US Company Formation from New Zealand (2026): Why Inland Revenue Treats a US LLC as a Company, CFC and FIF Rules, the US–NZ Treaty and US C-Corp Options
How to set up a US company from New Zealand: Inland Revenue's view that a US LLC is a foreign company, the controlled foreign company rules and services performed in New Zealand, company residence through control exercised in New Zealand, FIF rules and the NZ$50,000 threshold, transitional residents, the US–New Zealand treaty (dividends 15%/5%/0%, interest 10%, royalties 5%), US LLC formation vs US C-Corp formation, SaaS founders, Kiwi freelancers, NZ$ examples, costs and banking.
New Zealand founders go to the USA early. The home market is small, and SaaS, agritech, gaming and design companies from Auckland, Wellington and Christchurch find their customers and investors in America. Kiwi freelancers and consultants also bill US clients directly. A US company is the natural vehicle for many of them, and it can be formed from New Zealand without travelling.
The New Zealand side is less simple than many people expect. Inland Revenue treats a US LLC as a foreign company, even though the IRS ignores a single-member LLC. That one difference brings in the controlled foreign company (CFC) rules, sometimes New Zealand company residence, and a mismatch in foreign tax credits that catches people who copied an American structure. This guide explains those rules, the US–New Zealand treaty, and when US LLC formation or US C-Corp formation is the better fit.
In short: New Zealanders and NZ residents can own 100% of a US LLC or C-Corporation, formed remotely. Inland Revenue treats a US LLC as a company for New Zealand tax, so a US LLC controlled from New Zealand is usually a CFC, and if it is managed from New Zealand it may even be a New Zealand resident company. Income from services performed in New Zealand through a CFC is generally attributed back to the NZ owner. Personal tax runs up to 39%, and company tax is 28%. The US–NZ treaty limits US withholding on dividends to 15%, 5% or 0%, on interest to 10% and on royalties to 5%. New migrants can use the transitional resident exemption for four years. With UCB, a Wyoming LLC with EIN is $249 and a Delaware corporation with EIN is $358, all-in.
The core problem: one entity, two classifications
| IRS (USA) | Inland Revenue (New Zealand) | |
|---|---|---|
| Single-member US LLC | Disregarded; income is the owner's | A foreign company |
| Multi-member US LLC | A partnership | A foreign company |
| US C-Corporation | A corporation | A foreign company |
In 2023, Inland Revenue issued five public rulings (BR Pub 23/09 to 23/13) on investing in a US LLC that is a partnership in the USA but a company in New Zealand. They set out how the investment is taxed under the FIF and CFC rules and when New Zealand gives credit for US tax. The rulings run to June 2028. The practical message is that New Zealand will not follow the US classification. Plan on the basis that, for New Zealand, your US LLC is a company.
What follows from treating the LLC as a company
1. It may be a New Zealand resident company
A company is resident in New Zealand if, among other tests, its head office or centre of management is in New Zealand, or its directors, in their capacity as directors, exercise control in New Zealand. A single-member LLC run by its owner from a home office in Tauranga is controlled from New Zealand. Inland Revenue can treat it as a New Zealand resident company, taxed at 28% on its worldwide income and required to file New Zealand company returns.
The US does not treat a disregarded LLC as resident anywhere, so the treaty's tie-breaker for companies does not help much. Take advice from a New Zealand tax adviser before you form the company.
2. If it is not resident, it is a CFC
A foreign company controlled by New Zealand residents (broadly, more than 50% held by five or fewer NZ residents, or 40% or more held by one NZ resident) is a CFC. The NZ owner is then taxed on attributed CFC income each year unless the CFC passes the active business test, which requires its passive income to be less than 5% of its total income.
The rules count income from services performed in New Zealand by the CFC as attributable. So a freelancer's US LLC that sells the owner's own work, done in New Zealand, is attributing that income back to the owner, often with no benefit at all.
3. US tax and New Zealand tax may not line up
If the LLC earns US business income, the IRS taxes the owner (because the LLC is disregarded), while New Zealand taxes the company's income attributed to the owner or its dividends. Credits work only where New Zealand law allows a credit for the US tax against the same income. The 2023 rulings deal with some of these mismatches for LLCs that are US partnerships, but not every case. Get the structure right first.
4. Small holdings fall under the FIF rules
A non-controlling interest in a foreign company, such as a minority stake in a US start-up, is a foreign investment fund (FIF) interest. If your total FIF interests cost more than NZ$50,000, you are usually taxed on deemed income under the fair dividend rate method, at 5% of the opening market value each year. US shares bought by founders or employees often reach that threshold.
Transitional residents
People who become New Zealand tax resident for the first time, or after being non-resident for at least 10 years, are transitional residents for 48 months. Most foreign income is exempt during that period, and the CFC and FIF rules generally do not apply to them, except for employment and services income. An American or British founder moving to New Zealand can keep a US company through the first four years with much less New Zealand tax friction, but must plan for when the exemption ends.
New Zealand tax rates
- Individuals (from 31 July 2024): 10.5% up to NZ$15,600, 17.5% to NZ$53,500, 30% to NZ$78,100, 33% to NZ$180,000 and 39% above.
- Companies: 28%, with imputation credits passed to New Zealand shareholders.
- GST: 15%. Offshore sellers of remote services and low-value goods to New Zealand consumers must register above NZ$60,000 of New Zealand sales, so a US company selling digital products to Kiwi consumers can be caught.
The US–New Zealand treaty
The treaty, updated by a 2008 protocol, limits US withholding on payments to New Zealand residents:
| Payment from the USA | Treaty rate |
|---|---|
| Dividends to an individual | 15% |
| Dividends to a company owning 10% or more | 5% |
| Dividends to a company owning 80% or more, meeting conditions | 0% |
| Interest | 10% (0% for some financial institutions) |
| Royalties | 5% |
It also protects New Zealand businesses from US tax on business profits unless they have a US permanent establishment. New Zealanders are eligible for the E-2 treaty investor visa, which lets a founder live in the USA to run a substantial US business.
US C-Corp formation from New Zealand
Because New Zealand treats every US entity as a company anyway, the C-Corporation is often the cleaner choice for a New Zealand owner: the classification is the same on both sides, and the treaty applies in the ordinary way.
Example: a Wellington SaaS company
These are illustrative figures, not a client case, at NZ$1.70 to the dollar.
A Wellington company sells scheduling software to US clinics. It has NZ$2 million of annual revenue, mostly from the USA, and hires a US sales lead in Denver. It forms a Delaware corporation as a subsidiary:
- The US corporation employs the sales lead, signs US contracts and pays 21% federal tax plus Colorado tax on its own profit, which is mainly a sales margin, under a transfer-pricing agreement with the New Zealand parent.
- The New Zealand parent owns the software and pays 28% on its profit. The US subsidiary is a CFC, but an active one, so there is no attribution.
- Dividends from the US subsidiary to the parent are withheld at 5% (or 0% if the 80% conditions are met). New Zealand generally exempts foreign dividends received by NZ companies.
If the company later raises US venture capital, investors will usually ask for a Delaware flip, so that a Delaware corporation becomes the top company. A flip is a taxable event in New Zealand unless structured carefully, and it changes where future value is held. See raising US investment as a foreign founder, the C-Corp guide for non-residents and US subsidiary for a foreign company.
US LLC formation from New Zealand
An LLC still has its place, but it suits fewer New Zealand owners than owners from some other countries.
US tax position
A single-member LLC with a non-resident owner is disregarded by the IRS. If the owner works from New Zealand, with no US office, staff or dependent agents, there is no US permanent establishment and no US income tax (see effectively connected income explained). The LLC files Form 5472 with a pro forma Form 1120 every year, and the penalty for missing it is $25,000 (see Form 5472 explained).
When an LLC can still fit
- US rental property. Many Kiwis hold US property through an LLC. Rental income is US-source, taxed in the USA on a net basis if the owner elects, and the New Zealand side needs care under the CFC or FIF rules (see real estate investment LLC for foreigners).
- Transitional residents, for whom the New Zealand complications are mostly suspended for four years.
- A US-facing trading name for a freelancer, where the New Zealand adviser is comfortable treating the LLC as a resident company or attributing its income, and the owner values US invoicing and banking enough to accept the extra compliance.
Example: a freelancer in Auckland
Hana is a motion designer in Auckland whose clients are US agencies. She forms a Wyoming LLC so that clients can pay a US vendor. In the USA, the LLC owes no tax. In New Zealand, her adviser treats the LLC as a company controlled from New Zealand. Its income, from services performed in New Zealand, is taxed in New Zealand whichever way it is analysed. She pays the same New Zealand tax she would have paid as a sole trader, plus more accounting cost. A US bank account through a New Zealand company might have achieved the same result more cheaply. She keeps the LLC only because two clients insist on a US vendor.
Which state
- Delaware for a corporation, especially one that may raise investment.
- Wyoming or New Mexico for an LLC with no US operations.
- The state where US staff work, where the company must register as a foreign entity.
See best state for non-residents and the state selector.
What it costs
UCB's prices include state fees and the first year of registered agent service:
- Delaware corporation with EIN: $358.
- Wyoming LLC with EIN: $249, or $348 with a US bank account application.
A Delaware corporation costs $578 a year to keep active. A Wyoming LLC costs $121 a year, or $421 with the annual federal return. A US business address with your own suite number is $60 a year. See what a US LLC costs every year.
Banking
US banks and fintechs readily accept New Zealand owners. Use your New Zealand passport, and for proof of address a power, broadband or council rates bill, or a bank statement. What helps:
- a clear business description and website;
- your New Zealand company's details if it owns the US company;
- a US business address with your own suite number.
Payments to ANZ, ASB, BNZ, Westpac or Kiwibank arrive as international transfers and are converted to NZ dollars. See US business bank accounts for non-residents and Stripe for non-residents.
Mistakes to avoid
- Assuming New Zealand ignores a single-member LLC because the IRS does.
- Running a US LLC from a New Zealand home office without considering company residence.
- Using a CFC to sell your own New Zealand-performed services, which are attributed back anyway.
- Forgetting the FIF threshold on US start-up shares.
- Missing the end of transitional residence.
- Missing Form 5472 in a year when no US tax was due.
Frequently asked questions
Can a New Zealander own 100% of a US company? Yes, without visiting the USA or holding a US visa.
How does New Zealand treat a US LLC? As a foreign company, whatever the IRS classification. That brings in the CFC or FIF rules, and possibly New Zealand company residence.
Is there a US–New Zealand tax treaty? Yes. It limits US withholding on dividends to 15%, 5% or 0%, interest to 10% and royalties to 5%.
Is an LLC or a C-Corp better for a New Zealand owner? For a real US business, usually a C-Corporation, because both countries treat it as a company. An LLC can fit US property, transitional residents and some freelancers.
Does my US LLC pay US tax? Not if it has no US office, staff or agents. It files Form 5472 and a pro forma 1120 every year.
How UCB can help
We form US companies for New Zealand owners remotely: the state filing, EIN, registered agent, US business address and bank application. We prepare W-8BEN-E treaty forms, and each year we file the US returns through our US tax filing service. Your New Zealand chartered accountant handles CFC, FIF and IR filings, and we give them the US records they need. See our formation, EIN and bank account package and the Australia guide for the trans-Tasman comparison.
Setting up a US company from New Zealand? WhatsApp us at +1 315 961 2956 or email enquiries@ucbsolutions.com.
Let our experts handle it for you
Every business is different. Message us with your country, business type and goals, and we will recommend the right structure, state and package. We do the work; you focus on your business.
This article is general information for non-resident business owners and is not legal or tax advice. Rules and fees change; contact us to confirm what applies to your situation.
