This page has information about:
- when a company is considered to be a New Zealand resident
- the rules around permanent establishments
- how to apply for an IRD number for your company
- dual resident companies and determinations.
When a company is considered to be a New Zealand resident
A company is resident in New Zealand if it meets any of the criteria in the following table. A detailed discussion of the rules can be found in IS 16/03 Tax residence published in Tax Information Bulletin Vol 28, No 10 (October 2016) from page 36.
Tax Information Bulletin - Vol 28 No 10 - October 2016
| Criteria | Description |
|---|---|
|
It is incorporated in New Zealand |
|
|
It has its head office in New Zealand |
|
|
It has its centre of management in New Zealand |
|
|
Control by company directors is exercised in New Zealand |
|
Rules around permanent establishments
Double tax agreements (DTAs) with other countries or territories generally provide that a non-resident company with a permanent establishment in New Zealand will be subject to New Zealand tax on income derived here.
The definition of a permanent establishment can vary across different DTAs, but often uses the criteria in the following table.
| Criteria | Description |
|---|---|
|
A permanent establishment for a business is a fixed place where the business activity is wholly or partly carried on. |
This includes:
|
|
The company may also have a permanent establishment in other circumstances. |
This includes:
|
|
The company does not have a permanent establishment if it only uses facilities in New Zealand for certain activities. |
These are:
|
Applying for an IRD number for your company
If your company is deemed to be a resident of New Zealand, you will need to apply for an IRD number by completing an IRD number application - resident non-individual form, IR596.
Dual resident companies and determinations
It is possible for a company to be resident in more than one country. This can lead to a number of undesirable outcomes such as potential double taxation and restrictions on maintaining an imputation credit account. We recommend companies carefully review their governance arrangements so that dual residence does not arise inadvertently.
On the other hand, dual resident companies can be used in tax avoidance arrangements. In order to address these concerns, Article 4(1) of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting requires non-individual taxpayers that are dual residents to apply to either competent authority for a determination of their residency for tax treaty purposes.
If there is no agreement, treaty benefits will be denied or only granted to the extent to which competent authorities can agree.
Inland Revenue and the Australian Taxation Office have agreed an administrative approach under which eligible taxpayers can self-determine their residence without the need to apply for a determination. This approach is designed to reduce compliance costs for eligible taxpayers. You can see the eligibility criteria on Tax Policy's site.
Australia and New Zealand's administrative approach to MLI Article 4(1) (Tax Policy)
Companies that are not eligible for the administrative approach will need to apply to a competent authority for a determination. See Tax Policy for details of how to do this if the application is made to the competent authority in New Zealand.
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