The main forms of business allowed under New Zealand law include:

Limited Liability Company;
Partnerships;
Branch;
Look-through Company; and
Joint ventures.

Limited Liability Company

Limited liability companies are one of the most common business forms in New Zealand. They can be formed as private or public.

Key aspects of a Limited Liability Company include:

May be formed by a single shareholder, with no maximum limit;
Shareholders can be natural persons or legal entities;
There are no minimum capital requirements;
A company can have one or more share allocations and a share allocation can have one or more shareholders; in which case the shares will be jointly owned by those shareholders;
Must have at least 1 director who is responsible for the day-to-day management of the company;
Shareholder liability is limited to their contribution to the company, however, a shareholder who is also a director may be held liable for company debts greater than their contribution if they are deemed to have acted recklessly while in charge; and
Financial statements must be prepared annually and if the company issue shares publicly, the statements must be audited.

Partnerships

Partnerships in New Zealand can be formed as general partnerships and limited partnerships. They are commonly used by professionals and in the farming industry. Partnerships have their own tax registration (IRD) number but partners return their share of profits/losses under their own individual IRD numbers.

Key aspects of a General Partnership include:

Formed by a partnership agreement with a minimum of 2 partners;
Partners may be natural persons or legal entities;
All partners are fully liable for the obligations of the partnership; and
All partners may engage in the management of the partnership.

Key aspects of a Limited Partnership include:

Formed by a partnership agreement with at least 1 general partner and 1 limited partner;
Partners may be natural persons or legal entities;
General partners are fully liable for the obligations of the partnership, while limited partner's liability is limited to their contribution to the partnership; and
General partners may engage in the management of the partnership, while a limited partner may not.

Branch

Foreign companies are allowed to carry out activities in New Zealand through a branch.

Key aspects of a Branch include:

Not a separate legal entity from its foreign parent company;
The foreign parent is fully liable for the obligations of the branch;
Must be registered within 10 days of commencing business in New Zealand;
When registering a branch, details submitted include the name of the foreign company, evidence of its incorporation overseas, and full details of its directors; and
At least one-person resident or incorporated in New Zealand must be authorized to accept service of documents in New Zealand.

Look-through Company

A look-through company (LTC) is a special type of company that is a separate legal entity but is treated as a partnership for income tax purposes. Therefore, corporate taxes are not imposed and all profits are taxed in the hands of the shareholders. Shareholders of a non-resident LTC are not charged to income taxes unless the LTC derives income in New Zealand.

Key aspects of an LTC include:

It must be a company and a New Zealand tax resident;
Shareholders must either be natural persons or trustees (including corporate trustees);
Shareholders liability is limited to their capital contribution;
There are no minimum share capital requirements;
Cannot have more than five ‘look-through counted owners’ (The number of look-through counted owners is determined by identifying the relationships between individual shareholders wherein shareholders with certain relationships are counted as a single owner.); and
Permitted to have only one class of shares.

In order to register or continue as a look-through company, a company must meet the above criteria for the whole of each income year.

Joint Ventures

Although not a formal entity type in New Zealand, joint ventures can be formed by 2 or more parties combining investment capital or resources for a particular project. They may be formed as an incorporated company, or as an unincorporated contractual joint venture.

Further information on the general investment, tax and regulatory regime about the country is available at the following external references:

“Doing Business” report from World Bank - click here;
Reports and publications from OECD - click here;
Reports and publications from IMF - click here;
Reports and news from Tax Justice Network - click here;
Taxation overview in New Zealand - click here; and
Invest in New Zealand - click here.

Powerful Tax Solutions

Tax Rules Engine

Collaboration Tools

Latest Tax News