New Zealand is a member of the OCDE, GAFI and the Worldwide Organization of Commerce. Being a member of the British Commonwealth, English is the main language and most of the legislation, including fiduciary rights, is based on British common law.
New Zealand is not a member of the EU and it is not influenced by the tax savings Directive of the EU. New Zealand is considered a safe place. It has a well developed infrastructure including a solid and progressive economy, efficient telephone and Internet services and qualified professionals that provide services to clients worldwide and advise about taxes, trusts and company issues.
The setting up of trusts in New Zealand is based on the type of English trust. All income derived offshore is tax free and there are no taxes on capital income, successions or forced heirship. The income obtained in New Zealand territory is subject to local taxes. The income can be withheld in the trust or distributed among the beneficiaries appointed.
For a trust to be exempt from all taxes it requires:
- A non resident trustee (will not be disclosed to authorities).
- A non resident beneficiary (will not be disclosed to authorities).
- A beneficiary resident of New Zealand or fiduciary company (disclosed to authorities).
The fiduciary company has certain requirements. A New Zealand resident should serve as:
- A non-qualified director, or
- A qualified professional (public accountant or attorney), as manager or director.
If a non-qualified director is chosen, any omission or failure to comply by the settlor can result in a trust with taxed worldwide income. If this occurs, the settlor gives the pending registrations, the responsibility of taxed worldwide income ceases retroactively.
A qualified settlor resident in New Zealand can also be chosen as manager or director or professional (public accountant or attorney). This “safe harbour” will ensure that the trust is not in a situation of tax risk of worldwide income in case of any omission or failure to comply. On the other hand, the matter would be handled by the disciplinary committee of Accountants of the professional or the School of Lawyers and the punishment for this “qualified” person would be a fine or imprisonment.
The Foreign Trust does not pay taxes on income or assets derived outside New Zealand. The income obtained in New Zealand is subject to regular local taxes.
Registration and Privacy
It is required to notify the government of New Zealand of:
- The existence of a trust.
- The date a trust was set up.
- The name of the trust or other identification (for example, a code).
- The name and contact details of the resident trustee`s company in New Zealand.
Also, private registrations of trust transactions and distributions among beneficiaries must be kept. This is done by the settlor resident in New Zealand. This information is not made available to the Tax Office of New Zealand, but would have to be made available under a specific request of a foreign government with which New Zealand has a double tax agreement.