The New Zealand Look through company in 2021
Since 2011, Healy Consultants has assisted our Clients with registering Look Through Companies (LTCs) in New Zealand. Our services offered in New Zealand also include i) New Zealand LLC incorporation ii) government license registration iii) corporate bank account opening services iv) employee recruitment v) visa strategies and vi) office rental solutions.
What is a New Zealand Look Through company?
- The New Zealand Look-Through Company (LTC) is a legally tax-exempt entity in New Zealand if i) no business is done in the country and ii) the majority of shareholders and directors reside overseas. However, net profits directly pass to its shareholders who are required to record their profit share in their income tax returns in their country of residence. Thus it is a similar entity to the USA LLC or the Scottish or UK LLP;
- Both New Zealand citizens and foreigners can be shareholders of a LTC company. Unfortunately, this New Zealand entity cannot have corporate shareholders and is limited to a maximum of 5 shareholders;
- Unfortunately, a New Zealand resident director must be appointed to the LTC. If needed, our Firm can provide professional, passive nominee resident director services (click link);
Best Uses for a New Zealand Look Through Company company?
- A look through company is an attractive vehicle to form a financial company in New Zealand because:
- New Zealand companies offering financial services exclusively outside of New Zealand are only required to i) register as a FSP entity with the FSP registrar and ii) subscribe to a consumer dispute resolution scheme. No licensing is required;
- The Look Through Company is the perfect business vehicle to benefit from these advantages, while legally minimizing i) corporate income tax payable in New Zealand and ii) accounting and reporting requirements.
- Our foreign Clients based in politically risky country find their customers and business partners feel more secure dealing with a New Zealand business entity, thanks to New Zealand’s i) strong consumer laws ii) excellent oversight from the Financial Markets Authority and iii) the reliability of local Courts to handle commercial disputes;
- To customers, banks and Governments, a New Zealand LTC is an attractive vehicle to conduct international business;
- If properly structured, a New Zealand LTC is an excellent vehicle to legally minimize international taxation.
Tax and compliance for New Zealand LTCs
- Before using their new Zealand LTC to legally optimize tax, our Clients should keep in mind that:
- While the company will be legally tax exempt in New Zealand, the shareholders of the company must record earnings in their personal income tax returns in their country of residence;
- If our Clients resides overseas, the LTC company is legally required to deduct non-resident withholding tax (NRWT) from all dividend distributions and other payments made to its overseas owners;
- It is possible to reduce or waive NRWT, thanks to New Zealand’s DTAA agreements with 37 countries including: i) Australia ii) China iii) India iv) France v) Singapore vi) the United States vii) the UK and viii) the United Arab Emirates;
- It is important our Clients are aware of their personal and corporate tax obligations in their country of residence and domicile; and they will fulfill those obligations annually. Let us know if you need Healy Consultants help to clarify your local and international annual tax reporting obligations.
Table of comparison between New Zealand LTCs and LLCs
|New Zealand Look Through Company||New Zealand LLC|
|Also known as:||LTC||Closed Ltd.|
|Incorporation period?||2 weeks||1 week|
|New Zealand bank account required?||Yes||Yes|
|New Zealand address required?||Yes||Yes|
|Can be wholly foreign-owned?||Yes||Yes|
|Corporate shareholders allowed?||No||Yes|
|Minimum directors allowed?||1||1|
|Resident director required?||Yes||Yes|
|Resident director liability in case of company misuse?||Yes||Yes|
|Minimum share capital?||US$1||US$1|
|Annual return to Companies Office required?||Yes||Yes|
|Must register for VAT?||No||No|
|Legally exempt from New Zealand corporate tax?||Yes||No|
|Subject to NRWR on dividends and other payments made overseas?||Yes||Yes|
|Annual audited financial statements required?||Yes||Yes|
|Shareholders must include all company earnings in their tax returns, even if no dividends are received?||Yes||Yes|
|Payroll tax on foreign employees?||No||No|
|Can buy New Zealand property?||Yes||Yes|
|Can rent an office in New Zealand?||Yes||Yes|
|Allowed to own New Zealand securities?||Yes||Yes|
|Can conduct commercial operations in New Zealand?||Yes||Yes|
|Can conduct productive operations in New Zealand?||Yes||Yes|
|Engagement standard costs?||US$9,590||US$8,740|
|Sample engagement fee invoice||View invoice PDF||View invoice PDF|