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Payroll In New Zealand

Subsidiaries in New Zealand

New Zealand is a developed economy in the southern part of the world. The country has a free-market economy and is the 51st largest country in nominal gross income. The country has several advanced sectors, but most of its revenue comes from the export of agricultural products like dairy, meat, and forest products. 

The country is quite close to Australia. Hence, if you start a subsidiary business in New Zealand, you can efficiently service all parts of Australia. Moreover, New Zealand has one of the most globalized economies. It relies heavily on commerce with other nations, such as Australia, Canada, China, the European Union, Japan, Singapore, and South Korea.

While incorporating a foreign subsidiary in New Zealand, you can easily choose from the multiple business forms that the country offers. New Zealand’s economy is ranked 1st out of 190 in the ease of doing business index. Hence, setting up a subsidiary in New Zealand is a hassle-free process. 

Read on to learn everything about setting up a subsidiary in New Zealand. 

What are the Types of Subsidiaries in New Zealand?

You can set up different kinds of subsidiary companies in New Zealand. Some of the most common types of subsidiaries in New Zealand are as follows:

Limited liability company

A limited liability company is among the most popular types of subsidiaries in New Zealand. These companies are like all the LLCs around the world.

  • The owners of the company and the company are considered separate entities. Hence, the shareholders have limited liability. 
  • The shareholders’ liability is limited to the capital they bring to the company and the personal guarantees given to any business stakeholders. 
  • A foreigner can entirely manage a limited liability company or a subsidiary. No laws mandate having a New Zealand citizen as one of the company’s owners. 
  • At least one shareholder is required if you want to incorporate an LLC in New Zealand. 
  • An LLC in New Zealand must have at least one director.
  • The country has no minimum capital requirements for establishing an LLC in New Zealand.
  • A limited liability company’s name must have the word ‘ltd.’ or ‘Tapui’ at the end of it.  

Co-operative company

Co-operative companies are another popular form of business in New Zealand. These businesses are formed to support a community that performs a specific task. A few of these businesses operate in industries like cab services, dairy businesses, etc.

  • The shareholders of the company exercise at least 60% of the voting rights. Hence, the company’s members control all the significant operations. 
  • The structure of the cooperative companies accommodates all kinds of stakeholders like suppliers, employees, etc. 
  • The business shareholders provide all kinds of goods and services to the company and perform all kinds of commercial transactions with the company.
  • The company has shareholders as some members of the board of directors. 
  • A cooperative company should have the word ‘co-operative’ at the end of the company’s name.

Unlimited company

An unlimited company is another form of subsidiary business formed in New Zealand. These companies are formed to meet a few legal requirements.

  • The shareholders of the company have unlimited liability. 
  • In these companies, the company owners are liable to pay any liabilities and debts.

How to Set Up Subsidiaries in New Zealand?

If you wish to set up a subsidiary in New Zealand, you must follow a few steps. 

Step 1: Decide on a name and place

  • Before setting up a subsidiary in New Zealand, you need to finalize the company location to perform operations.
  • Select a name for your company in New Zealand once you have decided on the type of subsidiary you want to incorporate. Register it with Companies Register and create RealMe login. 
  • You can check the company name availability through ONECheck by the New Zealand government. 

Step 2: Submit the necessary documents

  • You need to submit all the documents to the Companies Office. You also need to submit the signed consent forms of all the shareholders. 
  • You must submit all the documents and the incorporation application online or to the Companies Registrar’s Office. 

Step 3: File the consent forms

  • The Companies Registrar’s office will respond with the necessary consent documents to be signed individually by all registered directors and shareholders once the online application is filled out.
  • The filled consent forms must be returned to the Companies Registrar’s office within the next 20 working days. 
  • Once all forms are approved, you will receive the Certificate of Incorporation in the next few days.

Step 4: Open a bank account

  • Opening a bank account is essential before incorporating a New Zealand business. 
  • The bank account is utilized to pay share capital as well as any other costs that may be incurred throughout the incorporation procedure.

A subsidiary business in New Zealand must complete all legal obligations before starting operations in the country. 

Benefits of Setting Up a New Zealand Subsidiary

Some of the benefits of opening a subsidiary business in New Zealand are as follows:

  • A subsidiary company in New Zealand can operate independently from the parent company. 
  • Comparatively, less paperwork is needed to set up a subsidiary company in New Zealand. 
  • There are no minimum capital requirements for most businesses in New Zealand. Hence, anyone can start a business in New Zealand. 
  • Starting a subsidiary in New Zealand is beneficial for a parent company as this structure limits the parent company’s liability in case of losses or debts. 

Documents to Prepare When Opening a Subsidiary in New Zealand

You must submit a few essential documents during the subsidiary company formation in New Zealand. Some of these include the following:

  • Memorandum of Association
  • Articles of Association
  • CIMA approval (for companies entering a regulated business in the country)
  • The registered office address from where all the business activities will be carried out
  • The names and addresses of all company directors 
  • The names and addresses of all company shareholders 
  • In the case of holding companies, a Declaration of an Ultimate Holding Company 
  • Annual returns for all the months
  • The constitution of the company

All the documents must be duly submitted to the Companies Registrar. These documents can be submitted online at the New Zealand Companies Office website. 

What Business Forms Can New Zealand Subsidiaries Take?

A subsidiary in New Zealand can take any form, depending on the number of employees and the business requirements. New Zealand allows you to incorporate wholly-owned and partly-owned subsidiaries like a joint venture. An ex-pat can be the sole shareholder or the director of any subsidiary business in New Zealand. 

Limited liability companies are New Zealand’s most popular type of business structure since they are flexible and straightforward to set up. However, while establishing a subsidiary in New Zealand, you can consider other options depending on your needs and financial situation.

New Zealand Subsidiary Laws

When starting a business in New Zealand, it is crucial to adhere to the subsidiary restrictions established by the New Zealand government. These laws are essential because they protect workers’ rights and interests when an organization employs them.

Before registering with the country’s tax authorities, companies must obtain the Incorporation Certificate. The best time to obtain all necessary certificates is after the incorporation process. Subsidiaries located in New Zealand are subject to all labor laws. Employees of the subsidiary company are not subject to the laws of the nation where your parent company is based.

You must also open a bank account to conduct all business and payroll-related transactions. As the law requires, you must pay your employees in local currency, the New Zealand dollars. When creating a subsidiary in New Zealand, you must adequately adhere to the shareholder and all the other requirements as laid down by the Government.

Post Incorporation Compliance

Once you incorporate a subsidiary business in New Zealand, you must adhere to all the local laws and regulations to ensure that the business functions smoothly. You must meet a few post-incorporation compliances once the company starts its operations. Some of these requirements are as follows:

  • The company must pay all the taxes on behalf of the employees to the relevant tax authorities.
  • The companies must file and report all annual financial statements with the registrar of the companies. 
  • Every business listed on the Companies Register must submit an annual return, including those from abroad. This is an annual update of the publicly available data about your company.
  • All subsidiaries in New Zealand must conduct their Annual General Meeting at least once in the calendar year.

Taxes on Subsidiaries in New Zealand

New Zealand has a flexible taxation system. The subsidiaries in New Zealand can pay taxes to the relevant authorities both online and offline. You can also reach out to the authorities with any tax-related queries. 

Companies are subject to GST at 15% and Corporate Income Tax (CIT) at 28%. LLCs are subject to taxes on their global income. However, you are exempt from registering for the tax if your organization doesn’t engage in commercial or trading operations.

Tax Incentives for Firms Setting Up a Subsidiary in New Zealand

All companies in New Zealand that earn income from other countries are subject to tax. However, these companies can avail of credit for the tax paid on foreign income. The tax credit is lower than the actual tax paid by the company. Also, the tax credit must be used in the same financial year when the tax is paid, as it cannot be carried forward. 

Several investors are also incentivized if they set up a new company in the country, which brings in foreign exchange. Also, a 15% tax credit is given on eligible R&D expenditures. These activities involve solving some technological uncertainties, etc. 

Other Important Considerations

Establishing a subsidiary company in New Zealand is a lengthy process. As a company owner, you are expected to take a few weeks off work to concentrate on the business’s growth. You must also visit New Zealand to meet all legal requirements. If your parent firm keeps you busy, you can assign the responsibility to another business executive or get extra assistance from the business executives to finish the work.

Furthermore, you must adhere to a set budget when completing each step of creating a subsidiary company in New Zealand. Therefore, create a budget before setting up a subsidiary in New Zealand because doing so will enable you to have control over your expenses.

How Multiplier’s Employer of Record Can Help You Hire & Expand in New Zealand 

Setting up an international business requires sufficient time and effort. Establishing a subsidiary abroad can take time to understand local business customs and labor laws.

Why not utilize a service provider like Multiplier to help your business surpass this growth obstacle?

There’s no need to worry about starting a new business entity in the nation because Multiplier handles all the legal requirements for entering a new market. Contacting Multiplier, which has domestic and international experience, will ensure that all New Zealand labor laws and regulations are strictly followed. You may onboard multinational teams and enter new market prospects with a PEO like Multiplier.

Frequently Asked Questions

Some authorities involved in incorporating a subsidiary in New Zealand are the Ministry of Business, Innovation, and Employment (MBIE), and Inland Revenue Department (IRD).

Companies need to pay 105 New Zealand Dollars and GST to incorporate a subsidiary business in New Zealand.

All the shareholders’ records and a few basic details about the company are recorded in the file maintained by the Registrar of Companies. The information can be accessed via the RealMe platform.

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