New Zealand's Tax System

Over the past 30 years, New Zealand has become one of the most favorable countries when it comes to asset protection and tax relief for entrepreneurs and foreign investors. The New Zealand government has made efforts to simplify the tax scheme, procedures, and payment forms so that more and more international investors put their money on Maori soil.

Perhaps the best part of the New Zealand tax system is that the country, besides being an international financial center and being one of the best options that someone may have to optimize taxes, is also a member of the OECD, so those who want to access the tax advantages of this place do not have to worry about the persecution that many offshore jurisdictions are suffering right now.

The tax advantages in New Zealand are the following:

• It is considered the Switzerland of the South Pacific, combining high levels of confidentiality with prices more than affordable for anyone.
• Stable banking industry, with a specialized structure in trusts.
• Offshore commercial structures for foreigners with tax incentives.
• Additional protection for trusts. They are unbreakable, and no one but the owner can claim them.
• No income, inheritance, local or regional taxes, payroll taxes, social security, or general healthcare taxes.
• LTC companies are the perfect vehicle for the commercial exchange of capital.
• It is possible to acquire property and immigration rights in such a way that we can have New Zealand as our second home and invest in assets within the country by working with local banks in the case of needing some type of credit.

Listing the advantages of doing business within the New Zealand tax system is a reasonably simple task. This country makes it easy for us to talk well about it. New Zealand is the perfect place to open a bank account, create a company, or start building an asset protection system with the best security standards you can imagine.

Isolated from the rest of the world, the two main islands of New Zealand offer us a stable government and breathtaking natural spaces, as well as many options when it comes to deciding the type of life we want. It also offers us many reasons to move our tax residence to the island of Maori legends.

Among those reasons to move our tax residence to New Zealand territory, we have a quite special one: there is a small clause in the New Zealand legislation that makes the idea of living in New Zealand sound like the best idea in the world. Although New Zealand is a country of taxation by residence, you can enjoy a kind of territorial taxation and be free of taxes on your income from outside the country in the case of foreigners.

If you want to know how to get rid of taxes and how long you can do it in New Zealand, read on or contact our team now! We can advise you on everything you need regarding tax optimization in New Zealand. 

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Personal and corporate taxes in New Zealand

Personal Taxes 

If you decide to work in a dependent relationship in New Zealand, you will be subject to a wage tax that has different amounts depending on how much your annual income is:

• 33% for annual salaries of $70,000 or more.
• 30%: for annual salaries of $48,001 to $70,000 or more.
• 17.5%: for annual salaries of $14,001 to $48,000 or more.
• 10.5%: for annual salaries of $0 to $14,000 or more.

One excellent benefit is that New Zealand is one of the handful of OECD countries that does not levy a capital gains tax, and there is also no inheritance tax.

Corporate Taxes

Companies are taxed on their profits generated inside and outside New Zealand at 28%. But profits made by subsidiaries or branches in New Zealand will only be subject to 28% tax on their profits generated in the country, not abroad. Corporate capital gains are also tax-free in New Zealand.

Tax residence in New Zealand

Whether you come to New Zealand to retire and enjoy its natural beauties, work, or incorporate your own company, one of the things you should know is how the New Zealand tax residence works. 

To become a New Zealand tax resident, you must meet one of the following two criteria:

The 183-day rule

The 183-day rule applies to most offshore jurisdictions when it comes to becoming a tax resident. To meet this criterion, basically all you need is to have spent more than 183 days during a period of 12 months in New Zealand territory to start being considered a tax resident of that country. It is essential to know that this 12-month period refers to any period, not a calendar or fiscal year.

Enduring connection to New Zealand

Another way to be a tax resident in this jurisdiction is to have a "permanent place of abode" within New Zealand that is available for you to use. The property in question can be in your name, or it can be in the name of a company or trust. In fact, the property can be leased or owned by a third party; either way, New Zealand regulation will treat that property as available to you. In addition to the permanent place of abode, this criterion also considers economic factors and family ties that bind you to New Zealand.

Generally, these cases are determined on an individual basis, so this criterion applies depending on each person's specific conditions.

New Zealand tax residents have a tax burden on their worldwide income, with the possibility of applying for a tax credit if taxes are paid overseas on foreign-sourced income. 

New Zealand also has several double taxation treaties that prevent New Zealand tax residents from being taxed in two countries simultaneously. These are the countries with which New Zealand currently has double taxation treaties:

• Australia
• France
• Mexico
• Spain
• Austria
• Germany
• Netherlands
• Sweden
• Belgium
• Hong Kong
• Norway
• Switzerland
• Canada
• India
• Papua New Guinea
• Taiwan
• Chile
• Indonesia
• Philippines
• Thailand
• China
• Ireland
• Poland
• Turkey
• Czech Republic
• Italy
• Russian Federation
• UAE
• Denmark
• Japan
• Samoa
• UK
• Fiji
• Korea
• Singapore
• USA
• Finland
• Malaysia
• South Africa
• Vietnam

In contrast, a non-resident is taxable only on New Zealand-sourced income, which brings us to our favorite theme of the New Zealand tax system: the transitional resident regime.

The Transitional Resident Regime of New Zealand

The income tax law that the New Zealand government passed in 2004 includes an element called "Transitional Resident Regime," which is the key for you to live in New Zealand without paying taxes on the income you earn abroad for up to 4 years. Exactly, four years without paying a penny of tax and without being under pressure from the OECD, you are reading right.

Those who take advantage of this regime will be able to manage their foreign companies without problems for up to four years because New Zealand's rules do not affect transitional residences. The only requirement is to be newcomers to New Zealand or not have been in this regime in the last ten years.

While the law still presents some technical details, the transitional residence regime is clear and unambiguous in practice. Foreigners can live up to four years tax-free in New Zealand, at least on their foreign income.

Best of all, at the end of those four years, you could apply for permanent residence without tax disadvantages, which will allow you to secure a place in this jurisdiction that is becoming increasingly popular among those looking for options to optimize their taxes.

If you want to have personalized advice to know the first steps that you must take to access the transitional resident regime in New Zealand, do not hesitate to contact our team of experts! 

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Who are we, and what can we do for you?

For the last 25 years in Mundo, we have worked with NTL to help families, entrepreneurs, investors, and high net worth individuals design and execute the best tax optimization strategies to protect the fruits of their labor from the hands of corrupt and authoritarian governments.

We sincerely believe that freedom is non-negotiable, and that is why we always strive to partner with the best tax optimization experts to help you no matter what your situation or goals are.

This time, we are pleased to tell you that we have teamed up with the best New Zealand experts to offer you a tax optimization strategy that will also make you enjoy the benefits of the third freest economy on the planet.

If you are interested in taking the first steps towards a life with fewer taxes in New Zealand, do not hesitate to contact us and meet the team of experts who will make it possible for you! We will be ready to start your tax optimization strategy the second you are ready. 

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