New Zealand Tax-Free Non-Resident Trust
While New Zealand is NOT an offshore haven, it is nonetheless recognized among informed practitioners as a first rate jurisdiction for certain financial structures. It provides all the advantages of traditional "offshore" financial centres, but is regarded as a true "onshore" financial centre which is NOT blacklisted by any jurisdiction or authority in the world. It is not perceived by OECD as a harmful tax jurisdiction, and has no connotations as a tax haven.
New Zealand is a full member of the OECD, FATF and World Trade Organization. As a member of the British Commonwealth, English is the main language, and the majority of the legislation including trust law is founded on British common law.
It is not a member of the EU, and is not influenced by the EU Savings Tax Directive and any future developments (should they be extended to apply to companies or trusts). It is a signatory to the 1922 Hague Convention and can provide Apostilled as well as Notarised documentation.
New Zealand is considered a safe location and offers long term security. It has a well developed infrastructure, including a progressive and robust economy, efficient telephone and internet services and experienced reliable professionals serving global clients with trust and company requirements, who can offer confident legal opinions on tax, trust and company matters.
Trust formation of a New Zealand Foreign Trust is modeled on the English form of trust. All income sourced offshore is totally tax free, and there are no capital gains, inheritance taxes or forced heirship. Any income earned within New Zealand is subject to domestic tax. The income can either be retained in the trust, or alternatively distributed to named beneficiaries.
In order to benefit from the aforementioned tax exemptions, the Foreign Trust requires:
- A non-resident settler (not disclosed to authorities)
- A non-resident beneficiary (not disclosed to authorities)
- An NZ resident trustee or trustee company (disclosed to authorities)
The trustee company has certain requirements. A New Zealand resident must serve as either:
- an unqualified director, or
- a professional "qualifying" (chartered accountant or lawyer), as either manager or director
If you choose an unqualified director, any omissions or non compliance by the trustee, may result in the trust being taxed on its worldwide income. If this liability arises, and subsequently the trustee does provide the outstanding records, the liability for tax on worldwide income ceases retroactively.
Alternatively you can select "a qualifying N.Z. resident trustee" as manager or director who is a professional (chartered accountant or lawyer). This is the "safe harbour", which will result in the trust NOT being at risk of taxation on its worldwide income in the event of any omissions or non compliance. Instead the matter would be dealt with by the disciplinary committee of the professional's Accountants or Law Society, and punishment for this "qualifying" person would be a fine and or imprisonment.
The Foreign Trust pays no income on income or assets sourced outside of New Zealand. Income earned within New Zealand is subject to regular domestic tax.
Records and Privacy
It is necessary to advise the NZ government of:
- The existence of a trust
- The trust’s date of settlement
- The trust’s name or another identifying particular (e.g. a code)
- The name and contact details of the New Zealand resident trustee company
N.B. If the settlor is an Australian resident, this fact must be disclosed.
Furthermore private records must be kept of the trust’s transactions and distributions to beneficiaries. These are held by the resident trustee in New Zealand. This information is not provided to NZ Revenue, but would have to be disclosed only following a specific request from an offshore Government with whom New Zealand has a double tax treaty, under the sharing of information agreements by these Treaty countries.
These provisions result from the Australian Tax Office requests to the N.Z. Government and are to primarily target Australian resident settlors. For practical purposes there is little expectation of active information exchange in respect of individuals resident in jurisdictions other than Australia.
New Zealand non-resident trusts start at US$7500.00. The total cost depends upon the services required and the complexity of the trust.