Residence for Investors
New Zealand is an open, market-oriented economy with a stable political system.
As New Zealanders we pride ourselves on being honest and hard working and we value ease and simplicity in doing business. Over the last two decades, successive governments have made investing in and trading with New Zealand more and more transparent and attractive.
Here are just some of the factors that make New Zealand a sound investment:
- Ranked the world’s least corrupt nation by the 2017 Transparency International survey.
- Ranked 1st in the overall ranking of the World Bank’s “Doing Business in 2018″ report, including being ranked 1st in the world for starting a business.
- Ranked 1st in the same report for registering property, 1st for getting credit, 4th for ease in getting credit, and 3rd for ease in dealing with construction permits.
- One of the most flexible labour markets in the world.
- Third highest level of economic freedom in the world.
- One of the least regulated economies in the world.
- One of the most open markets to trade in the world.
- Amongst the lowest average tariff rates in the developed world.
- Ranked 2nd in the world for democratic institutions by the Legatum Prosperity Index 2017.
- Amongst the lowest costs in the world for dismissing a redundant worker.
New Zealanders are renowned for innovation and flexibility – two things which play a central part in our national psyche. The term “Kiwi ingenuity” often describes the New Zealand approach to business. Here’s how The Economist magazine recently described New Zealand:
“New Zealand, despite its geographical isolation, has turned itself into an entrepreneurial powerhouse, leading the world in the creation of small and medium-sized enterprises, thanks in part to enlightened government policies.”
Over the last few decades, New Zealand has transformed itself from one of the world’s most regulated economies into one of the most free. American libertarian Professor Floy Lilley, an attorney and adjunct faculty member of the Mises Institute, says New Zealand sets an example that debt-ridden countries like the USA could follow:
“Each of us crippled by debt has a thing or two hundred to learn from the small country down under that did the impossible – New Zealand trimmed the size of its coercive, regulating, and taxing government and not only lived to tell about it, but flourished. While we have been fattening into the most engorged leviathan state on the planet, New Zealand slimmed down on a healthy diet of fiscal restraint in the mid-1980s. In short order, New Zealand threw out the parasites and opened the wide door of opportunity for producers and entrepreneurs to create wealth and raise the standard of living for all.”
Fewer restrictions on foreign investment
New Zealand’s regulations monitoring foreign investment are liberal by international standards. There are no restrictions on the movement of funds into or out of New Zealand, or on repatriation of profits, and no additional performance measures imposed on foreign-owned enterprises.
Foreign investment in New Zealand is monitored by the Overseas Investment Act. A full review of this Act is currently underway, aiming to make foreign investment even simpler and more attractive, and to produce a more streamlined process that allows faster decisions. However the review also promises to ensure that land of particular significance or importance to New Zealand continues to be protected. Overseas investments are screened by the Government and will require consent only if they are categorised as “sensitive”.
A simple, investor-friendly tax system
There are many aspects of New Zealand’s taxation system that make our country an attractive place to invest.
- Firstly, it is a simple system. All companies – whether New Zealand or non-resident – are taxed at a flat rate of 30 per cent. From April 2011 this will reduce to 28 per cent. Many small New Zealand businesses are not registered as companies however, and instead pay the applicable personal tax rate. These rates will also drop from October 2010, with the top personal tax rate reducing from 38 to 33 per cent.
- New Zealand has no capital gains tax (unlike many countries including Australia, the USA and the United Kingdom) although certain “gains” such as regular share trading and profits on the sale of patent rights are subject to income tax.
- Investors who become permanent residents in New Zealand also receive tax credits for foreign tax paid on foreign-source income.
- New Zealand has “double tax” treaties with 35 countries. These reduce the rate of tax that non-residents who are non-portfolio shareholders have to pay on dividends. Double tax agreements reduce the costs of doing business, remove tax obstacles to cross-border trade and investment, and prevent businesses being taxed twice on the resulting income.
- Employers and employees do not make social security contributions in New Zealand. Social security – unemployment and sickness benefits, pensions and so on – is largely funded through the general tax pool. However, all businesses with employees, employees and the self-employed must contribute to the Accident Compensation Corporation (ACC) Scheme, which provides compensation in the event of an accident. Businesses pay Workplace Cover levies to cover the costs of injuries that happen in the workplace, while earners, self-employed people and motor vehicle users are required to pay levies to cover the costs of injuries outside the workplace.
Residence Categories for Investors
New Zealand’s Migrant Investment Policy offers a fast route to New Zealand residence for investors. Investors can secure residence in one of two ways:
- Investor 1 (“Investor Plus”) Category
If you have investment funds totalling NZ$10 million or more, the Investor Plus category is definitely worth exploring. This direct route to residence has no age requirements, no business experience requirements and no English language requirements. You’ll only need to invest your funds in New Zealand for 3 years and then spend only 44 days in New Zealand per year in the second and third years of your investment period.
Contact us for advice on securing residence under the Investor Plus category.
- Investor 2 Category
This could be the category for you if you are aged 65 years or under, have at least 3 years of business experience and invest NZ$3 million in New Zealand for 4 years. Only a low level of English language ability (an overall IELTS score of 3.0 or less than 4.0) is required. Everyone included in your residence application must meet Immigration New Zealand health, character, and English language requirements (or pre-purchase ESOL language tuition).
Immigration requirements around the location and source of your investment funds are quite stringent. You’ll need to be able to provide evidence showing that your nominated investment funds and/or assets are owned either by you or jointly by you and your partner and/or dependent children. The funds must also be unencumbered, have been earned or acquired legally, and must be transferable through the banking system.
The Investor 2 category is a two-step process. To start the ball rolling, you’ll need to submit an “Expression of Interest” (EOI) to Immigration New Zealand. Selections of EOIs occur each fortnight with a maximum of 400 residence applications approved each year. Once your residence application is approved in principle, you will then be given 12 months to transfer your nominated investment funds to New Zealand and place them into an acceptable investment. To be acceptable, the investment must be either equity in New Zealand firms (public or private including managed funds); or bonds issued by the New Zealand government, local authorities, finance companies, banks, New Zealand firms trading on the New Zealand Debt Securities Market (NZDX), or New Zealand firms with at least a BBB- or equivalent rating from internationally recognised credit rating agencies (for example, Standard and Poor’s). Your funds may also be invested in commercial property, residential property development (with strict regulations), certain venture capital funds, managed funds, or “angel funds or networks”.
Once your funds have been invested and your residence is approved, you’ll then need to retain your investment funds in an acceptable investment(s) for four years, and spend at least 146 days each year in New Zealand in years two, three and four of your four-year investment period.
If you would like to invest and work in your own business in New Zealand, visit www.investmentnow.govt.nz for more information.
Contact us to find out more about gaining fast-tracked residence under the Investor 2 category.
New Zealand has topped the World Bank’s List of “ease of doing business” for two consecutive years. For more information on New Zealand’s performance in the World Bank’s Doing Business in 2018 report, click here. Also, check out the New Zealand Trade and Enterprise Invest in New Zealand website, which connects international investors with investment opportunities in New Zealand.
The following websites are helpful:
A specialist division within New Zealand Trade and Enterprise that helps international corporate investors invest in New Zealand.
The FMA is the New Zealand government agency responsible for financial regulation.
Kia Ora and welcome to McLeod & Associates – New Zealand’s leading provider of immigration services.
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