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Foreign Trusts in New Zealand

- Friday, December 14, 2012
We are seeing an increase in popularity with the use of New Zealand foreign trusts being set up by nonresidents of New Zealand. The principal benefits of using such a structure are:
  • An aid to asset protection and succession planning.
  • Flexibility.
  • The confidential nature of a trust.
  • The fact that New Zealand is a stable, onshore, whitelisted jurisdiction and is not regarded as a tax haven.
  • The limited reporting requirements and compliance obligations.
  • No tax being payable to the New Zealand Inland Revenue Department on foreign earned income.
  • To qualify as a New Zealand foreign trust the trust must comply with all four of the following requirements:
  • The settlor who transfers property to the New Zealand foreign trust must be a non New Zealand resident.
  • The trustee must hold the property of the trust for nonresident beneficiaries.
  • The trust’s income must be sourced from businesses and/or investments which are not in New Zealand.
  • The trust is required to have a New Zealand resident trustee (which can be a company or in certain specified cases an individual).

The New Zealand foreign trust regime is a flexible and tax efficient means of holding assets and/or conducting commercial activities in a confidential and tax efficient manner.  Each trust must be tailored to suit the requirements and objectives of those setting it up.

For further information please contact Jeremy Carr jac@burtonco.co.nz  or Hamish Taylor hst@burtonco.co.nz.