American investor migrants come to us full of enthusiasm for New Zealand, ready to create a new life for themselves and their families in Aotearoa. While the Active Investor Plus Golden Visa programme provides these opportunities and more, one question I always ask is: “Have you thought about tax?”
Yes, there is a Double Taxation Agreement between New Zealand and the United States but that doesn’t mitigate all types of tax, plus there are a number of other complex issues which, if not managed well, can result in significant tax burdens.
In our latest Mobile Expert Interview, NZ tax expert, Graham Lawrence, Director of The Advisory Group highlights four biggest immediate tax issues that Americans relocating to New Zealand need to be aware of - and how they can be mitigated
1. You need to file US tax even if you live in New Zealand
Issue: The U.S. taxes its citizens on worldwide income regardless of residency.
Implication: Even while living in New Zealand, U.S. citizens must file a U.S. tax return annually, reporting all global income, including New Zealand wages, rental income, and investment income.
Mitigation tools:
Tax planning – Understand what type of investments you are making in NZ and how these are taxed in NZ and the US. This includes NZ’s foreign investment fund tax rules which should only become applicable after you have been in New Zealand 4 years. Planning is required for this 4 year period and the rules are about to undergo a major overhaul.
Foreign Earned Income Exclusion (FEIE) – Up to ~$120,000 of foreign earned income can be excluded.
Foreign Tax Credit (FTC) – to offset U.S. tax using taxes paid to New Zealand
2. You can become NZ tax resident without living here full time
Issue: New Zealand taxes based on residency, not citizenship, and becoming a NZ tax resident can happen quickly (183 days in a year or if you have a "permanent place of abode").
Implication: You could become a NZ tax resident and owe tax on your worldwide income in NZ, even if you’re only partly settled.
Special provision: The four-year transitional resident exemption allows newly resident individuals to avoid NZ tax on most foreign-sourced (non-employment) income, including investment and passive income.
Doesn’t apply to employment or self-employment income
One-time benefit; can’t be opted into later
Planning tip: Consider timing your move carefully to optimize this exemption.
Double Tax Agreement between the US and NZ: If you do become a NZ tax resident, depending on your specific situation this agreement can help you allocate taxing rights between the two countries.
3. You’ll need to report your NZ financial accounts to the IRS
Issue: U.S. citizens must disclose foreign financial accounts if balances exceed $10,000 USD in aggregate.
Forms:
FBAR – Due annually, separate from the tax return
FATCA – Report foreign assets such as KiwiSaver, overseas pensions, or trusts
Penalties: Non-compliance can lead to steep fines.
Note: Many New Zealand institutions now comply with FATCA and may report your account details to the IRS.
4. You’ll need to choose NZ investments carefully to manage tax
Issue: U.S. tax law often treats non-U.S. mutual funds (including KiwiSaver, PIE funds, or foreign unit trusts) as Passive Foreign Investment Companies (PFICs).
Implication: Harsh U.S. tax treatment, including:
Complex annual reporting
Potential for punitive tax rates and loss of capital gains treatment
KiwiSaver complication: Depending on structure, it may be treated as both a foreign pension and a PFIC.
Planning tip: Consider U.S. compliant investment options or consult a cross-border tax advisor.
Bonus Consideration – Estate & Gift Tax Planning
While not in the top four, U.S. estate and gift tax laws can create issues, especially if:
You gift assets to a non-U.S. spouse or children
You hold assets jointly with non-citizens
New Zealand has no estate or gift taxes, but the U.S. does – creating mismatches that require careful planning.
Final Recommendation
Cross-border tax issues are highly nuanced. If you're a U.S. citizen moving to New Zealand, consult a tax advisor experienced in both U.S. and NZ tax law before and after your move. Timing, investment choices, and filing accuracy can make a huge difference.
Kia ora and welcome to New Zealand!
Mobile Relocation connects you with what you need to thrive in New Zealand. Contact us today to talk about how we can carry your relocation burden.
If you are a recruiter or HR Professional bringing international talent to NZ Mobile Relocation has a range of settlement support services to suit your candidates and your business - from baseline support to meet Immigration New Zealand’s AEWV Accreditation requirements (Kiwi Launch Pad) through to personalised programmes to support your most valued international employees.
Bridget is a New Zealander who has lived and worked as a diplomat in Singapore and India. After experiencing all facets of the relocation experience, she founded Mobile to work with private individuals moving to NZ and leading local and international businesses bringing in offshore talent.
Source: www.mobile-relocation.com