People wanting to get New Zealand visas by investment are getting a menu of acronyms at a range of price points:
- The Active Investor Plus (“AIP”) policy opened in April, requiring input of NZ$5 million or $10 million, depending on your appetite for tisk. See our blog on the AIP, and a more recent blog on the potential pitfalls.
- The Business Investor Visa (“BIV”) will open late in November. Applicants must front up with $1 million or $2 million as explained below, for people who want to buy, or buy into, an existing NZ business.
- Discussions are still going on about the Start Up Visa (“SUV”). The details are not finalised, but I suspect that it will require something less than $1 million to get in, perhaps $500,000. It will aim to attract people who want to start a business from scratch.
This time we’ll focus on the new kid on the block, the BIV.
What is the BIV Offer?
The Business Investor Visa is not really an investor offering. That is, it is not about simply putting money in and sitting back. It requires applicants to buy a share of a New Zealand business and be actively involved in running it. For example, visa holders have to spend at least half of each year in New Zealand and operating the business. On their way to getting Residence, they also need to show that they have been actively involved and that the business has continued to trade successfully.
This is not a direct path to Residence. Applicants first of all get a 1-year Work Visa which gives them time to transfer their funds and start working in the business they have chosen. If they achieve this, then it is extended for another 3 years to make a total of 4 years. There are 2 ways to qualify for Residence depending on how much you put in:
- $1 million: The investor must operate the business for 3 years before they can apply for Residence
- $2 million: The investor must operate the business for 1 year before they can apply for Residence, although they only get to keep their Residence if they prove later on that they ran that business for at least 3 years.
Applicants must also have another $500,000 available to support themselves.
They have to meet some threshold criteria:
- Aged 55 or younger
- Have English to the standard of IELTS 5.0 or equivalent
- Have at least 3 years’ past “acceptable” experience of owning their own business or being a senior manager in a company of sufficient size and turnover (5 employees and at least NZ$5 million/year turnover).
The visa rules, which were published only recently, don’t say that the business experience has to be in the same industry as the NZ company they wish to invest in. However, I suspect that this could be made into an issue in certain cases, and that it would be safer to decide to invest in an industry or offering which you have worked in before. That is also just common-sense, especially if you are considering putting your money into the economy of a country where you have never lived before.
Choosing a Business to Buy
People could buy a business outright, or buy a nominated proportion of the business (usually by way of being a shareholder). They will also need to choose the business carefully, because it must already employ at least 5 people full-time, and it must have have been in operation for at least 5 years already.
Unlike the earlier and failed Entrepreneur category, visa holders do not have to demonstrate that they will bring a “substantial benefit” to New Zealand. They do need to make sure that the business is still solvent by the time they have Residence and all the conditions attached to that Resident Visa have been fulfilled. They must also ensure that the company has hired at least 1 more full-time New Zealander, to fulfill a key overarching aim of Government policy to create employment for its people.
Why the BIV?
One reason it has been introduced is because the owners of quite a lot of NZ companies are reaching retirement age. If they don’t have a succession plan, or can’t sell up, they simply have to close their doors. This leads to loss of tax revenue, loss of jobs, and negative impacts on the their local communities. In other cases, businesses are looking for capital and initiative from experienced business people to energise them and grow.
The Government does not want a repeat of the previous Entrepreneur visa category, which involved people buying or setting up businesses which were perceived as low-value. This means that a number of business types are not eligible for the BIV – including vape shops, convenience stores or drop-shipping services. Another big excluded class is franchises, which is potentially controversial because so many small businesses now operate under a franchise model.
The BIV is an opportunity for those who don’t have the resources to buy into the Active Investor Plus. However, it does require migrant applicants to roll their sleeves up and get involved in the enterprise.
This policy is new and untested. Should you be really interested in going forward with it, you will benefit from professional guidance and input. Contact us to book a time to talk about it.