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What’s the best way to send a lot of money overseas?

Know your options, the fees you'll pay and the tax rules when sending a million dollars or more abroad.

If you’ve sold a property or business offshore, then you’ll potentially need to shift a large sum of money. Make sure you don’t pay more than you need to by learning about the choices available and the potential fees involved in transferring big sums internationally.

Money transfer services with no maximum sending limit

Min. Transfer Amount Transfer Speed Online Transfer Fee Rate Amount Received Description CTA Details
NZD 250 1 day NZD 0.00 0.672 USD
TorFX guarantee to beat any competitor's exchange rate for a transaction. Conditions apply.
TorFX sends money overseas in 30+ currencies, with competitive rates for transfer amounts over $2,000.
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NZD 2,000 2 days NZD 0.00 0.672 USD
Exclusive offer: Discounted exchange rates for all Finder customers.
WorldFirst sends 60+ currencies at competitive rates. If you find a better eligible quote, WorldFirst will beat it.
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Disclaimer: Exchange rates change often. Confirm the total cost with the provider before transferring money.

What are the tax rules for large money transfers?

If you’re sending a large sum of money to someone overseas, you usually don’t need to worry about any tax implications for yourself. However, the receiver will often have to consider tax issues. For example, in the United States, the recipient needs to fill out Form 3520 on their taxes if they receive above US$100,000 from an individual or US$15,601 from a foreign corporation. Similarly, in India, money transfer recipients must report any transfers above INR50,000 on their taxes.

If you’re transferring the money to your own account overseas, you’ll also need to declare this on your taxes. The New Zealand Inland Revenue Department (IRD) taxes you on your worldwide income if you’re a New Zealand resident. Potential income sources include the following:

  • Rental income from an overseas property
  • Capital gains made on an overseas asset, like a property
  • Offshore bank accounts
  • Interest received on a foreign account or investment

Keep in mind that if you’ve already paid foreign tax on any of these sources, you may be able to get a tax offset, which means you won’t have to pay double tax.

Business or personal? This will change the tax you pay

If you’re investing in a business, you may be required to own property in the country where you have your offshore account or holding company. That can mean significant additional costs – not just for the purchase of a residence, but also for the legal or account registration fees that may be required for setting up the holding company.

Offshore trusts, foundations or businesses can provide a way to restructure ownership of assets in the case of lawsuits or debt issues at home, making them an attractive option to protect individual assets from seizure. However, there are still tax implications for whoever holds the assets offshore.

When sending money to children studying or working abroad or to family overseas for other reasons, you may need to consider if that country has a gift tax. In New Zealand, a one-time gift generally isn’t taxed as long as it doesn’t relate to any business-like activity.

Laws and legal documents you need when transferring large sums of money

How important is the exchange rate?

Given the amount of money you’re looking to send, a solid exchange rate is critical. Even minor variances in exchange rates can save or cost you thousands of dollars.

To find the best exchange rate, first find out what the mid-market rate is for the currency you’re looking to exchange your dollars for. Use this rate as a baseline to compare against the rates your bank or transfer service is offering. The closer you can get to the mid-market rate, the better the deal.

Let’s say the mid-market rate for dollars to euros is NZ$1 = EUR 0.58. Charging above the mid-market rate means a company will convert your money for less than it’s really worth. For example, they may reduce the exchange rate to NZ$1 = EUR 0.55. When you’re talking about a transfer of $1 million, that’s a difference of EUR 30,000.

What is the mid-market rate?

The mid-market rate is what your money’s actually worth compared to another currency. “Mid-market” refers to the midpoint between worldwide supply and demand for that currency. Use this rate as a baseline to compare against the rates provided by your bank or transfer service. With it, you’ll discover which companies offer the best rates.

If your transfer isn’t urgent, you may want to use a limit order. A limit order allows you to set a target exchange rate with a service or broker that monitors the rates 24/7 to make sure you don’t miss it. Once exchange rates meet your target, the service or broker will contact you to complete the transfer.


Should I use my local bank or a money transfer specialist?

You may be tempted to turn to more traditional methods, like your local bank, to make a money transfer. However, on top of weaker exchange rates and higher fees, you’ll find that it typically takes longer for your bank to transfer money internationally. This could be a problem if your money needs to reach its destination quickly.

Banks may also limit the countries to which you can transfer such a large sum of money, depending on the partnerships it has established.

An alternative option is money transfer companies, such as WorldFirst or OFX. These providers not only have their own rates, transfer maximums and advantages, but they are also often cheaper and faster than banks. You can also track your money along each step of the transfer, with online and phone support available if you have any questions.

What fees will I pay?

The fees that banks and other money transfer providers charge cover a number of areas. As well as transaction fees, banks and transfer services establish working arrangements in other countries to facilitate the exchange. These arrangements can result in further charges.

Legal requirements also drive costs up. For many transfers of large sums, providers have to generate KYC (know your customer) reports, source of funds reports, SAR/CTR (suspicious activity reports/currency transaction reports) and threshold reports. Each of these documents takes time and resources to produce, and the transfer company passes these costs on to you.

What else do you need to know?

In cases where New Zealand has imposed sanctions on a country, sending money can be far more complicated, though not impossible. Finding someone who can help you navigate the rules and understand the options makes a big difference.

Countries with sanctions include the following:

  • Iran
  • Iraq
  • Myanmar
  • North Korea
  • Russia
  • Ukraine
  • Yemen
  • Zimbabwe

Service providers will also limit how much you can send daily or monthly, so you’ll want to factor this into your decision. Also, the amount you’re sending may affect the rates that providers quote, so you may be able to negotiate a better rate, especially with larger sums. You may even be able to negotiate sending limits, although this may require additional evidence and reporting.

Whenever the opportunity to send a large amount overseas arises, compare your options, ask questions and consider the exchange rates and fees, so you can hang onto as much of your money as possible.


DISCLAIMER: This article is general advice. It does not consider your own personal circumstances and may not be applicable to you. You should obtain professional advice and consider your own situation before acting on anything contained in our article.

Picture: Shutterstock

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