Israel – New Zealand Tax Treaty

Business Activity in New Zealand

With its stable economy, powerful legal system, and government incentives aimed at attacking in foreign investors, New Zealand provides a favorable investment climate. The technology, manufacturing, tourism, agricultural, and services sectors are among the main industries of the nation. Notably, New Zealand is a popular tourist destination and a global leader in dairy production. The economy is greatly impacted by tourism, hence supporting small businesses in the area by generating income and jobs. China, Australia, and the United States are its top trading partners. Electronics, autos, and machinery make up the majority of imports. This thorough summary demonstrates the advantages and possibilities found in New Zealand’s ever-changing business environment.

New Zealand offers a range of tax benefits to overseas investors, including the Research and Development Tax Incentive, which matches qualifying R&D expenditures with a 15% tax credit. The government aims to promote technological innovation and achievements in a range of areas, including manufacturing, software, and aggrotech.

Bilateral agreements between New Zealand and Israel

Israel and New Zealand have signed the following agreement:

1. Agreement on Cooperation in Technological Innovation, Research and Development.

Residency for Tax Purposes in New Zealand

Residence of an Individual

An individual is considered a tax resident of New Zealand if one of the following three conditions applies:

• An individual is physically present in New Zealand for at least 183 days during the tax year.
• They have a permanent place of abode in New Zealand.

To read about how an individual is considered a resident of Israel, click here.

Residency of a Company

For a company to be a resident, it must be incorporated in New Zealand or have its head office, center of management, or the control of its directors exercised in New Zealand. In addition, a company can also exist, in the meaning of a Double Tax Treaty between countries, without a fixed place of business if employees overseas habitually exercise authority in order to conclude contracts or habitually play the principal role.

To learn about how a company is considered a resident of Israel, click here.

The Tax System in New Zealand

New Zealand’s Tax Authority is called “The Inland Revenue Department (IRD)”

Income taxation:10.5-39%

Taxation of companies and branches:28%

VAT: 15%

Capital gains tax: NA

Withholding Tax

Inheritance Tax and Estate Tax in New Zealand

New Zealand does not levy an inheritance, gift or estate tax. However, income tax must be paid on income generated by the estate itself, such as rental income or interest, and when the inherited estate is sold. Available exemptions or deductions might apply.

Relocation to New Zealand

New Zealand is an attractive destination for relocation, offering a range of benefits for individuals and businesses. The country’s stable political environment, strong economy, and high quality of life make it an ideal place for expatriates. New Zealand has approximately 7,000 Jews, with the majority living in Auckland. The Jewish community is represented by the New Zealand Jewish Council.

New Zealand offers a favorable business environment that encourages companies to establish operations there. The corporate income tax rate in New Zealand is 28%, and there are various incentives available for research and development activities.

Moreover, New Zealand’s government provides support for businesses in the form of grants and assistance programs aimed at fostering innovation and international trade. Companies in the agricultural sector, technology, and renewable energy can benefit from various support schemes.

Some general benefits of relocating to New Zealand include:

• Free currency exchange: New Zealand operates a floating exchange rate, characterized by financial stability and monetary policy.
• High ranking in ease of doing business: New Zealand ranks first out of 190 countries in the World Bank’s Ease of Doing Business index.
• Fast business registration procedures: Setting up a business in New Zealand is straightforward and can be done quickly online.
• Opportunities to market agricultural products: New Zealand is a leading exporter of dairy, meat, and wine, benefiting from low fees and minimal trade barriers.
• Increased tourism: New Zealand’s stunning landscapes and unique culture attract millions of tourists annually, providing opportunities for businesses in the hospitality and tourism sectors.
• Natural renewable resources: The country is rich in renewable resources, making it a great location for sustainable energy projects.

Real Estate Taxation in New Zealand

In New Zealand, property taxes are primarily administered at the local government level. The main type of property tax is the rates, which are levied by local councils to fund local services and infrastructure. Rates are based on the value of the property, which can include both land and improvements. In addition, in New Zealand but certain profits from property sales may be taxed if the property was bought with the intention of resale or sold within a specific period after purchase (Bright-line test). New Zealand does not apply a property transfer tax.

Transfer of Funds from Israel to New Zealand

According to section 170(a) of the Israeli income tax ordinance, any transfer of payment to a non-Israeli resident is subject to 25% of withholding tax. The tax authority can allow, under certain circumstances, to reduce or dismiss the withholding tax. Our firm handles withholding tax matters with the Israeli Tax Authority.

In providing advice regarding the transfer of money abroad, in addition to the issue of withholding tax, our office handles the requirements of the foreign banks, such as an accountant’s approval regarding the payment of taxes and examines additional actions required in light of the uniform standard of CRS between the countries – automatic exchange of information between countries which is carried out first through the banks and then between the tax authorities of each two countries.

The banks raise many difficulties and charge high fees for converting shekels into other currencies, so it is important to consult before transferring the funds – Contact us.

For more information on money transfers abroad, click here.

Types of Business Entities in New Zealand

There are three main structures of business entities in New Zealand:

Individual Entrepreneurship (Sole Trader): This type of business entity is owned and managed by a single person. Sole traders are personally responsible for the obligations and liabilities of the business. The advantages of being a sole trader include potential financial rewards, the ability to be your own boss, flexibility, and ease of setup. However, it may require long hours and increased risk as the owner is personally liable for all debts and obligations.

Limited Liability Company (LLC): Limited liability companies are the most common business entity in New Zealand. The shares are divided among shareholders depending on the amount of capital each person has invested. Shareholders are responsible for paying a company’s debts, up to the value of their shares. But shareholders are also entitled to a dividend, a share in the company’s profits. Individuals in an LLC are not liable for the company’s obligations beyond their investment in the company.

Partnership: A partnership can be an independent legal entity or have an agreement between partners. The company can be managed by more than one individual. In general partners are liable for the business’s liabilities, while limited partners can only lose the amount they invested in the company.

Incentive Laws in New Zealand

New Zealand offers various incentives to attract investment and foster economic growth:

1. Research and Development (R&D) Tax Incentive: A 15% tax credit for eligible R&D expenditures encourages innovation and technological advancements.
2. Film Industry Incentives: The New Zealand Screen Production Grant provides cash grants for international and domestic film productions.
3. Export Market Development Grant: Grants from New Zealand Trade and Enterprise (NZTE) assist businesses in expanding into international markets through market research and business development.
4. Primary Growth Partnership (PGP): Funding for collaborative projects in agriculture, forestry, and fisheries aims to boost innovation and productivity.

New Zealand Double Tax Treaties