New Zealand's New Golden Visa

New Zealand has long been an appealing destination for human capital and a relatively secure refuge for financial capital. Over the years, many skilled migrants have settled as permanent residents in New Zealand, forming financial and social ties with the country, even if they typically reside elsewhere in the world. 

This is because New Zealand is internationally viewed as a socially cohesive, safe, stable, and well-functioning nation with a strong legal system, a mild climate, breathtaking natural landscapes, and a high quality of life. 

Another contributing factor is the global trend of talent and capital mobility, which has intensified in recent decades. This trend is driven by advances in aviation and telecommunications, digitization, globalization and free trade, relaxation of exchange controls and visa restrictions, the demand for political and economic safe havens to mitigate geopolitical risk, war and social unrest, climate change, and the desire for geographic investment diversity.

As a result, individuals seeking safety, economic opportunities, quality of life, and global mobility are increasingly attracted to New Zealand as an alternative or secondary residence. 

There are several pathways to residency in New Zealand, including its residency by investment program. Until 2022, this program was highly successful in attracting significant talent and capital. In return, New Zealand gained new skills, networks, and substantial financial investment in its delicate domestic economy. However, changes to visa criteria under the previous Labour government diminished interest in the program. The current Centre-Right coalition government has addressed these shortcomings by launching the revamped AIP visa, recognizing the vital role of foreign talent and capital in the business and innovation ecosystem.  

Applicants can apply for a New Zealand resident visa under one of the two AIP visa categories:

• Growth Category: Applicants must invest NZD 5 million in approved managed funds and/or direct investments and spend at least 21 days in New Zealand over a 3-year period.

• Balanced Category: Applicants must invest NZD 10 million in acceptable investments and spend at least 105 days in New Zealand over a 5-year period.

Acceptable investments for the Balanced Category include bonds (government, local government, and corporate), listed equities, philanthropy, property development (new residential and/or new/existing commercial and industrial), and Growth Category acceptable investments (approved managed funds and direct investments).

Applicants under the Balanced Category can reduce the number of days they must spend in New Zealand during the 5-year investment period by investing additional funds into acceptable direct investments and/or managed funds. Applicants who invest:

• NZD 1 million (a total investment of NZD 11 million) receive a 14-day reduction;

• NZD 2 million (a total investment of NZD 12 million) receive a 28-day reduction;

• NZD 3 million (a total investment of NZD 13 million) receive a 42-day reduction.

The Government has also eliminated the English language requirement for applicants. 

These changes aim to provide flexibility, a reasonable financial commitment, and manageable investment risk for applicants in the Growth Category, while still promoting impactful investments in New Zealand's innovation ecosystem. The Growth Category rewards applicants willing to take greater investment risks with a lower investment threshold, fewer days required in-country, and a shorter investment period, while the Balanced Category offers a less risky alternative.

The modifications to the AIP visa are part of a wider Government initiative aimed at attracting talented individuals and their capital to New Zealand. This initiative includes completed and anticipated reforms to tax and real estate regulations, which have historically troubled many migrants who arrived in New Zealand without comprehensive early advice on all relevant factors.

For instance, the unique Foreign Investment Fund (FIF) rules have been a significant burden for many migrants by effectively imposing a wealth tax on foreign investments. In response to feedback, the Government introduced a realisation-based calculation method.

Historically, many migrants and AIP visa holders have been surprised and disappointed by the challenges they face when conducting transactions in New Zealand, particularly with basic activities like purchasing a home to live in. In response, the Government has indicated several reforms to the Overseas Investment Act (OIA) to highlight the benefits international investment can bring to New Zealand while continuing to protect against the risks of foreign ownership of strategic and sensitive assets.

Meanwhile, certain other settings crucial for pre-migration planning remain in place. For example, first-time residents or returning expatriates who have been away for ten years or more are eligible for a 4-year tax exemption when relocating to New Zealand. With very few exceptions, all foreign-sourced income of the transitional resident is exempt from tax in New Zealand, even if it is remitted.

During the late 2010s and early 2020s, New Zealand's government policies were quite insular, discouraging foreign investment. This, among other factors, led to a significant decline in the country's economic outlook. An unintended consequence of this is that, based on current foreign exchange rates compared to 2, 5, and 10-year averages against most major currencies, the New Zealand Dollar appears undervalued.

Meanwhile, New Zealand has upheld its reputation as a safe haven for human capital and a stronghold of democracy in a world where such attributes are increasingly rare. Additionally, popular residency and citizenship by investment programs in other countries have been restricted or are under scrutiny, limiting options for globally mobile talent.

The key point is that New Zealand now offers a sensible and appealing residency by investment program. Initial indications suggest that the program will see high demand, with applications rising significantly in the first few months.