Starting a business in New Zealand

New Zealand stands out as a premier destination for starting a business, thanks to its vibrant economy, political stability, and innovation-driven environment.

Known for its business-friendly policies, the country offers a blend of government support and entrepreneurial freedom. From low-cost legal advice to tailored mentoring programs and startup grants for eligible businesses, New Zealand provides a comprehensive framework to foster business growth.

Entrepreneurs benefit from personalised guidance, access to a vast network of mentors, and essential resources that make scaling and managing a business in New Zealand both efficient and rewarding. If you're planning to start a business in New Zealand, this guide explores the country's advantages and the common business structures for registration.

Why choose New Zealand?

New Zealand's unique combination of factors creates a highly favourable environment for businesses to thrive. Here are some key differentiators that make New Zealand an emerging destination for entrepreneurs:

Conducive economic climate

New Zealand is among the top ten places in the world to do business, positioned eighth out of over 80 countries based on the 2024 Economic Investment Unit (EIU) business environment rankings. This index evaluates the global business environment for the next five years, an indicator of future investment opportunities in the country.

New Zealand is also a strong performer overall in the World Bank’s 2024 Business Ready (B-READY) report. Out of 50 economies, it particularly stands out in two key areas:

Taxation: New Zealand’s taxation framework is a major strength. In the aggregated scores from the B-READY data, New Zealand tops the Taxation topic. This indicates that its tax administration is transparent and efficient, with clear procedures and digital services that facilitate compliance for businesses.
Business location: New Zealand also performs very well on the Business Location topic, ranking among the top three. This reflects robust processes in areas such as property transfers and a well-organised environment for foreign direct investment.

The country's strong focus on international trade supports its economy, especially in agriculture, forestry, and energy sectors. The country also excels in registering property, enforcing contracts, and protecting minority investors.

With one of the most developed financial systems globally, New Zealand offers a business-friendly environment. New Zealand’s strategic location also allows companies to service customers across major global markets like the United States (US), the United Kingdom (UK), and Asia.

Tax benefits

A New Zealand resident company is taxed on its worldwide taxable profits at a rate of 28%. A company is resident in New Zealand if any one of the conditions apply:

It is incorporated in New Zealand
Its directors exercise control in New Zealand
It has its centre of management in New Zealand where the company as a whole is managed on a regular basis
It has its head office in New Zealand from which the business of the company is directed and carried out

Overseas companies are taxed only on their New Zealand source profits at a rate of 28%. The corporate rate is less than the tax rate applied to sole traders or partnerships.

Companies can also carry forward tax losses to offset future taxable income, helping reduce future tax liabilities.

Capital gains tax is generally not imposed on companies, meaning profits from selling capital assets are typically not taxed. However, individuals and companies could be subject to capital gains tax under specific circumstances, such as property sales that fall under the bright-line test for residential properties.

New Zealand has a broad-based tax system, including income tax and goods and services tax (GST), payroll tax, but no inheritance tax, stamp duty, or local/state income taxes. With a network of over 40 double-tax agreements with key trading partners, New Zealand’s tax environment remains attractive for international businesses and investors.

Pro-business government incentives

Government grants are available to support businesses growing in this jurisdiction to enhance competitiveness. The Management Capability Funding initiative, for example, can help businesses expand operations through improved leadership and management skills. By first registering with the Regional Business Partner Network (RBPN) and consulting a Growth Advisor, businesses can secure co-funding for management training in critical aspects like business planning, capital raising, and exporting.

In addition to this, businesses can access grants for research and development as well as mentoring opportunities. This may help companies strengthen internal capabilities and effectively compete in international markets.

Strong legal and foreign exchange policies

New Zealand’s legal system is based on common law principles similar to those in Australia and the UK. The country is also known for its simple foreign exchange controls. The country is popular with entrepreneurs as there are no restrictions on the flow of capital from a New Zealand company to foreign investors.

Foreign investment in the country is monitored by the Overseas Investment Office, the Financial Markets Authority, and the Reserve Bank of New Zealand. These institutions regulate the markets through monetary policy and regulation.

Global financial hub with trade agreements

New Zealand's free trade agreements (FTAs) provide companies with a strategic advantage in accessing global markets. For instance, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) opens opportunities across the Asia-Pacific region, while the New Zealand-European Union Free Trade Agreement (NZ-EU FTA) strengthens trade ties with Europe. These agreements help businesses reduce tariffs, streamline trade regulations, and expand their international reach.

The trading environment in New Zealand is highly favourable due to its low tariffs, minimal trade restrictions, and efficient customs processes. It allows businesses to operate with fewer constraints compared to many other countries.

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Business structures in New Zealand

Once you decide to start a company in New Zealand, there are different ways to structure your business. Each business structure has different legal and financial obligations. If you want to start your company in the country, here are the business structures for your consideration.

Limited liability companies

Limited liability companies (LTDs) in New Zealand operate under the Companies Act 1993, offering business owners limited liability protection. This means the company is a separate legal entity from its owners, protecting personal assets from business liabilities. LTDs also provide significant flexibility in ownership and management, making them a popular choice for entrepreneurs.

To establish an LTD in New Zealand, the company must have at least one director, one shareholder, and a registered physical office address. There is a requirement for the Company to have at least one New Zealand resident director or an Australian resident director who is also a director of a company incorporated in Australia. There are no minimum capital requirements, and there are no limits on the number of directors or shareholders. However, LTDs must file annual returns with the Companies Office to remain compliant.

Limited partnership

The Limited Partnerships Act 2008 governs limited partnerships (LPs) in New Zealand. An LP must include at least one general partner and one limited partner. The general partner manages daily operations and is fully liable for business debts, while the limited partner has no operational control and is only liable up to their investment.

Limited partnerships benefit from "pass-through" tax treatment, meaning profits and losses are directly passed to partners without additional tax in New Zealand unless the partner is resident in New Zealand, or the LP has New Zealand source profits. Losses are attributable to the partners in accordance with the partnership agreement.

Business owners must register the LP with the Companies Office, along with details of partners and a physical New Zealand address. An annual return is required; larger partnerships may need audited financial statements.

Branch office

A branch office in New Zealand is an extension of the parent company. The branch is not considered a separate legal entity; however, it is governed by New Zealand law. Foreign companies can set up a branch to conduct business, with the parent company remaining responsible for all debts and obligations. The branch office must have a resident representative and a legal address. The branch must register on the Companies Office’s Overseas Register, meet reporting requirements like annual returns and director updates, and pay corporate income tax on New Zealand profits.

New Zealand Foreign Trust

For foreign families and companies seeking long-term asset management and/or succession planning solutions, the New Zealand Foreign Trust (NZFT) is a popular structure.

In common law legal systems, such as New Zealand, a trust is a private legal arrangement, whereby the settlor entrusts specified property and the legal ownership of it to another, known as the trustee. The trustee holds the property for the benefit of one or more beneficiaries. The trustee’s prime duty is to carry out the terms of the trust and preserve the trust property. The trustee must act in the best interests of the beneficiaries and be diligent in discharging the trust duties.

An NZFT is required to have a New Zealand resident trustee, referred to as a “Resident Foreign Trustee”. The settlor, beneficiaries and assets are located outside of New Zealand. The Trust; details of its connected persons; its annual financial statements and an annual return are filed with the Inland Revenue.

Under local legislation, a properly structured and compliant NZFT is not subject to New Zealand tax on income derived from outside New Zealand. The NZFT offers a flexible and confidential structure for holding assets or conducting commercial activities in a tax-efficient manner. It combines the advantages of asset protection, succession planning, and wealth maximisation within a reputable onshore jurisdiction.

“We’ve been working with Hawksford since 2012 when we decided to set up our own entities in Asia. The team is very professional and helpful. They took care of every step of business formation, giving us advice and responding to our needs in a timely manner."

Sophia Zhou, APAC Finance Controller, Moleskine China