Economic Growth Minister Nicola Willis has announced new conditions to New Zealand’s visitor visas settings, allowing visitors to work remotely for an overseas employer or client while they are in New Zealand. The “digital nomad visa” is aimed at attracting more tourism to New Zealand, by allowing travellers coming to New Zealand to continue working for their overseas employers or clients, without breaching the conditions of their visitor visas. 

What is the “digital nomad visa”?

It is now a condition of all visitor visas that the holder may undertake remote work in New Zealand. In order to meet the definition of “remote work” the visa holders must not: 

• work for a New Zealand employer; 
• provide goods or services to people or businesses in New Zealand; or
• do work that requires them to be physically present at a workplace in New Zealand.

Remote work is not, in and of itself, a lawful purpose for visiting New Zealand. However, intending to work remotely while undertaking another purpose (such as holidaying, sightseeing, or visiting family or friends) is now acceptable. 

Visitors whose employment requires them to be in New Zealand such as sales representatives of overseas companies, performers and people coming to work for New Zealand employers must still obtain visas relevant to their circumstances.

As the new remote working conditions apply to all visitor visas, the usual visitor visa application process continues to apply. This means both visitor visa holders and people who enter with an NZeTA (New Zealand Electronic Travel Authority) from a visa waiver country or territory will receive these conditions. The existing rules around the maximum length of permitted stay also continue to apply, i.e. either six months (multiple entry) or nine months (single entry) (unless an exception applies). 

What are the tax implications? 

While these changes have clarified the immigration rules for digital nomads wanting to work remotely in New Zealand, New Zealand’s tax settings currently remain unchanged. The Government has flagged that those taking advantage of the remote working conditions may have to pay tax while they are in New Zealand. The tax treatment of a digital nomad’s income from working for a foreign employer while in New Zealand depends on the person’s individual circumstances and the Government has said that the visa holder is responsible for understanding the tax rules relevant to their circumstances.

The Government has highlighted that if a visa holder performs services for a non-resident and their income is taxed in another country or territory, they may not need to pay tax in New Zealand if they are here for no more than 92 days in a 12-month period. If a visa holder is a tax resident in one of the countries and territories New Zealand has a tax treaty with, they may be able to stay in New Zealand for up to 183 days before they need to pay tax. The days of arrival and departure count as full days, and days do not need to be all at once, for example if a visa holder visits New Zealand more than once in a 12-month period.

While the digital nomad visa applies to visitors, the Government is also consulting on changes to tax law to encourage investment in the IT and technology sectors by migrants. In particular, alleviating the financial impact of the foreign investment fund (FIF) rules which tax deemed income on an annual basis rather than the international norm of taxing on realisation. Feedback was sought by late January on various alternatives that were included in an Inland Revenue issues paper and we expect the Government to fast-track changes to this very unpopular tax.

Our view 

Following the Prime Minister’s State of the Nation speech, the New Zealand Government clearly has tourism in its sights as one of the short-term levers it can pull to encourage economic growth. Tourism is New Zealand’s second largest export earner; but, total visitor numbers are still below the pre-pandemic levels. However, New Zealand will be joining a growing list of more than 40 countries that already offer some form of a digital nomad visa, including Portugal, Spain, Greece, Italy, Croatia, Turkey, Brazil, Argentina, Malaysia, Thailand, Japan, the UAE, and many of the Caribbean Island countries. Some of these countries offer additional benefits, such as longer stays, a pathway to residency or citizenship, and tax incentives, but they also come with additional conditions, such as minimum income and savings thresholds. 

As evidenced by the number of countries that already offer digital nomad visas, this is a competitive segment of the international tourism market that has largely come about during and after the COVID-19 pandemic as policymakers sought to take advantage of the popularity of remote working, address the decline in tourism revenue, and even reverse the impact of brain drain in their countries.

The New Zealand Government will be hoping that these changes will help stimulate tourism and allow digital nomads to contribute to the economy during their stay by drawing in highly skilled and well-compensated professionals, particularly from the IT sector, and predominantly from the USA and Asia initially. Moreover, it may provide social media 'influencers' the opportunity to maintain their work while visiting New Zealand, thereby promoting the country through an additional platform. Potential ripple effects could include visitors choosing to extend their stay in New Zealand outside of the peak times due to the ability to now carry out remote work while they are in New Zealand. 

If you would like to know more about the “digital nomad visa”, the possible tax implications of working remotely from New Zealand, or immigration and investing options in New Zealand more generally, please get in touch with one of our experts.
 

This article was co-authored by Solicitor Sera Milbank and Law Clerk Ella McCall, both in our Employment team.