New Zealand

Company formation in New Zealand

Within the frameworks of a multiannual government program, New Zealand has achieved recognition as a country providing one of the best business environments in the world. The main reason behind the changes was the intention to attract not only tourists, but also entrepreneurs interested in business and offshore companies to the remote island. Despite its offshore operations, New Zealand has a high reputation, which is why this form of doing business is increasingly applied in international trade, but we can find several examples for companies that carry out investment and holding activities as well.

One of the most popular corporate forms among foreign investors is the Limited Partnership (LP). There must be at least one member in the LP whose liability for the debts of the entity is unlimited, and it is usually this partner who represents the Partnership (General Partner). The number of members is not determined, and it is also possible for a limited liability company to become a member. In the case of the members, it is an additional condition that each of them has the same rights, for example, they may not have memberships with pre-emptive rights concerning the profit contribution or voting. There is no minimum requirement for the registered capital during the forming of an offshore partnership, and it is not necessary for the members to actually make a deposit to the bank account of the partnership.

LPs are provided a special tax status. Corporate tax is 28% in New Zealand, but the LP does not qualify as a taxpayer, meaning they do not have to pay corporate tax on their profits. The essence of the method is that the partnership qualifies as “transparent” for tax purposes, and only the members have to pay tax after their income, i.e. tax on the profit only has to be paid on the level of the partners. In case the partners are not New Zealanders, no tax is payable locally after the profit of the partnership, even at the level of the partners (provided that the profit is not generated in New Zealand).

In the case of the LP, it is necessary for the enity to prepare its financial report after the closure of the business year, but normally it is not required to be submitted to any authority, as it is sufficient for the partnership store it at their registered office. It is, however, necessary to submit tax returns annually, even if the LP has no tax liability.