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Establish a Foreign Trust and obtain the following benefits:

The Foreign Trust, its trustees, or beneficiaries are not exposed to New Zealand tax on foreign-sourced income.


Compliance and reporting requirements for Foreign Trusts are minimal.

The Foreign Trust is resident in a reputable OECD member country, with a stable legal, political and economic environment.

What is a Foreign Trust?

A trust settled by a non-New Zealand resident settlor with a New Zealand resident trustee is categorised as a foreign trust for tax purposes in New Zealand.

Taxation of Foreign Trusts

The non-New Zealand sourced income of a Foreign Trust is exempt from New Zealand taxation, whether that income is accumulated or is distributed to non-New Zealand resident beneficiaries.

Benefits of Establishing a Foreign Trust

The principal advantages of New Zealand Foreign Trusts are:

Compliance and reporting requirements for Foreign Trusts are not onerous:
  No public disclosure of beneficial owner;
  No audit of the Foreign Trust.
New Zealand is not on any country's "black list" of tax havens requiring special reporting or taxation for the settlor of a trust.
A Foreign Trust may qualify as a New Zealand resident for preferential treatment under New Zealand's several tax treaties.
The Foreign Trust is resident in a reputable OECD member country, with a stable legal, political and economic environment.
The Foreign Trust has access to inexpensive professional services of excellent reputation in New Zealand.
New Zealand trust law is modern and contains special provisions facilitating the use of a Foreign Trust as a modern international investment structure.

Who is Appointed as Trustee of a Foreign Trust?

NZTIC can incorporate a separate company controlled by the client to act as trustee of the client's trust (a private trustee company) or alternatively NZTIC can act as the professional trustee of that trust.

A. Private Trustee Company (PTC)

NZTIC can incorporate a private trustee company (PTC) in New Zealand on behalf of a client. The PTC is appointed as trustee of the Foreign Trust, with the client and his/her advisors providing shareholders and directors. Some key features of the PTC structure are:

The client and his/her advisors can provide the officers of the PTC and direct the activity of the PTC (and therefore the Foreign Trust) without outside involvement. Alternatively, NZTIC can provide nominee shareholders and directors.
The business of the Foreign Trust is carried out by the directors of the PTC.
A PTC can act as trustee of several Foreign Trusts.
The PTC should operate in the same manner as a professional trustee company. It should administer the business affairs of the Foreign Trust as a trustee, and will normally charge the Foreign Trust for its services.

NZTIC provides ongoing advice on operations and administration to PTCs to ensure their compliance with New Zealand legal requirements. This is done under a formal Managed PTC Contract.

B. NZTIC as Trustee

Most Foreign Trusts have a professional trustee company such as NZTIC as their trustee. The advantages of appointing NZTIC as a trustee are considerable and include:

The administration of the Foreign Trust is carried out by professionals with up to date knowledge of New Zealand tax law as well as experience as international trustees.
There are no reporting or filing obligations for the client to be concerned about.
There are no audit obligations.
There is a clear separation between the trustee and the client/settlor.
Protection of trust assets from malfeasance under NZTIC is $10m Fidelity Insurance cover.

How Does New Zealand's Modern Trust Law Assist?

New Zealand law provides several mechanisms that enable a Foreign Trust to function efficiently in a modern international environment.

A. Custodian Trustees

The New Zealand Trustee Act allows for the appointment of a corporation as trustee (the "Custodian Trustee") to hold title to all the trust property as if it were sole trustee. The management of the trust property and the exercise of all powers and discretions exercisable by the trustee under the trust remain vested in the remaining trustee (the "Managing Trustee").

The Managing Trustees direct the Custodian Trustee in relation to the trust property, and the Custodian Trustee is not liable for any act or omission performed or not performed in accordance with those directions. Thus, the sole function of the Custodian Trustee is to hold the trust property and to invest or distribute it as the Managing Trustee directs.

Management of the trust is left in the hands of those closely connected with the Foreign Trust property and the beneficiaries. This is preferable to delegating powers, and avoids sham arguments.
When it becomes necessary to change the Managing Trustee, there is no need to re-title the assets of the Foreign Trust, these remaining at all times in the name of the Custodian Trustee.
Where it is important to maintain confidentiality, certain information concerning the Foreign Trust and its activity can be held exclusively by the Managing Trustee.

B. Advisory Trustees

The New Zealand Trustee Act allows for a Foreign Trust to appoint a third party (perhaps the settlor) as an advisor to the trust (the "Advisory Trustee"). The Advisory Trustee is authorised to give advice to the normal trustee (the "Responsible Trustee") on all matters relating to the administration of the trust. This includes investments and distribution decisions. The Responsible Trustee is not required to follow the advice given, but if it does so, receives special protection against any liability. The Advisory Trustee is specifically deemed not to be a trustee or fiduciary, and as such has no fiduciary liability.

How Can NZTIC Assist?

NZTIC provides expert advice on structuring and operation of Foreign Trusts and PTCs, and acts as trustee of Foreign Trusts.