New Zealand Trust and Paraguayan Residency: The Arrangement Explained and Weighed, 2026

Our guide on private foundations and fideicomiso established the wealth pyramid for Paraguayan residents: will and Operating Agreement at the base, fideicomiso for local real estate, and a foreign foundation for international assets. This guide examines a variation that structuring advisors often cite with suspicious enthusiasm: the New Zealand trust, presented as the holy grail of its kind: a true common law trust, in an OECD jurisdiction at the top of transparency rankings—as our New Zealand comparison noted—which, due to a peculiarity of its tax law, does not tax trusts whose settlor is a non-resident.

The mechanism is real, its reputation too, and the setup has its place, albeit a narrow one, in the arsenal of options. But the gap between the brochure and reality is, once again, considerable: the "total 0%" promised requires specific conditions, France has a say as soon as an heir lives there, the divestment required is real, and for most assets, simpler tools do the same job for a tenth of the price. This guide breaks down the mechanism, quantifies the costs, maps out the pitfalls, and frankly states for whom this setup makes sense—which is very few people.

The mechanism: why New Zealand does not tax this trust

Element	Detail
New Zealand tax principle	New Zealand links the taxation of a trust to the settlor, rather than the trustee: a trust whose settlor has never been a New Zealand tax resident, a foreign trust, is only taxed in New Zealand on its New Zealand-sourced income. A Paraguayan resident settlor, international assets, no local source income: New Zealand tax is zero, in full orthodoxy, by design of the law and not by revocable favour.
On the Paraguayan side	Territoriality operates as usual: distributions a Paraguayan resident receives from a foreign trust on foreign assets are foreign-sourced income, outside the scope of Law 6380/2019, with the crypto declaration of Resolution 47/2026 applying where appropriate. The "0% + 0%" in the brochure is therefore accurate, subject to the two conditions already mentioned: that the assets are truly outside New Zealand, and that the relevant tax authority, which we will discuss, is neither New Zealand nor Paraguayan.
The 2017 counterpart: transparency	This is the point that promoters tell only half of: after the major offshore document leaks of the mid-2010s, where New Zealand trusts featured prominently, Wellington reformed: every foreign trust must now be registered with the New Zealand tax authority, with identification of the settlor, trustees, and beneficiaries, submission of annual accounts, and transmission of information to relevant jurisdictions via automatic exchange. The New Zealand trust is not taxed, but it is seen: this is precisely what gives it its banking credibility, and what makes it unusable for the purpose some clients silently imagine. Transparency is not the product's flaw: it is the product.
Duration	Modern New Zealand law allows trusts for a maximum duration of 125 years, one of the longest horizons in the civil or common law world: three to four generations of governance under a single instrument, the real dynastic argument of the setup against the time-capped Paraguayan fideicomiso.

The typical setup, and its real cost

Element	Detail and cost
The architecture	You, a Paraguayan resident settlor, establish the trust by deed, drafted by a New Zealand firm; a licensed local professional trustee legally holds the assets, in practice shares in your American LLC, a portfolio through an underlying company, possibly real estate outside New Zealand; a protector, often a relative or advisor, has veto rights and the power to replace the trustee; beneficiaries, your family, receive distributions according to the deed and letters of wishes.
Costs, without forgotten items	Formation: 3,000 to 8,000 USD in drafting and setup fees, depending on complexity. Recurring: professional trustee 2,000 to 6,000 USD per year and more depending on assets, annual registration and filings with the New Zealand tax authority, trust accounting, and, a line systematically omitted from quotes, the tax advice for the beneficiaries' countries, which in practice is the item that overruns. The "1,100 to 3,000 € per year" in brochures describes an empty trust; a living trust, with assets, accounts, distributions, and a family in two countries, realistically costs 5,000 to 12,000 USD per year all inclusive. This is the entry price for the category, to be compared with the fideicomiso and Panamanian foundation from the previous guide, and the 300 USD will that suffices for most.

The three pitfalls, in the order they bite

• France, again and always. Our foundations guide established this, and the trust magnifies it: French tax law specifically recognizes trusts, imposes specific declarations on the trustee as soon as a settlor or beneficiary is resident in France or assets are located there, applies a dedicated levy for declaration defaults, and taxes transfers via trust to French beneficiaries according to rules that can be heavier than direct inheritance, especially when each person's shares are not determined. A New Zealand trust with children in Paris is not an optimization setup: it is a demanding French compliance matter, which must be conceived with a French tax specialist as the orchestra conductor, or not conceived at all. The map of beneficiaries' residences dictates everything: this is the golden rule from the previous guide, squared.
• Divestment, common law version. A trust only exists if the trustee genuinely holds assets and makes decisions: a settlor who retains signature authority, can revoke at will, and treats the trustee as a nominee is building a sham trust, which can be reclassified by any judge—New Zealand, French, or Paraguayan—as simple personal ownership. This means it becomes nothing, at the worst possible moment, when facing a creditor or the tax authorities it was intended to deter. Protection is bought by ceding power: non-binding letters of wishes, a protector with defined rights, and a trustee who truly governs. Anyone selling you a trust "over which you retain total control" is selling you the word trust, not the thing itself.
• Proportionality. At 5,000-12,000 USD per year for a potential one hundred and twenty-five years, the New Zealand trust is an instrument for dynastic wealth: family businesses to perpetuate, assets over a million, multi-generational governance, beneficiaries dispersed outside France. Below this, it is to wealth what a semi-trailer is to moving a studio apartment: the pyramid from the previous guide—will, Operating Agreement, designations, local fideicomiso, simple foundation if applicable—provides the same service at a tenth of the cost and formality. The best structuring advice is the one that sells you the level below.

New Zealand trust, foundation, fideicomiso: the final table

Criterion	Paraguayan Fideicomiso	Private Foundation (Panama type)	New Zealand Trust
Nature	Local fiduciary contract, civil law	Legal entity without shareholders	Common law trust, segregated fund
Area of excellence	Paraguayan assets, primarily real estate	Holding international shares, standard family governance	Long-term dynastic governance, international assets, maximum reputation requirement
Banking reputation	Local, no issues	Correct, questions and delays, as our foundations guide noted	The best in its category: OECD jurisdiction, register, filed accounts: banks open accounts, which is the decisive argument for the product
Duration	Capped by law	Perpetual in practice	Up to 125 years
Realistic annual cost	1,000 to 3,000 USD	2,000 to 5,000 USD	5,000 to 12,000 USD
Relevance threshold	Significant local assets	~500,000 USD international	~1 to 2 M USD and a genuine dynastic motive
Compatibility with heirs in France	Classic inheritance subject	Trust regime largely assimilated: French advice required	Trust regime specifically applicable: French advice imperative, and often dissuasive

The three mistakes to avoid

• Buying respectability as one bought opacity. The New Zealand trust is the anti-offshore product par excellence: registered, filed, exchanged. To enter it hoping for the discretion of yesteryear is to pay the price of daylight to live in darkness: a complete misinterpretation. You choose it for its transparency, because it opens doors at banks and solidifies the case, or you don't choose it at all.
• Signing the deed before mapping the beneficiaries. This is a reflex from the previous guide, tenfold here: a single French resident child changes the entire tax nature of the setup, including declarations, levies, and transfers. The order of consultations is immutable: a French tax specialist if France is on the map, a tax specialist from each beneficiary's country, then the New Zealand firm. Any vendor who starts with the deed ends up with your penalties.
• Confusing the tool with the trophy. The New Zealand trust has become, in some circles, a marker of wealth status: it's displayed like a watch. A 400,000 USD estate in a trust costing 8,000 USD annually loses 2% per year in prestige fees for a service that three documents at 1,000 USD would provide: structuring is not a collection, it's plumbing. The right question is never "can I have it" but "do I have the problem it solves."

Conclusion

The New Zealand trust fulfills its technical promise: zero New Zealand tax by design of law, zero Paraguayan tax by territoriality, a one hundred and twenty-five-year horizon, and the only banking respectability in its category, precisely because it traded opacity for registration in 2017. It is the cleanest dynastic governance instrument on the market, and it is a niche instrument: for millionaires, with a multi-generational purpose, beneficiaries outside France, an appetite for genuine divestment, and an annual five-figure budget. Four conditions, rarely met.

For all others, the conclusion of the previous guide remains the map of the territory: the pyramid begins with a will and Operating Agreement, ascends to a fideicomiso for Paraguayan soil, a simple foundation for international assets, and only tops it all with a New Zealand trust when the assets, duration, and family map together demand it. The Paraguayan zero, for its part, is already acquired at all levels: it is the foundation that makes each tool simpler, and the only element of the setup that costs nothing extra each year.

Are you considering wealth structuring from Paraguay? Contact us: Paraguayan tax residency from €1,400, or €1,800 for the Express formula which can be finalized in a single 2-day trip on-site, creation of a US LLC, Paraguayan bank account for €250, and DNIT accounting for €30 per month. We will direct you to Franco-Paraguayan tax specialists and specialized advisors who will, with your file in hand, tell you if your assets have the problem a trust solves, or one a will addresses. Write to us on WhatsApp at +595 971 362 302: quick response, in French.