Following the conclusion of extensive negotiations beginning in June 2018, New Zealand entered into a Free Trade Agreement with the European Union (the EU), signed in Brussels on 9 July 2023 (EU FTA). As New Zealand’s fourth-largest trade partner, this agreement is expected to increase trade between New Zealand and the EU by 30%. Moreover, EU investment flows into New Zealand could increase by over 80%.
As part of the EU FTA’s implementation, the European Union Free Trade Agreement Legislation Amendment Bill (the Bill) passed its First Reading in Parliament on 31 January 2024, and is now entering the Select Committee stage. If the Bill continues to progress, it is expected to come into force by mid-2024.
For EU non-government investors, the Bill introduces significant amendments to the Overseas Investment regime. Specifically, it proposes that such investors will enjoy a higher threshold for consent at NZD200 million, increased from the default NZD100 million, for investments in significant business assets in New Zealand. This is the same threshold increase that UK investors benefitted from last year following the UK-NZ Free Trade Agreement.
Who is eligible?
In general terms, under the strongest exemption category, this includes a person who is a national of one of the EU member states, and “EU enterprises” (being an enterprise constituted or organised under EU law) or the EU branch of a non-NZ enterprise, each of which have a substantial business in an EU territory or being more than 75% owned and controlled by NZ citizens / EU nationals. Enterprises with more than 25% non-NZ government involvement are excluded, as are the NZ branches of enterprises.
This article was co-authored by Brayden Print, a Solicitor in our Corporate and Commercial team.
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