Concept
A New Zealand foreign trust (officially termed a foreign exemption trust by the tax authority) is established by a non-resident of New Zealand but has a New Zealand resident trustee. The structure exploits a feature of local law: tax liability is tied not to the trustee's residence but to the settlor's residence. If none of the settlors are New Zealand residents, the trust's foreign-source income is not taxed in New Zealand—only income sourced within the country is subject to tax.
History
Before 2016, the regime was almost opaque, and New Zealand appeared in the Panama Papers as a convenient safe haven. The government commissioned an independent inquiry (the Shewan Report), following which mandatory registration and disclosure were introduced on 21 February 2017. This rehabilitated the instrument's reputation: New Zealand is an OECD jurisdiction participating in CRS, not a classic offshore haven.
Registration and Reporting
A new trust must register with Inland Revenue (IRD) within 30 days. The registration fee is NZ$270, with an annual fee of NZ$50; for non-professional individual trustees, no fees are charged. An annual return must be filed within six months of the reporting date, including financial statements and details of all contributions and distributions for the year.
Disclosure
Upon registration, settlors, trustees, beneficiaries and other significant persons (such as an appointer) must be disclosed, along with all contributions to the trust since its creation. The exemption from tax on foreign income applies only if these requirements are met—failure to disclose results in loss of the concession.
⚙️ The key condition for the concession is the absence of a New Zealand resident among the settlors. The addition of a New Zealand settlor changes the tax status of the entire trust, so the residence of parties is monitored throughout the structure's lifetime.
Application
🔗 Related
Asset protection trusts · Trusts (Singapore) · Private Foundations · Succession Planning · CRS — Overview
New Zealand foreign trusts are used to hold and transfer overseas assets for families with no connection to New Zealand: they value the reputation of the common-law legal system, political stability and judicial protection at moderate cost. In essence, this is an estate planning and asset protection instrument comparable to Jersey or Singapore trusts.
🍓 The New Zealand foreign trust is attractive for its combination of zero tax on foreign income and solid reputation. The price is full transparency before IRD and the discipline of annual reporting.
This material is for reference purposes only and does not constitute individual advice.
Key factual claims
- Before 2016, the regime was almost opaque, and New Zealand appeared in the Panama Papers as a convenient safe haven.
- A new trust must register with Inland Revenue (IRD) within 30 days.