Business entities in New Zealand

Business entities in New Zealand

New Zealand business entity typesHealy Consultants will assist our Clients engineer the optimal New Zealand corporate structure. There are several ways of doing business in New Zealand, the most common being the setting up of an LLC. Alternatively, our foreign Clients can also establish a look-through company or, if they already run a foreign company, a branch and a representative office.

Doing business in New Zealand with a local entity

The New Zealand limited liability company (closed limited company)

  • Multinationals wishing to set up a subsidiary in New Zealand will use the simple limited liability company requiring i) paid up share capital of just US$1 and ii) just 1 shareholder and 1 director but iii) one resident director (Australia or New Zealand). The registration process with the New Zealand Companies Office is straightforward and can be completed within 1 week. Such type of business entity is also the perfect choice for a foreign corporation willing to register a subsidiary in New Zealand;
  • After New Zealand company setup, annual audited financial statements and tax returns are to be submitted to the Inland Revenue Department. A New Zealand limited liability company is considered resident for tax purposes, so corporation tax on all its net profits amounts to 28%;
  • Best uses: the New Zealand limited liability company is a flexible vehicle to do business in New Zealand and is almost always fit for the expected activities of our Clients.

The New Zealand public limited company (open limited company)

  • To give their company a marketing edge, Healy Consultants recommends our Clients establish a New Zealand PLC instead of an LLC, which can be done just by allowing for the issuance of new shares in the company’s articles of incorporation. There are no additional administrative or capital requirements compared to an LLC. Corporation tax on net profits also amounts to 28%;
  • Best uses: the New Zealand public limited company is fit when our Clients are planning to finance their business by raising capital through private/public equity issuance.

The New Zealand “look through company”

  • Important notice: from April 2017 onwards, foreigners will be able to register New Zealand look through companies only if i) they own less than 50% of the shares of such company or ii) if the company is receiving less than US$10,000 of foreign sourced income. If otherwise, the company (including existing ones) will automatically convert to a standard limited liability company;
  • A look through Company is a New Zealand business entity very similar to a limited liability company: it is also constituted through the setup of a simple New Zealand limited liability company, with a maximum of five shareholders, who all must be individuals. Like a New Zealand LLC, this business entity however requires one New Zealand or Australia resident director It is also mandatory for the company to disclose information re its shareholders and directors to a public register;
  • Our Client must submit a Look Through Company Election form to the New Zealand Tax Department. This certificate is known as the “Look Through Company” status, providing for legal tax-exemption of the company. Due to LTC status, owners will have to include the company’s earnings in their personal income tax returns;
  • Best uses: we currently do not recommend our Clients to setup LTCs in New Zealand, due to the uncertainties created by the regulatory changes described above.

The New Zealand limited partnership

  • A New Zealand limited partnership can be registered by a minimum of two partners, amongst whom at least one general partner who will be subject to unlimited liability against the partnership’s losses. It is however possible to appoint a corporate as general partner so that the beneficial owner(s) still enjoy limited liability. The other “limited” partners are only liable to their contribution to the partnership;
  • Partnerships are tax transparent entities, in the sense that all earnings channeling through them are subject to income tax when they are distributed to the partners, at the end of the partnership’s financial year. Partnerships are still required to prepare and file an annual tax return, and may be also required to register for GST;
  • It is also possible to register in New Zealand an overseas partnership. Unlike New Zealand limited partnerships, there is then no requirement to appoint a general partner ordinarily resident in New Zealand, provided that the overseas partnership has one resident representative in New Zealand;
  • Best uses: using a limited partnership is a good solution when our Clients already have a local partner willing to act as general partner. It is also possible to register a branch of an overseas partnership, as described above.

The New Zealand foreign trust

  • Trusts are most commonly used by our Clients i) in need of wealth management services or ii) willing to provide such services. This contract enables to transfer property over assets such as i) real estate ii) shares and other securities and iii) art, antiques jewelry and other kind of alternative assets. The trust agreement will appoint i) a “trustee”, who will manage these assets in accordance with the trust’s rules and ii) “beneficiaries” receiving earnings generated by the assets and who may include the assets’ initial owner(s), but also other people;
  • Our Clients may also choose to register a private trustee company (PTC) in order to provide i) wealth management services to their Clients and ii) raise and invest funds. The private trustee company, a subtype of limited liability company serving as a trustee for one or many trust agreements, is indeed very easy to setup in New Zealand;
  • >Best uses: setting up a New Zealand trust is an efficient way to reduce taxation for our foreign Clients as foreign-sourced assets and earnings remitted to a trust will be 100% tax exempt in New Zealand, as long as the income generated by the trust is not distributed to the beneficiaries. Endowing their assets to a trust will also protect their assets against i) inheritance tax ii) potential expropriation by their country’s government and iii) potential claimants in business and family disputes.

Doing business in New Zealand with a foreign entity

The New Zealand branch office

  • New Zealand’s Companies Act allows foreign companies to register branch offices in New Zealand, with an independent management team and a corporate bank account based in the country. Registration of this business entity follows similar procedures to those involved for the setup of a limited liability company, including the need to provide the authorities with i) a registered address and ii) a resident administrative agent;
  • All New Zealand branch offices are required i) to provide the company register with an annual update regarding the branch’s particulars and ii) to file annual audited financial statements including both the branch’s accounts and its parent company’s. New Zealand sourced income of a branch of a foreign company is subject to local corporation tax of 28%;
  • Best uses: registration of a branch of a foreign company in New Zealand can be a good option in regulated industries, such as banking, insurance and financial services.

The New Zealand representative office

  • New Zealand representative offices are only allowed to engage in i) market research and ii) promotion of the business of the parent company. While representative offices are exempted from corporate tax in New Zealand and do not need to register for tax, they are still required to i) register with the Companies registrar ii) appoint an administrative agent and iii) submit annual audited financial statements to the authorities. Because no sales income is permitted, no corporation tax is payable by New Zealand representative offices;
  • Best uses: it usually makes more sense to register a limited liability company in New Zealand as such entity is more flexible and will be allowed to trade immediately if needed, while a representative office will be required to convert first into a branch.

Table of comparison between tax resident New Zealand entities

Operations and LogisticsLLCLTCPLCOverseas LPTrustBranchRO
Doing business in New Zealand permitted?YesYesYesYesNoYesNo
Allowed to sign contracts with local Clients?YesYesYesYesNoYesNo
Allowed to invoice local Clients?YesYesYesYesNoYesNo
Can rent local office premises?YesYesYesYesNoYesYes
Allowed to import raw materials?YesYesYesYesNoYesNo
Allowed to export goods?YesYesYesYesNoYesNo
Accounting and taxLLCLTCPLCOverseas LPTrustBranchRO
Corporate tax rate on local sales?28%0%28%28%N/A28%N/A
Corporate tax rate on global sales28%28%28%28%N/A28%N/A
Corporate bank account?ANZDBS SingaporeASB BankHSBC Hong KongCitibankWestpac New ZealandWestpac New Zealand
Statutory audit required?NoNoYesYesYesNoNo
Annual tax return to be submitted?YesYesYesYesYesYesYes
Access to DTAAs?YesNoYesYesYesYesNo
Company lawLLCLTCPLCOverseas LPTrustBranchRO
Issued share capital required?NoneNoneNoneNoneNoneNoneNone
Resident director/representative required?YesYesYesYesYesYesYes
Resident bank signatory requiredNoNoNoNoNoNoNo
NZ shareholder required?NoNoNoNoNoNoNo
Minimum number of directors?1111111
Minimum number of shareholders?11111Parent companyParent company
Individual shareholders allowed?YesYesYesYesYesNoNo
Corporate director(s) allowedNoNoNoNoNoNoNo
Corporate shareholders allowed?YesYesYesYesYesYesYes
Public register of shareholders and directorsYesYesYesYesYesYesYes
ImmigrationLLCLTCPLCOverseas LPTrustBranchRO
Can the entity hire expatriate staff?YesYesYesYesNoYesYes
How long to get work permit approved1 month1 month1 month1 monthN/A1 month1 month
Fees and timelinesLLCLTCPLCOverseas LPTrustBranchRO
How long to set the entity up?1 week2 weeks2 weeks2 weeks2 weeks2 weeks2 weeks
How long to open corporate bank account?4 weeks4 weeks4 weeks4 weeks4 weeks4 weeks4 weeks
Estimate of engagement costsUS$6,640US$7,490US$6,730US$7,100US$14,300US$8,230US$8,230
Draft invoicedraft invoice for New Zealanddraft invoice for New Zealanddraft invoice for New Zealanddraft invoice for New Zealand LPNew Zealand trust engagement feedraft invoice for New Zealanddraft invoice for New Zealand


Frequently asked questions

Contact us

For additional information on our business setup services in New Zealand, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Mr. Simon Guidecoq, directly:
client relationship officer - Simon