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YD 4: Classes of income treated as having New Zealand source
or “Types of income considered to be from New Zealand for tax purposes”
You could also call this:

“What counts as a fixed place of business in New Zealand for tax purposes”

When you or a business (called an enterprise) provide goods or services in New Zealand, you might have what’s called a ‘permanent establishment’. This means you have a fixed place to do business in New Zealand.

If you’re from a country that has a tax agreement with New Zealand, the meaning of ‘permanent establishment’ comes from that agreement. It might also come from section GB 54 if you meet certain conditions.

If you’re from New Zealand or a country without a tax agreement with New Zealand, the meaning of ‘permanent establishment’ is found in schedule 23.

Schedule 23 follows guidelines from an international organisation called the OECD. These guidelines explain what ‘permanent establishment’ means and are updated each year.

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Next up: YD 5: Apportionment of income derived partly in New Zealand

or “Dividing income when it's earned both in and outside New Zealand”
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Part Y Definitions and related matters
Residence and source in New Zealand

YD 4BMeaning of permanent establishment

  1. This section gives the meaning of permanent establishment for a person or other enterprise (the enterprise) that makes in New Zealand a supply of goods or services.

  2. Permanent establishment, for an enterprise that is resident in a country or territory with which New Zealand has a double tax agreement that includes a definition of permanent establishment, has the meaning given by—

  3. the double tax agreement:
    1. section GB 54 (Arrangements involving establishments), if the enterprise meets the requirements of the section.

      1. Permanent establishment, for an enterprise that is resident in New Zealand or in a country or territory with which New Zealand does not have a double tax agreement that includes a definition of permanent establishment, has the meaning given by schedule 23 (Meaning of permanent establishment).

      2. Schedule 23 is treated as applying consistently with the guidance relevant to the schedule that is provided by the Commentary on Article 5 of the Model Tax Convention on Income and on Capital, in Model Tax Convention on Income and on Capital published by the Organisation for Economic Co-operation and Development, as amended at the beginning of the income year in which the enterprise makes the supply.

      Notes
      • Section YD 4B: inserted, on , by section 51(1) (and see section 51(2) for application) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).