New Zealand Foreign Trusts: A Safe Horbor, Not a Tax Haven

Some individuals and businesses seek to avoid taxes by moving funds to tax havens. A tax haven is a country with laws that allow foreign-originated funds to go unreported. In a recent article published on NZHerald.com, Geoffrey Cone writes that New Zealand is not one of these tax havens and is not likely to change. In fact, Cone says the country is considered a model of tax transparency when it comes to foreign trusts and other arrangements. New Zealand complies with the Organization for Economic Cooperation and Development’s 2002 Model Agreement on Exchange of Information on Tax Matters. New Zealand is on the OECD white list of nations practicing tax transparency.

A Safe Haven for Investors

Investments by foreign individuals in New Zealand trusts is growing. The reason is that the clear and consistent regulatory environment makes it ideal for those who are concerned with issues like protecting their money and insuring proper succession. New Zealand has built a global reputation for tax transparency that attracts these types of foreign trust investments. For example, there are double taxation agreements with 35 nations that protect investors. There are another 20 tax information exchange agreements designed to prevent tax evaders from hiding money in New Zealand.

Regulatory Requirements

In 2005 New Zealand adopted updated requirements for trustees for foreign trusts. Trustees must file disclosure forms for settlements and when distributions are made. The required information includes a listing of the trust’s assets and liabilities. Trustees must also furnish the name and addresses of all recipients of foreign trust funds and the particulars of distributions and settlements. As the agreements mentioned above imply, this information is shared with the investors’ home countries tax agencies and other regulatory bodies. When a foreign trust includes a business, the trustee must furnish information about the method of accounting.

Not surprisingly, New Zealand has strict enforcement policies, including severe penalties for noncompliance with the regulations governing foreign trusts. These policies have enabled the country to develop strong relationships with nations like the United States and Great Britain that also follow OECD guidelines.

Geoffrey Cone is an attorney based in Auckland, New Zealand. He specializes in international trust and tax law. He works mainly with clients from Spain and Latin America, assisting them with wealth planning. He is a partner in the law firm of Cone Marshall Ltd. Geoffrey Cone began practicing tax and trust law in 1980 following his graduation from the University of Otago.

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