Country code – NZ
Legal basis – Common law
Legal framework – New Zealand Trustee Act 1956
Formal name – Foreign Trust
Settlor – The settlor is the person who establishes and whose assets are put into the trust. It may be either an individual or a legal entity.
The settlor may also be the beneficiary of the assets and may, subject to certain provisions, retain control of the trust. There may not be protection from a subsequent bankruptcy after assets are gifted to the trust.
Trustee – Trustees are the legal owner of the assets who have a fiduciary and statutory obligation to act in the best interest of the beneficiaries.
New Zealand foreign trusts shall be administered by at least one resident custodian trustee, either an individual or a company.
Beneficiaries – Beneficiaries are those who get benefit from the trust. Beneficiaries may be natural persons or body corporates.
There are specific provisions to prevent beneficiaries from draining the trust of its assets, and spending in a thrifty way. There are no specific legislative provisions regarding probate and forced heirship.
Protector – A protector is not mandatory, but may be appointed by the settlor. The settlor can appoint himself or use a trusted individual (attorney, professional, family member) in which consent must be given for certain actions made by the trustee.
Disclosure - A trust does not need to be registered with any statutory bodies. The trust deed is a strictly private arrangement between the settlor and the trustee.
Protection from foreign judgements – The Trustee act does not include provisions to ignore and not enforce foreign judgments. The Hague Convention on Trusts does not apply in New Zealand.
Protection from creditors – The Trustee act does not repeal the Statute of Elizabeth, so transfers by the settlor to the trust may be set aside if the settlor transferred the property before the debt arose. The creditor must prove the fraudulent transfer of assets to the trust, which are not defined by the law. Creditors’ claims may be brought jointly. If a fraudulent transfer is proven, trust may be declared invalid.
Protection for immigrant trusts – Trusts that migrate from other jurisdictions do not benefit from retroactive protection.
Community property – Community properties transferred to a New Zealand trust may retain its community property character.
Exclusion of foreign law - There are no provisions in the legislation to be able to exclude foreign law.
Choice of law – The choice of law of New Zealand to govern the trust or a particular aspect of that trust, is valid, effective and conclusive regardless of any other circumstances.
Compliance – Certain records need to be held by the resident trustee in NZ including: copy of the trust deed. details outlining the settlements by the trust, details of the distributions made by the trust, names and addresses of the settlors and beneficiaries and a record of the assets and liabilities and all sums of money received and sent by the trust
If the trust carries out business activities must keep accounting information. There are no annual reporting requirements.
- Settlor as a beneficiary
- Bankruptcy protection
- Ignore foreign judgements
- Hague convention on trusts
- Choice of law is binding
- Protection from immigrant trusts
- Community property provisions
- Custodian trustee permitted
- Rule against perpetuities (years)
- No Specific exclusion of foreign law
- Yes Settlor can retain control
Protection of Settlor
Protection from foreign judgements
- Avoidance of forced heirship
- Spendthrift provisions
- Exclusion of Statute of Elizabeth laws
- Trust invalid if transfer fraudulent
- Creditor must prove fraudulent transfer
- Clear definition of fraudulent transfers
- Separation of creditor claims
- Statutory limitation on fraudulent transfer
Protection of Beneficiary
A trust established in New Zealand may not be subject to local taxes applicable to the assets and income of the trust, provided that no residents of New Zealand benefit from the trust and no physical assets are located there.
It must be noted that the choice of law of the trust would not be applicable to tax matters, which would be governed by the respective jurisdiction where the settlor, beneficiaries, assets or trustee are located, as applicable.
You should consult with your tax advisor or accountant to know the tax implications in your jurisdiction of residence when establishing a trust in New Zealand, transfer assets to it and receive profits from said assets.
- Offshore Income Tax Exemption
- Offshore capital gains tax exemption
- Offshore dividends tax exemption
- CFC Rules
- Thin Capitalisation Rules
- Patent Box
- Tax Incentives & Credits
- Property Tax
- Wealth tax
- Estate inheritance tax
- Transfer tax
- Capital duties
- - Offshore Income Tax Rate
- - Corporate Tax Rate
- 0% Capital Gains Tax Rate
- 0% Dividends Received
- 15% Dividends Withholding Tax Rate
- 15% Interests Withholding Tax Rate
- 15% Royalties Withholding Tax Rate
- 0 Losses carryback (years)
- Indefinitely Losses carryforward (years)
- FIFOAverage cost Inventory methods permitted
- 3% Social Security Employee
- 3% Social Security Employer
- 33% Personal Income Tax Rate
- 15% VAT Rate
- 58 Tax Treaties
New Zealand is a country of Oceania member of the Commonwealth. Located in the southwest of the Pacific Ocean and formed by two great islands: the North Island and South Island, along with many other smaller islands, standing out among them Stewart Island and the Chatham Islands.
The Kingdom of New Zealand also includes the self-governing autonomous states of Cook Islands and Niue, and Tokelau. It has a population of over 4.5 million inhabitants.
The capital is Wellington, but its most populated city is Auckland, both located on the North Island. Its official languages are English, Māori and the sign language of New Zealand.
Its official currency is the New Zealand Dollar (NZD), being one of the ten largest global transaction currencies.
Its cities are among the best quality of life in the world. New Zealand is a developed country ranking high in international ranks such as absence of corruption, educational attainment and economic freedom, human development index, democracy indexes, freedom and respect for civil rights.
New Zealand is a constitutional monarchy and a parliamentary democracy. The monarch of the United Kingdom is the head of State and has the title of King of New Zealand, under the law of royal titles of 1974. The monarch is represented by the governor general, who is appointed by her with the exclusive advice of the prime minister.
The governor general appoints the ministers of the crown with the advice of the prime minister who is, by convention, the leader of the governing party or coalition, that is, with the majority in parliament. The cabinet, headed by the prime minister, is the highest policy-making body and consists of the majority of the Crown ministers.
The New Zealand parliament is the representative of the legislative power and is made up of the sovereign (represented by the governor general) and the House of Representatives.
New Zealand has a modern, prosperous and developed market economy. It is very dependent on international trade, particularly for agricultural products.
Its main export products come from agriculture, horticulture, fishing and forests, which are: dairy products, meat, wool, fruit, fish and wine. Its most important manufacturing industries include aluminum production, food processing, metal fabrication, wood and paper products.
However, the services sector is the most important sector, with tourism playing a major role in its economy.
The jurisdiction has an attractive regulation for the establishment of asset protection trusts. The New Zealand Foreign Trust regime provides protection against asset claims, confidentiality and tax exemption for trusts established in its territory by non-residents.
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