10 Mar 2006 - The New Zealand Trust - updated
| MONACO CORPORATE SECRETARIAT International tax planning Protecting your assets The New Zealand Trust New Zealand has developed its own approach to the taxation of trusts, based not on the residence of the trustee or of the beneficiary, but on the source of the trust funds - that is, taxation based on the residence of the settlor. This provides tax planning opportunities. Taxation The New Zealand foreign trust managed from Monaco by Monaco Corporate Secretariat is not subject to New Zealand tax, except on income with a New Zealand source - even though the trustees are tax residents of New Zealand, and even if some or all of the beneficiaries are New Zealand resident. For beneficiaries of a New Zealand foreign trust the rules are also interesting. A trust beneficiary who is not resident in New Zealand will only be taxed on income with a New Zealand source, and will not be taxed on capital profits or gains even those with a New Zealand source. Foreign income and all capital gains received for a New Zealand foreign trust managed in Monaco, (even those arising in New Zealand) will be distributed free of New Zealand tax - whether at the level of the trustee or the beneficiary. This raises the interesting possibility of a New Zealand trust being a resident of New Zealand for the purposes of a double taxation treaty, with the protection this brings, and yet not being subject to tax in New Zealand. Although tax treaties vary in their treatment of trusts, and of "persons" not subject to tax in the treaty partner country in which they claim residence, it should be noted that the New Zealand trust is "subject to tax" in New Zealand in terms of double tax treaties. Advantages The advantages of a New Zealand trust are as follows: * Such trusts are substantially tax free if there is no New Zealand sourced income; * New Zealand tax law does not tax capital gains, even of residents; * There is nil tax incurred in Monaco for management of a New Zealand foreign trusts assets & income. * New Zealand is politically and economically very stable; * New Zealand trust law is firmly based on equity and the common law, with some local modification, but supported by an efficient and open judicial system; * New Zealand professional and administration services are efficient and not a high cost by international standards; * Such trusts avoid the stigma associated with tax haven trusts; * Such trusts provide asset protection advantages (discussed below); * There is the possibility of benefiting from New Zealand's tax treaties * There are no reporting requirements to the New Zealand Inland Revenue Department or other state body, except in relation to New Zealand sourced income. * Where management is in Monaco nil tax is incurred. In 2005 a change in legislation incurred due to Australian / New Zealand convention, sets out that trust accounts may be required from April 1st 2006. Uses Derek Smith of Monaco Corporate Secretariat, a specialist in this field, has been using the New Zealand trust for a number of years. He advises that the New Zealand trust managed in Monaco may be of interest in a number of situations: - As a zero-tax tax planning vehicle, in place of an offshore trust established in a tax haven; - In particular in conjunction with the lack of a capital gains tax in New Zealand, such trusts can be used as holding vehicles; - As an asset-protection trust established in a jurisdiction with a range of treaties and with a fully developed and efficient judicial system; - As a pre-migration trust, established prior to immigration to New Zealand (or indeed to other countries where such trusts are effective - for example, Australia or Canada). - Where managed by Derek, who is licensed in Monaco, incurs nil tax. Asset protection trusts The New Zealand trust managed by Monaco Corporate Secretariat may therefore offer considerable advantages as a zero or low tax (or at least tax neutral) asset protection trust. More information For further information please contact : Derek R. SMITH of M.C.S Email: assetprotect@libello.com Tel: +377 9797 6230 Mobile: +377 (0)607 934 943 Fax: +377 9797 6233 While every effort has been made to ensure that this information sheet is accurate and up-to-date we cannot be held responsible for any errors or omissions. |