An update on remote working in New Zealand: sun, sand [and no tax!]

By Stephen Walker & Ilaisaane Soakai

Recent amendments to New Zealand immigration laws, effective from 27 January 2025, marked a significant shift to attract international tourists to New Zealand by permitting visitor visa holders to work remotely for overseas employers or for their clients during their stay. While this signalled New Zealand’s openness to the digital nomad community, some practical tax limitations have remained meaning that many visitors hesitate (to the extent they are aware of the issues) to extend their stay beyond those permitted by existing tax rules to make full use of their visitor visa.  Where there is a lack of awareness around existing tax rules, there is almost certainly non-compliance resulting in an uneven playing field where those individuals and employers choosing to be compliant are placed at a competitive disadvantage compared to those that don’t.

Recognising this barrier, the Taxation (Annual Rates for 2025–26, Compliance Simplification, and Remedial Measures) Bill proposes updates to the tax treatment of certain non-resident visitors, which are scheduled to take effect from 1 April 2026 (once enacted). These changes are aimed at alleviating the tax and compliance burdens for remote workers, and their foreign employers and/or associates, when they are temporarily working from New Zealand.

Why change

Under current rules, income earned whilst remote working in New Zealand may be exempt from taxation if the individual qualifies for either the short-term business traveller exemption (up to 92 days in 12 months) or the double tax agreement (DTA) exemption (up to 183 days in 12 months) if travelling from a DTA country.  However, if visiting for more than these periods, which the new visitor visa allows, income derived from remote working in New Zealand is likely subject to tax here. For more information on the taxation of remote working income under the existing tax law, see our March 2025 article “Remote working in New Zealand: Sun, sand, and tax!”.

Proposed Amendment

The current proposal is to:

1. Exclude individuals classified as “non-resident visitors” from the application of the 183-day tax residency test (providing they are in New Zealand legally)
2. Exempt New Zealand sourced employment and professional services income of a non-resident visitor from New Zealand income tax
3. Modify the definition of permanent establishment (PE) to exclude the activities of a non-resident visitor
4. Modify the tests for corporate tax residency to exclude the activities of a non-resident visitor under the centre of management and director control tests
5. Make GST registration optional for a non-resident visitor.

Non-resident visitors would be treated as non-residents for New Zealand income tax purposes provided their stay does not exceed 275 days in any 18-month period, and they meet all the following criteria:

• Immediately before becoming a non-resident visitor they are neither a tax resident nor a transitional resident of New Zealand
• They do not undertake work in New Zealand that is for a New Zealand resident or a branch of a non-resident, offering goods or services to New Zealand clients, or which requires the individual to be present in New Zealand
• They are not receiving family scheme entitlements
• They are lawfully present in New Zealand under the Immigration Act
• They remain a tax resident of a foreign jurisdiction with substantially similar tax to New Zealand income tax.

It is also worth noting that there are no changes to the permanent place of abode individual tax residency test, which will continue to apply as the overriding tax residency test and cause a non-resident visitor to become tax resident from the moment they acquire one in New Zealand.

Although the proposed amendments have been prompted by and targeted at the new visitor visa, the proposed legislation, as it is currently drafted, may also have broader application to others including New Zealand citizens and other visa holders who meet the criteria for non-resident visitor status.  For example, New Zealand citizens who are tax non-residents and returning to New Zealand for an extended family holiday, or to temporarily assist elderly relatives, may qualify to be non-resident visitors as defined, as could those looking to come to New Zealand for extended periods of time as holders of residency visas obtained under the current Active Investor Plus or previous Investor Plus visa pathways. 

Impacts of the proposed amendments

The proposed rules remove much of the uncertainty and compliance burden currently faced by digital nomads spending time in New Zealand. By effectively switching off the 183-day tax residency test for those who qualify as non-resident visitors, the new rules ensure that individuals making full use of their visitor visa are not unexpectedly classified as tax residents and taxed on their income simply because the cumulative number of days in New Zealand permitted by the visitor visa exceeds the current days thresholds that apply for tax purposes.

From an individual perspective it is helpful that if they decide to stay longer in New Zealand or their non-resident visitor status ends, or their tax residency status in their home country ceases, they will only have New Zealand tax obligations on a go forward basis (unless they breach their visa conditions and are present in New Zealand illegally, in which case the current 183-day tax residency test would apply retrospectively).  This clarity means that individuals, and their overseas employers, can more reliably and easily assess their New Zealand tax obligations in advance and avoid the risk of retrospective tax liabilities and compliance costs. 

Non-resident visitors would also still be eligible for the transitional residency exemption if they go on to become tax resident in New Zealand and meet all other qualifying conditions.

From an employer risk perspective, it is also helpful that these amendments seek to clarify that the presence of remote workers in New Zealand can be ignored for corporate tax, and employment tax risk and compliance purposes where they are a non-resident visitor. 

As with all changes, there are a few nuances to work through in terms of the practical application of some of these changes to individuals based on their specific facts and circumstances but given this government’s objective of wanting to make it easier and more attractive for remote workers and digital nomads to temporarily work from New Zealand, these proposed tax changes go a long way in achieving this. 

If you would like to know more about these changes and how they could impact you and/or your organisation, please contact your usual Deloitte advisor.