postal or physical address (but not a DX) and must include an email address.
The companies office requires the following to be stored at the registered office:
  • Constitution of the company (optional);
  • Minutes of all meetings and resolutions of shareholders;
  • Share register and the register of Director's interests;
  • Minutes of all meetings and resolutions of directors and directors committees;
  • Certificates given by directors under Companies Act;
  • Full names and addresses of the current directors;
  • All written communications to all shareholders, including annual reports;
  • Copies of all financial statements and group financial statements (these must be in English);
  • Accounting records for the current accounting period.

All records must be held and updated regularly for the past seven years.

Seal

There are no statutory requirements for a company in New Zealand to have a seal.

Redomicile

The redomiciliation of companies to or from New Zealand is permitted.

COMPANY STRUCTURE

Directors

Every company in New Zealand must have at least one director. A director must be a natural person. There are no requirements to the residency of directors. A person cannot be a director of a company if they are:
  • under 18 years of age
  • an undischarged bankrupt
  • otherwise prohibited from directing, promoting, participating in the management of a company under any statutory provisions.

However, from 1 May 2015, New Zealand companies must also have at least one director who lives in New Zealand or who lives in an enforcement country (currently Australia only) and is a director of a company in that country.
Directors’ information appears on public record.
A meeting of the board may be held either by a number of the directors who constitute a quorum, being assembled together at the place, date, and time appointed for the meeting; or by means of audio, or audio and visual, communication by which all directors participating and constituting a quorum can simultaneously hear each other throughout the meeting.

Secretary

New Zealand companies are not required to appoint a company secretary.

Shareholders

Each company in New Zealand must have at least one shareholder. There is no restriction on the nationality or residency of the shareholders. The shareholders can be individuals and/or legal persons.
Each shareholder is on public record.
The board of a company must call an annual meeting of shareholders. A company does not have to hold its first annual meeting in the calendar year of its reregistration but must hold that meeting within 18 months of its registration. The following meetings should be held not later than 15 months after the previous annual meeting. Meetings may be held in or outside of New Zealand.

Beneficiary

The details of the beneficial owner are not available on public record.

Share capital and shares

There is no specific minimum capital requirement. The usual minimum authorized capital is NZ$ 100. The minimum issued capital may be one share without par value. Issued shares must be fully paid. Registered shares, preference shares, redeemable shares and shares with or without voting rights are permitted.
Shares must not have a nominal or par value. Bearer shares are prohibitted.

TAXATION

Personal income tax

New Zealand tax residents pay income tax on their worldwide income, and non-residents pay income tax on New Zealand sourced income.
Income tax is levied on a progressive scale at the following rates:
  • Income up to NZD 14,000 – 10.5%
  • Income from NZD 14,000 to 48,000 – 17.5%
  • Income from NZD 48,000 to 70,000 – 30%
  • Income from NZD 70,000 to 180,000 – 33%
  • Income over NZD 180,000 – 39%

Capital gains from the sale of assets are normally included in the general tax base. There are certain exemptions. Thus, income from the sale of shares of New Zealand companies is tax exempt, except in the cases of active trading in securities. In addition, when receiving dividends from New Zealand companies, personal income tax on such income may be reduced by the corresponding portion of the corporate income tax paid by the New Zealand company. On the other hand, when investing in foreign shares, tax is paid according to special rules; the most common method is including in the tax base a certain percentage (5%) of the market revaluation of the investment. There are exceptions. The tax base may include unrealized revaluation of foreign currency assets.

Corporate income tax

New Zealand companies are taxed on their worldwide income, and foreign companies are taxed on New Zealand sourced income.
The corporate income tax rate is 28%.
The gains from the sale of shares are tax exempt, unless generated by active trading operations. Dividends from foreign companies with more than 10% participation are generally tax exempt, however, undistributed “passive” profit of such companies may be included in the tax base of the New Zealand shareholder under special rules.

CFC rules

A controlled foreign company (CFC) is a foreign company in which 5 or fewer New Zealand residents hold directly or indirectly more than 50% participation, or over which a single New Zealand resident has control (participation of more than 40%, without a non-resident holding an equal or greater participation).
The CFC’s undistributed “passive” profit is included in the taxable income of the New Zealand residents; however, the profit of CFCs with active business abroad (passive income being less than 5% of the total income) is tax exempt.

Withholding tax

Withholding tax on dividends may be 0% in the case of at least 10% participation, or 15% in the case of participation below 10% (subject to the determination of income taking into account the corporate income tax of the distributing company), or 30% in other cases. The withholding tax rate for interest and royalties is 15%.
Withholding tax may be charged on certain other types of income.
The tax rates can be reduced under double tax treaties (DTT).

Goods and services tax (GST)

GST is similar to VAT. The tax rate is 15%.

Fringe benefit tax

Employers pay fringe benefit tax on various fringe benefits (cars for personal use, loans at preferential rates, health insurance, etc.) provided to their employees at special rates.

Social security contributions

Employers and employees pay premiums for insurance against work-related accidents; the rates vary by industry, and there are remuneration thresholds for charging the premium. Employees also pay premiums for insurance against non-work accidents at a rate of 1.39% of remuneration up to a maximum of about NZD 131,000.
Employees can voluntarily join certain retirement savings plans. In this case, potentially, the employer is also obliged to pay a certain minimum pension contribution for the employee. The employer's contributions to pension funds are usually subject to a special tax deducted from the employee’s remuneration at the corresponding progressive tax rates.

Property tax

Real estate taxes are levied by local authorities.
The sale by non-residents of New Zealand residential property is subject to withholding tax calculated using special rules. There may be exemptions for long-owned properties.

Stamp duty

There is no stamp duty in New Zealand.

Double Tax Agreements

New Zealand signed double tax agreements with 59 countries:
  • 40 DTS: Australia, Austria, Belgium, Canada, Chile, China, Chinese Taipei, Czech Republic, Denmark, Fiji, Finland, France, Germany, Hong Kong, India, Indonesia, Ireland, Italy, Japan, Korea, Malaysia, Mexico, Netherlands, Norway, Papua New Guinea, Philippines, Poland, Russian Federation, Samoa, Singapore, South Africa, Spain, Sweden, Switzerland, Thailand, Turkey, United Arab Emirates, United Kingdom, United States of America, Canada, Papua New Guinea, Viet Nam.
  • 20 TIEA: Anguilla, Bahamas, Bermuda, Cayman Islands, Cook Islands, Curaçao, Dominica, Gibraltar, Guernsey, Isle of Man, Jersey, Marshall Islands, Niue, Saint Kitts and Nevis, Saint Vincent and the Grenadines, Samoa, Sint Maarten, Turks and Caicos Islands, Vanuatu, Virgin Islands (British).

Exchange control

There are generally no restrictions on foreign exchange transactions.

ACCOUNTS

Accounting records

The board of a company must ensure that the company keeps accounting records. These records must:
  • correctly record and explain the company’s transactions;
  • at any time enable the financial position of the company to be determined with reasonable accuracy;
  • enable the directors to ensure that the company’s financial statements comply with the Financial Reporting Act 1993; and
  • enable the company’s financial statements to be readily and properly audited.

Financial statements

Presently, all companies registered in New Zealand, whether or not they are incorporated in New Zealand, must prepare financial statements that comply with the requirements of the Companies Act 1993 and the Financial Reporting Act 1993.
The Financial Reporting Act 1993 requires compliance with generally accepted accounting practice in New Zealand (NZ GAAP) within 5 months after the end of accounting year.
A New Zealand company may be required to file accounts with the Companies Office if it falls under one of the following categories:
  • 
If it is a 'large' company in which 25 percent or more of the voting shares are held by a company or body corporate incorporated outside New Zealand; or a subsidiary of a company or body corporate incorporated outside New Zealand; or a person not ordinarily resident in New Zealand;
  • 
If it is a subsidiary of a company or body corporate incorporated outside New Zealand.

Audit

The financial statements of all companies must be audited, except where shareholders unanimously resolve that no auditor be appointed. That exception does not apply to:
  • subsidiaries of foreign companies (if there is a New Zealand holding company, and then subsidiaries below that, then only the parent and consolidated financial statements of the New Zealand holding company need be audited)
  • companies controlled by overseas persons who hold more than 25% of the voting shares, whether directly or indirectly held
  • entities that raise funds from the public or are listed on New Zealand’s stock exchange ( issuers)
  • branches of foreign companies.

On the New Zealand Companies Office website (www.business.govt. nz/companies/learn-about/updating- company-details/financial-reporting) there is a Financial Reporting Calculator which allows one to independently check whether or not there is a need for an audit.

Annual Return

Generally speaking, Annual Return is a short review on the current state of the company, which is prepared by the company secretary annually. As a rule it includes the following information:
  • Incorporation information (registration date, registered address);
  • Information about directors and their resignation;
  • Information about secretaries and their resignation;
  • Information about registered capital, nominal value of shares and amount of issued shares;
  • Information about shareholders and share transfer.


A limited liability company in New Zealand must file an annual return with the Companies Office as required by the Companies Act 1993 and it is an offence not to comply with this. If an annual return is not filed by the due date, the company risks being removed from the register as the Registrar may be satisfied that the company has ceased to carry on business.
When you incorporate your company you can choose the month the company will be required to file the annual return. You can also select a new filing month when you file the company's next annual return.
If you are unable to file your annual return by the due date, you can apply for a time extension. If granted, this will give you a further 20 working days in which to file your annual return.
A company is not required to file an annual return in the calendar year of its incorporation. For example, if a company is incorporated in 2014, its first annual return will be due in 2015.
Information to be contained in annual return is as follows:
  • the address of the registered office of the company;
  • the address for service of the company;
  • the postal address of the company;
  • if the share register is divided into 2 or more registers kept in different places, the place in which each register is kept;
  • information relating to the shares in the company;
  • the full names and residential addresses of the directors of the company;
  • the names and addresses of all shareholders of the company;
  • in the case of a company which has passed a resolution that no auditor be appointed, the text and date of the resolution;
  • the date of the last annual meeting of the company;
  • other.

Tax Returns

The tax year runs from 1 April to 31 March.
Corporate income tax returns are usually filed by 7 July.
Provisional tax payments are due in three instalments during the year.
The final tax payment is usually due by 7 February.
The dates may differ from those above if a company is approved to have a non-standard financial year.

NEW ZEALAND TRUSTS

What is a Trust?

A trust is a legally binding arrangement whereby a person (the "settlor") transfers assets to another person (the "trustee") who is entrusted with legal title to the trust assets, not for the trustee's own benefit, but for the benefit of other persons (the "beneficiaries").
The instructions from the settlor to the trustee as to the distribution of trust assets will normally be contained in a document called the trust deed. The trust deed will usually provide that the trustee has the power to manage and distribute the trust assets in accordance with the terms of the trust deed and the high standards of prudence imposed on trustees under NZ law.
It is also common for a settlor to express to the trustee his wishes as to the management and distribution of the trust fund in a less formal manner. This expression is often contained in a letter of wishes which, although not legally binding, will generally be considered by the trustee to be of persuasive effect when performing the duties of trusteeship which include the distribution of the trust fund to beneficiaries.

Types of Trusts in NZ

Among the most common types of trust are the following:
Discretionary trust
The discretionary trust provides maximum flexibility and is the most widely used and, often, the most effective solution for both settlor and beneficiaries. Under the terms of a discretionary trust the trustee is given wide discretionary powers as to when, how much and to which beneficiaries the income and capital of the trust should be distributed. Such a form of trust is useful where at the time of creation of the trust the future needs of beneficiaries cannot accurately be determined and are likely to change over time. The beneficiaries are not regarded as having any direct legal rights over any particular portion of the trust fund but only a right to be considered to benefit when the trustee exercises his discretion.
Fixed interest in possession trust
Under a fixed interest trust a named beneficiary will normally be granted a vested interest in the income of the trust fund for life. For example, the trust deed may specify that the trustee is required to distribute all of the income of the trust fund to a particular individual during that person's lifetime and subsequently to distribute the capital of the trust fund in fixed proportions to named beneficiaries (such as the settlor's children).
Accumulation and maintenance trust
An accumulation and maintenance trust is one where no beneficiary has a fixed entitlement to the benefits accruing to the trust for a certain period, during which time income is accumulated and becomes part of the capital. The beneficiaries may therefore benefit from the accumulation of capital. The trust deed may give the trustee a discretionary power to make distributions amongst the beneficiaries up to a specific age for their education, maintenance and benefit and to provide thereafter for a designated share of the trust fund to be distributed to each of them on attaining a specified age. An accumulation and maintenance trust may be particularly appropriate where the settlor wishes to benefit a group of children, for example, grandchildren wishing to study at university.
Revocable trust
Although for tax and other reasons it is generally desirable for a trust to be constituted as an irrevocable settlement, in certain circumstances the settlor may require the additional comfort of retaining the power to revoke the trust and enforce the return of the trust fund.
Charitable trust
Generally, in order for a trust to be valid there must be identifiable beneficiaries who can enforce the duties against the trustees. An exception to this general rule has permitted trusts to be established in favour of charitable purposes. Charitable trusts are often used to further the objectives of philanthropists and not for profit organizations.

Creation of a Trust in NZ

It is usual for a trust to be created by the execution of a formal written deed. Trusts created in writing may be either by a settlement of trust signed by both the settlor and the trustee, or by a declaration of trust signed by the trustee alone. Following execution of the trust deed a trust will come into existence upon settlement of the initial property, which may be supplemented later.

Trust Structure

The trust relationship is comprised of a number of important components, some of which are essential and others not.
Settlor
Once a trust is created the settlor will no longer be the legal owner of the trust assets. The settlor may be a beneficiary and he may also act as a co-trustee or protector and, in such capacity, retain a degree of control over the trust, such as the power to approve distributions, the power to appoint and remove trustees and the power to revoke the trust.
However, a settlor may reserve to himself certain powers or grant such powers to a protector. These may include the powers to revoke, vary or amend the terms of a trust, to distribute income or capital, to appoint or remove any trustee or beneficiary, and to change the governing law of the trust.
Trustee
Legal title to the trust assets is vested in the trustee under the obligations imposed by the trust deed and from then on the trustee is responsible for the management of the trust. A trustee must exercise his powers solely for the benefit of the beneficiaries and the trust assets do not form any part of the trustee's own estate or property available to any creditors of the trustee.
Beneficiaries
The beneficiaries are the persons entitled to benefit from the assets held on trust by the trustee. The settlor may be one of the beneficiaries. An express power for the addition of further persons to the class of beneficiaries may be included in the trust deed. The beneficiaries may enjoy equal or unequal benefits, as specified in the trust deed, or, in the case of a discretionary trust, as the trustee may determine. It is also possible to include in the trust deed a power to exclude certain people from benefiting under the trust.
Trust fund
There are no restrictions on the type of assets which may be held in trust and further assets may be added from time to time. It is normal to establish a trust with a nominal initial amount and subsequently to add further assets such as real property, shares or other forms of investment.
Protector
NZ trust law recognises and permits the use of a protector to counterbalance the wide discretionary powers conferred on a trustee. Often the settlor will fulfil this role or appoint a trusted friend or professional advisor to act as a protector of the trust. In such cases the consent of the protector will generally be required before the trustee may exercise certain important powers under the trust deed.
Custodian and Advisory Trustees
NZ trust law permits family advisors, settlors and beneficiaries to influence the exercise of powers by the trustees by the use of a mechanism which separates powers between custodian trustees, managing trustees and advisory trustees.
These provisions are invaluable tools for the international wealth planner to cut across time zones and appease settlors unwilling to cede complete control to foreign trustees.
For example, a NZ resident custodian trustee could hold the assets whilst discretionary investment management could be delegated to an investment firm in Zurich. Meanwhile, a trusted family advisor resident in the jurisdiction in which the settlor resides could hold office as advisory trustee. The management and administration of the trust could be exercised by a managing trustee based in Jersey or under a delegated administration agreement. All transactions would be implemented by the NZ resident custodian trustee which would also retain the power to review directions given.

Practical uses of NZ trusts

The range of uses to which a trust may be employed is widespread and constantly evolving but flexibility and confidentiality are the principal advantages which a trust has over other legal forms designed to hold, preserve and transfer wealth. The trust concept has proved to be enormously adaptable and is widely used in financial planning including:
  • Preservation of wealth
  • Succession planning
  • Asset protection
  • Asset protection –divorce issues

  • Creditor protection

Aside from use in structuring personal and family wealth NZ trusts can also be used for the following commercial purposes:
  • collective investment of capital;
  • off-balance sheet transactions;
  • inter-creditor agreements;
  • asset securitisation schemes;

  • employee share option and executive incentive schemes; and
  • private equity investment arrangements.

Taxation of Trusts

Where the settlor of the trust is resident outside NZ the trust will be exempt from assessment in respect of NZ tax on income and capital gains arising outside of NZ. Accordingly, the trustee may make distributions out of a trust fund established in NZ without any withholding or deduction for NZ income or capital gains tax. There are no inheritance, wealth or capital gains taxes levied in NZ nor is there any gift duty, stamp duty, value added tax or equivalent forms of indirect taxation charged on the creation or transfer of assets to a trust by a non-resident of NZ.
There are minimal reporting requirements to the Inland Revenue.

INVESTOR VISA

Migrant Investment Categories

NZ Migrant Investment categories are for investors who want to gain residence in New Zealand.
There are two categories: Investor Plus (Investor 1 Category), and Investor (Investor 2 Category). Compare the basic criteria below:
Kew requirements Investor Plus Investor
Maximum age No requirement 65 or younger
Business experience No requirement Minimum of three years
Investment funds NZ$10 million invested in New Zealand for three years NZ$1.5 million invested in New Zealand for four years
Settlement funds No requirement NZ$1 million (transfer not required)
Principal applicant's English language No requirement an English speaking background, or IELTS test report with an overall band score of three or more, or a competent user of English
Family member's English language No requirement Same as principal applicant or pre-purchase ESOL tuition
Minimum time in New Zealand 44 days in New Zealand in each of the last two years of the three-year investment period. 146 days in New Zealand in each of the last three years of the four-year investment period.
Health and character must meet health and character requirements must meet health and character requirements

Investor Plus Category Requirements

Investment Funds
The funds and/or assets you nominate in your residence application must be equivalent to at least NZ$10 million. You will have to provide evidence to show that these funds and/or assets:
  • are owned by you or jointly by you, your partner and/or dependent children
  • are unencumbered, i.e. not subject to any mortgage, lien, charge and/or encumbrance (whether equitable or otherwise) or any other creditor claims
  • have been earned or acquired legally
  • are transferable through the banking system, or a foreign exchange company that uses the banking system.

When application is approved in principle you will need to provide verifiable documents to show that the funds you transfer to New Zealand came from the funds and/or assets that you nominated. You cannot nominate investment funds or assets you intend to bring to New Zealand for your personal use – for example a personal residence, car, or boat.
If your residence application is approved in principle, you (the principal applicant) will have 12 months to transfer your nominated investment funds and invest them in an acceptable investment in New Zealand, though you can apply to have this timeframe extended. You can also apply for a work visa so you can travel to New Zealand to look into investment opportunities. You will need to retain your investment funds in acceptable investments for three years. You will have to spend at least 44 days in New Zealand each year in years two and three of your three-year investment period.

Application
If you meet the requirements and are ready to apply for residence, you will need to complete and submit an Investor Plus (Investor 1 Category) Application for Residence (INZ 1163). You must provide verifiable documentary evidence with your application.
You must be in good health. You will have to be assessed by an approved doctor. Your application must be accompanied by medical and chest x-ray certificates for each person.
You must be of good character. You will have to provide a police certificate for all applicants over 17 years.
You can submit your residence application directly (without any ‘expression of interest’ process) if you apply under the Investor Plus (Investor 1 Category). You may submit your application through your local Immigration New Zealand branch and it will be transferred to the Business Migration Branch, or you can send the application directly to the Business Migration Branch at:
Business Migration Branch
PO Box 3705
Wellington
New Zealand

How long will it take to process an application?
Processing an Investor Plus application through to approval in principle takes approximately three months, although how long it takes depends not only on our processes, but also on other factors, for example:
  • whether you provide all of the information we need to assess your application at the start
  • whether there are any health issues you or your family members have which we need to assess
  • how quickly we are able to receive verification from external sources regarding the information you provide
  • how quickly you are able to respond to requests we make for further information.

Investor Category Requirements

Under this category, the first step is to submit an Expression of Interest (EOI) form, showing your eligibility for points under the various criteria for this category. We can approve a maximum of 300 residence applications per year under the Investor Category. We make a fortnightly selection from the pool of EOIs, selecting those applicants with the highest points totals. If we invite you to apply for residence, you will then need to provide evidence that you meet the Investor criteria, as per the claims you made in your EOI.
Everyone included in your residence application will have to meet our health, character, and English language requirements.
You (the principal applicant) must be aged 65 or younger, and have at least three years’ business experience, as well as meeting the Investor criteria summarised below.

Investment and Settlement Funds
The investment funds and/or assets you nominate must be equivalent to at least NZ$1.5 million, though you may nominate more, depending on the points claimed in your EOI. In addition, you need to own settlement funds and/or assets of at least NZ$1 million. In your residence application, you will need to provide evidence showing that your investment and settlement funds and/or assets are owned by you or jointly by you and your partner and/or dependent children. You will also need to be able to provide evidence showing that your intended investment funds:
  • are unencumbered, ie not subject to any mortgage, lien, charge and/or encumbrance (whether equitable or otherwise) or any other creditor claims
  • have been earned or acquired legally
  • are transferable through the banking system, or a foreign exchange company that uses the banking system.

After we give you approval in principle, you will need to provide verifiable documents to show that the funds you transfer to New Zealand came from the funds and/or assets that you nominate. You will need to place your investment funds in an acceptable investment(s) in New Zealand.
If your residence application is approved in principle, you (the principal applicant) will have 12 months to transfer your nominated investment funds and invest them in an acceptable investment in New Zealand, though you can apply to have this timeframe extended. You can also apply for a work visa so you can travel to New Zealand to look into investment opportunities. You will need to retain your investment funds in an acceptable investment(s) for four years, and spend at least 146 days each year in New Zealand in years two, three and four of your four-year investment period.

Application
Before you can apply for residence, you must complete an Investor (Investor 2 Category) Expression of Interest (INZ 1165). If you've already submitted an EOI, and we invite you to apply for residence, we will send you an application form and other information to help you complete the application form. Your application must be received by the Business Migration Branch within four months of the date of our letter inviting you to apply.
When you submit your application you must provide evidence to support all of the claims that you made in your EOI. Along with your completed and signed application form, and the correct fee for every person included in the application, you must provide:
  • two passport-size photographs
  • photocopies of the identity pages of your passport(s)
  • a full birth certificate.

You must also show that everyone included in the application meets our health requirements by submitting a completed medical and chest x-ray certificate.
You must also show that everyone included in the application who is aged 17 and over meets our character requirements by providing police certificates from their country(ies) of citizenship, and all countries they have lived in for 12 months or more in the last 10 years. This includes countries where the stay has been broken by short departures.
English language requirements
You must show that everyone included in the application meets English language requirements. The requirements for the principal applicant are different from those for your partner and dependent children.
The evidence you must provide depends on how many points you are claiming.
1 point an IELTS certificate (IELTS certificates must be no more than two years old at the time you submit your application for residence) which shows you gained at least an overall band score of 3 in the IELTS General or Academic Module.
4 points an IELTS certificate which shows you gained at least an overall band score of 4 in the IELTS General or Academic Module.
10 points evidence you have an English speaking background OR an IELTS Certificate which shows you gained at least an overall band score of 5 in the IELTS General or Academic Module, OR other evidence that you are a competent user of English.

Other evidence that you are a competent user of English may include:
  1. your current country of residence
  2. countries you may have lived in before
  3. how long you were in each country
  4. your previous or current work and the level of English language skills required
  5. your qualifications and the level of English language skills they required.

You may be required to provide an IELTS test if your case officer is not satisfied that you meet the standard of English for which 10 points can be awarded.
To meet our English language requirements partners and dependent children aged 16 or older included in your application who already meet our minimum level of English language must provide the evidence listed above.
However, if your partner and/or dependent children do not yet meet the minimum standard of English, they can pre-purchase ESOL tuition in New Zealand.
Partner evidence
If your partner is applying on your application form too, you need to show that you have been living together in a genuine and stable relationship for at least 12 months.
Evidence you live together might include original or certified copies of documents showing shared accommodation (such as joint ownership of residential property, joint tenancy agreement, or correspondence (including postmarked envelopes) addressed to both you and your partner at the same address).
Evidence of your business experience
Acceptable evidence of your business experience can include (but is not limited to) original or certified copies of enough of the following documents to clearly demonstrate your business experience.
  1. Business registration
  2. company financial statements
  3. company tax returns and tax records
  4. shareholder certificates or proof of ownership of business
  5. pay slips
  6. job specifications
  7. job assessments
  8. personal tax returns
  9. letters of appointment
  10. certificates of service
  11. strategic planning documents,
  12. references from employers on company letterhead, stating your position(s) and dates of employment, and giving the contact phone number and address of the employer.

International law relations

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Party to the Hague Convention (Apostille) Legal system Double tax treaties network OECD member Offshore/onshore status according to the RF laws
Yes common law 40 Yes No

Public authorities and legal acts

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List of laws and regulations
Act name Scope of law
Companies Act 1993 companies
Companies Amendment Act 2014 amedment to companies act (resident directors)
Financial Reporting Act 2013 financial reporting
Income Tax Act 2007 income tax
Tax Administration Act 1994 tax administration
Goods and Services Tax Act 1985 GST
Trade and Enterprise Act trade and enterprise
Trade Marks Act trade marks
Tax treaties entered Australia, Austria, Belgium, Canada, Chile, China, Chinese Taipei, Czech Republic, Denmark, Fiji, Finland, France, Germany, Hong Kong, India, Indonesia, Ireland, Italy, Japan, Korea, Malaysia, Mexico, Netherlands, Norway, Papua New Guinea, Philippines, Poland, Russian Federation, Samoa, Singapore, South Africa, Spain, Sweden, Switzerland, Thailand, Turkey, United Arab Emirates, United Kingdom, United States of America, Canada, Papua New Guinea, Viet Nam
Tax Exchange Information Agreement (TEIA) Anguilla, Bahamas, Bermuda, Cayman Islands, Cook Islands, Curaçao, Dominica, Gibraltar, Guernsey, Isle of Man, Jersey, Marshall Islands, Niue, Saint Kitts and Nevis, Saint Vincent and the Grenadines, Samoa, Sint Maarten, Turks and Caicos Islands, Vanuatu, Virgin Islands (British)
List of state regulatory authorities
Ministry of Business, Innovation and Employment http://www.mbie.govt.nz/
Ministry of Foreign Affairs and Trade http://www.mfat.govt.nz/
Companies office http://www.business.govt.nz/companies
Intellectual property office http://www.iponz.govt.nz
Accident compensation corporation http://www.acc.co.nz/
Kiwisaver http://www.kiwisaver.govt.nz/
Starting Business http://www.business.govt.nz/
Inland Revenue Department http://www.ird.govt.nz/
New Zealand Statistics http://www.stats.govt.nz/
Reserve Bank of New Zealand http://www.rbnz.govt.nz/
Immigration New Zealand http://www.immigration.govt.nz/
Invest in New Zealand http://www.nzte.govt.nz/en/invest/
New Zealand legislation http://www.legislation.govt.nz/

    Legal Partner of Review:

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    Company Formation in New Zealand

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