With remote working becoming increasingly common, we are seeing more people permanently relocate to New Zealand while continuing to work for an overseas employer.

While this arrangement may seem straightforward, it can create unexpected tax issues if your employer continues to deduct tax in your previous country of residence.

Where Should You Pay Tax?

As a general rule, employment income is taxed in the country where the work is physically performed. There are exceptions to this.

If you have permanently moved to New Zealand and perform your work from New Zealand, your salary or wages will generally be taxable in New Zealand, regardless of where your employer is based.

This means that continuing to have tax deducted and paid to the overseas tax authority may not satisfy your New Zealand tax obligations.

Common Situations We See

We regularly encounter situations where individuals have:

• Permanently relocated to New Zealand.
• Become New Zealand tax residents.
• Continued working remotely for their overseas employer.
• Had tax withheld and paid to the tax authority in their previous country.

Unfortunately, this can result in tax being paid in the wrong jurisdiction and may create additional compliance issues.

Could You Be Taxed Twice?

Potentially, yes.

Depending on the circumstances, you may:

• Need to declare your employment income in New Zealand.
• Be entitled to claim a foreign tax credit for tax paid overseas.
• Need to seek a refund of tax incorrectly paid to the overseas tax authority.
• Rely on the relevant Double Tax Agreement (DTA) between New Zealand and the other country.

Every situation is different, and the outcome depends on factors such as:

• Whether you have become a New Zealand tax resident.
• Whether you remain tax resident in the other country.
• The terms of any applicable Double Tax Agreement.
• The nature and duration of your employment arrangement.

What About PAYE?

If you are working in New Zealand for an overseas employer, your PAYE obligations will depend on your specific circumstances.

In some cases, the overseas employer may need to register as a New Zealand employer and deduct PAYE. In other situations, the employee may be responsible for meeting their own New Zealand tax obligations.

The correct treatment depends on how the employment arrangement is structured.

Don’t Assume Your Employer Has It Covered!

Many overseas employers are unfamiliar with New Zealand’s tax rules. They may simply continue processing payroll in your previous country because that is where you were originally employed.

This can leave you with unexpected tax obligations, penalties, or the need to amend tax returns in more than one country.

We Can Help

If you have moved to New Zealand and continue working remotely for an overseas employer, it is important to review your tax position as early as possible.

At ABA Chartered Accountants, we can help you:

• Determine your New Zealand tax residency.
• Review where your employment income should be taxed.
• Advise on your New Zealand filing obligations.
• Assist with claiming foreign tax credits where available.
• Liaise with overseas tax advisers where cross-border advice is required.

A review early on can often prevent costly mistakes and ensure you remain compliant in both jurisdictions.