Frequently Asked Questions
Here are some commonly asked questions and answers:
Why do I need a New Zealand Foreign Trust?
It is an ideal asset protection and tax
minimization vehicle established in a reputable
country.
a. If you have assets that you may want to
protect against any future personal
liability, you may want to gift those assets
to a trust where it become free and clear
from claims made against you personally.
b. Trusts are not subject to tax in New
Zealand, apart from income earned in New
Zealand. Distributions to non-resident
beneficiaries are not subject to tax
either, provided the income does not
have its source in New Zealand.
c. New Zealand Trust is recognised
by other jurisdictions and makes use
of New Zealand’s 35 double tax
agreements.
Can a New Zealand Foreign
Trust be a shareholder of an
offshore company?
It can and this then facilitates
the trust to be involved in any
legal business activity; which
can in turn create wealth for
the trust and its beneficiaries.
Can a New Zealand Foreign
Trust commence business and
international trading?
There is no law in New
Zealand which restricts or
prohibits trusts to trade
and carry out all standard
kind of business activities.
The initial concept of the
trust though is to protect
interests of the
beneficiaries. Therefore,
normally we would recommend
to employ a trust for
holding and/or investment
purposes. For international
trading, you can consider a
New Zealand Look-through
company and make use of its
special tax regime.
Is the New Zealand
Foreign Trust recognized by
international law?
New Zealand Foreign
Trusts are recognized by
the Hague Convention of
1 July 1985 on the Law
Applicable to Trusts and
on their Recognition.
Can a company be a
Settlor or Beneficiary
of a New Zealand Foreign
Trust?
It is not usual
practice but it
certainly can.
What is the
procedure of a New
Zealand Foreign
Trust’s
registration?
Trusts in New
Zealand are
confidential and
are not publicly
registered.
Can a non
New Zealand
resident set up
a Charitable
trust in New
Zealand?
Yes he can.
Charitable
trusts are
established
exclusively
or
principally
for
charitable
purposes and
regulated by
the
Charitable
Trusts Act
1957. A
Charitable
purpose
means every
purpose that
in
accordance
with the law
in New
Zealand is
charitable.
Charitable
purposes may
include: the
relief of
poverty,
education,
religious
instruction,
promotion of
athletic
sports or
recreation.
What
is an LLC?
LLC, or
Limited
Liability
Company
is the
most
common
type of
corporate
entity
in New
Zealand.
Limited
liability
means
limited
liability
to the
members
(shareholders).
There is
no
personal
liability
and
therefore
personal
assets
are
protected
against
law
suits,
etc.
What are
the
differences between
Look-though
company,
Limited
Liability
Company
and
Limited
Partnership?
A
Look-through
company
must be
owned by
individuals
or a
trust,
and if
the
shareholder(s)
are
non-NZ
residents
then no
income
tax is
paid in
New Zealand
(as long
as the
company
does not
derive
income
from New
Zealand). The
same
applies
for a
Limited
Partnership
except
that the
partners
can be
corporations
which,
apparently, can
also
bring
certain
tax
planning
benefits. A
simple
LLC pays
tax on
its
world
wide
income.
Can a
foreign
(non New
Zealand)
company
be a
shareholder
of LTC?
In
most
cases
a
foreign
company
can’t
be a
shareholder
of
LTC.
As
standard
rule,
only
individuals
and
trustee
can
be
shareholders
of a
New
Zealand
Look-Through
Company.
If a
company
is
appointed
as a
trustee
of a
trust
(regardless
if
it
is a
New
Zealand
Foreign
trust
or
other
offshore
trust)
then
yes,
it
can
be a
shareholder
of
LTC
on
behalf
of a
trust.
Do I
need
to
have
a
board
of
directors,
a
company
secretary
and/or
a
treasure
for
New
Zealand
company?
No, New Zealand corporate law only requires at least one director. You do not need to appoint a secretary but may do so if you wish.
How many Directors do I need for a NZ LLC or LTC? Do they need to be NZ Residents?
A Company must have at least one Director, who has to be a natural person (i.e. not a body corporate) but don't need to be a New Zealand Resident yet. There is no restriction on the total numbers of directors, and directors need not to be shareholders.
How many shareholders do I need for LLC or LTC?
A Company must have at least one shareholder, which can be an individual or a company. Trusts are not recognised as being a shareholder because shareholders have certain liabilities under New Zealand Company law. Number of shareholders for LTC is limited to five.
What is the minimum or standard share capital requirement in New Zealand?
The share capital of a company is properly known as the authorized share capital. This share capital is a statutory requirement which sets out the total value of the shares that may be sold and distributed for cash or kind.
In New Zealand there is no minimum authorized capital requirement at the time of company registration. The number of shares may vary depending on your circumstances, normally it is from one hundred shares to up to one thousand shares.
What are the requirements for a company's address in New Zealand?
Every company must have a registered office in New Zealand. Every company must have a Registered Office and Address for Service in New Zealand.
The registered office and address for service need not be at the company’s place of business, nor in the same place. However they must be at a physical location not a postal address or document exchange or a 'virtual office' (that is a mail or message collection point).
Is it necessary for a New Zealand company to have a constitution (articles of association of a company, or articles of incorporation)?
New Zealand Companies Law does not require companies to adopt a constitution. A company can be regulated by the rules of the Companies Act 1993. The company may also adopt a written constitution, which outlines the rules by which a company must operate. The provisions of the Companies Act 1993 apply except to the extent that they may be legally varied by a constitution.
Can a company not incorporated in New Zealand, transfer its incorporation to New Zealand?
Yes, an overseas company can be re-domiciled (transfer its incorporation from the country in which it is registered) and become a New Zealand registered company under the Companies Act 1993.
Do New Zealand Companies need to be audited?
An auditor must be appointed, if a company is controlled by foreign interests, that is, where body corporate incorporated outside New Zealand or their subsidiaries, or persons not ordinarily resident in New Zealand control more than 25% of the votes.
But New Zealand registered company with 25% or more overseas held shareholding will only have to file financial statements with the Companies Register if they qualify as a “large” company (i.e. crosses two of the following thresholds: has NZ$20,000,000 in annual turnover or NZ$10,000,000 in a company’s assets or 50 or more full-time employees).
Other companies can unanimously resolve not to appoint an auditor.
New Zealand Foreign Trusts are not subject to audit.
Does New Zealand have foundation?
New Zealand does not have a separate entity called foundation. We assume that usually by foundation people from other jurisdictions mean a type of entity that is a cross-breed between a trust and a company. Foundations are not adopted by Anglo-Saxon law (Common law) and New Zealand is a part of this legal system. On the other hand New Zealand can provide a similar legal structure where NZ trust holds shares of another NZ company, either LTC or LLC. This combination allows you to utilize the same advantages of foundation in a reputable and not “black-listed” country.
How long does it take to incorporate a company or set up a trust?
Once we have received the payment and all the required information and documents, the time it takes to get a standard limited liability company incorporated is 2-3 business days after which we can forward you a copy of the Certificate of Incorporation. Sometimes due to complexity of the case it can take much longer than the normal time to complete the incorporation process. As for trust, we can send all the trust documents within 2-3 working days once we have received the payment and all the required information and documents.
What is the income tax rate in New Zealand?
The rate for income tax for companies in New Zealand is 28%; the trustee income is taxed at 33% rate (ie New Zealand sourced income that the trust earns and does not distribute to its beneficiaries). Top marginal rate of individual income tax is 33%.
Is it necessary for a New Zealand Foreign Trust or a New Zealand Company (partnership) to open up a New Zealand bank account?
No, while New Zealand posses a developed banking system on par with other OECD nations, there is no legal requirement for a bank account to be opened in New Zealand
What is the difference between a notarized document and an apostille document?
A notarized document is a copy of the document which is certified to be a true copy of the original and signed (notarized) by one who is a registered Notary Public. This notary public is usually an attorney, a lawyer or a justice of the peace.
An apostille to a document is the authentication, by a specially appointed government official, of a copy of a public document which has been notarized as a true copy by a notary public. The apostille is internationally accepted under The Hague convention. Not all countries of the world are members of The Hague but the majority of English speaking and European countries are members.
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