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Non-Resident Contractors Tax (NRCT) and Exemptions: A Guide for International Service Providers to New Zealand

New Zealand’s Non-Resident Contractors Tax (NRCT) applies to individuals and businesses providing services within the country. However, exemptions may be available depending on the service arrangement, location of work, and the contractor's status.

This article outlines three common scenarios where international contractors engage with New Zealand-based companies and discusses whether NRCT applies and how exemptions can be obtained.

Scenario 1: Individual Providing Services Partially in New Zealand and Partially Overseas

An individual working both in New Zealand and overseas is considered a non-resident contractor if they are not tax resident in New Zealand and provide services under a contract.
Since part of the work is performed in New Zealand, NRCT may apply to the New Zealand-sourced portion of the income. An exemption can be obtained if:

  • The contractor qualifies for relief under Double Tax Agreement (DTA) rules.

  • They meet the 24-month good compliance history requirement.

  • The services provided fall under specific exemptions (e.g., exploration and development activities).

If an exemption is granted, NRCT withholding is not required.

Scenario 2: Individual Working Remotely from Overseas with No Physical Presence in New Zealand

Since all services are performed outside New Zealand, the individual does not meet the definition of a non-resident contractor providing services in New Zealand.
In most cases, no exemption is needed since NRCT does not apply. However, some large corporations in New Zealand apply Non-Resident Withholding Tax (NRWT) to all overseas contractors by default.

In such cases, an exemption can be requested based on DTA rules, confirming that no work is physically performed in New Zealand.

Scenario 3: Overseas Company with Employees Occasionally Working in New Zealand

An overseas company sending employees to New Zealand may qualify as a non-resident contractor. However, if employees work in New Zealand for extended periods or if the company maintains a fixed place of business, it may create a Permanent Establishment.
Permanent Establishment (PE) Considerations

A company has a PE in New Zealand if it:

  • Maintains a fixed place of business (office, branch, factory, etc.).

  • Has employees working in New Zealand for more than 183 days in 12 months.

  • Supervises, directs, or controls employees providing services in New Zealand.

If a PE exists, the company may be subject to corporate tax in New Zealand on income attributable to the PE. 

An exemption can be obtained if: 

  • The DTA confirms no PE is created.

  • The company's engagement in New Zealand is temporary.

  • The company meets the 24-month good compliance history requirement.

If an exemption is granted, NRCT withholding is not required.

Understanding Your Tax Obligations

The application of NRCT and available exemptions depends on various factors, including the nature of the services, the presence of personnel in New Zealand, and the terms of relevant Double Tax Agreements. Each case should be assessed individually to determine tax obligations.

If you would like to discuss a specific situation, please consult with a tax specialist.

New Zealand Tax Accountant.