Living in NZ being paid in the UK

[arnoldpointer]

I am moving permanently to NZ. I will continue to work for my current UK employer. They have suggested that the easiest routs fort hem would be for me to set up a limited company and work as a contractor for them. I have had a look around the web and am very confused. My understanding is that I would pay myself a salary that would be subject to tax in NZ. The company profits would be subject to corporation tax (in UK?) and the dividend that I pay myself would be subject to tax in NZ (except during the transition 4 year period when it would be tax free). Could anyone confirm that my understanding is correct? Also is this going to result in me paying more tax than I would have done had I remained on payroll?
Many thanks

[GlobalTaxAdviser]

Hi

The Company pays tax where it is incorporated and individual pays tax where they are resident (or sometimes in both countries). I am not sure on 4 year transition period you mentioned

However, the issue with a limited company being managed overseas is that you could become into the remit of taxation in that country as you are essentially moving the residency of the company overseas. The reason is the place of management is no longer UK but New Zealand

I think there are a number of issues here. Perhaps in New Zealand they could claim that you are disguised employee and not someone with their own business. Fair remuneration taking into account taxes and cost of living etc. Upkeep of NI contributions, exchange rates, bank charges, additional costs of running a company, permanent establishment etc.

There maybe a way of your employer registering as an employer in NZ or maybe even you registering the company as an employer and taking account of your own taxes (like in the UK)

The best solution depending on long how you are going for is to establish a company or become self employed in NZ assuming employment is not an option

Kind Regards

GTA

[jason13]

the dividend that I pay myself would be subject to tax in NZ (except during the transition 4 year period when it would be tax free).

I'm no NZ expert but in addition to the problems pointed out by GTA, I'm pretty sure the dividends wouldn't be tax free in the first 4 years. While foreign dividends are temporarily exempt in NZ for new residents, they make it very clear that "Employment income from overseas employment performed while living in New Zealand" is taxable in NZ and I'd assume that they'll see through your ploy (especially since, as GTA pointed out, the management of the company will be in NZ so it's hard to argue that it's a foreign corporation). http://www.ird.govt.nz/income-tax-indiv ... n-inc.html