Last modified: 23/04/2024 10:27

Corporate taxation

	Rate
Corporate income tax rate	15%
Branch tax rate	0
Capital gains tax rate	0

1. xxxxxxxx
2. xxxxxxxx

Residence: Bermuda imposes no taxes on profits, income, dividends, or capital gains, has no limit on the accumulation of profit, and has no requirement to distribute dividends. A company is resident in Bermuda if it has its registered office and its management and control is observed in Bermuda. An Exempted company in Bermuda is subject to Economic Substance requirements. Bermuda has two types of companies, Local companies and Exempted Companies. Bermuda has introduced a 15% corporate income tax (CIT) that will be applicable to Bermuda businesses that are part of multinational enterprise (MNE) groups with annual revenue of €750M or more. The tax is effective beginning in 2025. As there has been no income or profit taxes on Bermuda corporations, corporate residence has not been specifically defined in Bermuda.

Basis: Local Companies are NOT taxed on their worldwide wealth. Exempted Companies (companies resident in Bermuda but exempt from tax if they are not part of a MNE group with annual revenue of €750M or more will not be taxed in Bermuda)

Significant local taxes on income: There is not VAT or sales tax in Bermuda Customs duties are imposed on almost all goods arriving on the island at varying rates. The most common rate of customs import duties is at 25%. There are no excise taxes imposed in Bermuda

Alternative minimum tax: Not Applicabe

Taxation of dividends: Dividends are not taxed

Capital gains: Not Applicable

Losses: Not Applicable

Foreign tax relief: Not Applicable

Participation exemption: Not Applicable

Holding-company regime: Not Applicable

Tax-based incentives: Not Applicable

Group relief/fiscal unity: Not Applicable

Small company/alternative tax regimes: Not Applicable

Corporate taxation: compliance

Tax year: Not Applicable

Consolidated returns: Not Applicable

Filing and payment: Not Applicable

Penalties: Not Applicable

Rulings: Not Applicable

Taxation of individuals

	Rate
	Federal Income Tax
Item 1	0
Item 2	0
Item 3	0

1. xxxxxxxx
2. xxxxxxxx

Residence: All homeowners and long-term tenants are required to pay Land Tax twice yearly. You must pay Land Tax if you are: the sole proprietor of a property a life tenant in an property a leaseholder for three or more years a periodic (yearly or monthly) tenant of property owned by the Government of Bermuda Determining Land Tax amounts Your Land Tax bill is calculated by the Office of the Tax Commissioner. Your Land Tax rate is based on the annual rental value (ARV) of your property determined by the Department of Land Valuation. Land Tax Calculation Annual Rental Value Tax Rate $22,001 to $33,000 3.5% $33,001 to $44,000 6.5% $44,001 to $90,000 12.0% $90,001 to $120,000 12.0%

Basis: Historically, the Bermuda payroll tax was imposed on the employer, and the employer had the right to recover up to a prescribed percentage of the payroll tax from its employees. Effective April 2017, the payroll tax is ‘split’ into being imposed upon the employer and the employee; however, the tax payment obligation remains with the employer. Bermuda imposes a payroll tax on employers at a rate determined by the employer category or the total annual payroll. International businesses, which normally register as exempted undertakings, are liable for the employer category only at a rate of 10.25% of total employee remuneration of any kind. There is an employer portion exception for new Bermudian hires, among other special situations.

Taxable income: Bermuda does not tax its residents but employers and employees must pay Payroll Tax (which is a form of income tax) which is calculated across 5 tax bands using the marginal or progressive tax rate structure as follows: Employee 0-$48,000 0.50% $48,001 – $96,000 9.25% $96,001 – $200,000 10.00% $200,001 – $500,000 11.50% $500,001 – $1,000,000 12.5% Employer portion is also on a sliding scale

Capital gains: Not Applicable

Deductions and allowances: Not Applicable

Foreign tax relief: Not Applicable

Taxation of individuals: compliance

Tax year: Not Applicable

Filing and payment: Not Applicable

Rulings: Not Applicable

Withholding taxes

Type of Payment	Resident recipients		Non-residents recipients
	Company	Individual	Company	Individual
	Rate (%)	Rate (%)	Rate (%)	Rate (%)
Item 1	0	0	0	0
Item 2	0	0	0	0
Item 3	0	0	0	0
Item 4	0	0	0	0

1. xxxxxxxx
2. xxxxxxxx

Branch remittance tax: Not Applicable

Anti-avoidance legislation

Transfer pricing: Not Applicable

Interest restriction: Not Applicable

Controlled foreign companies: Not Applicable

Hybrid mismatches: Not Applicable

Disclosure requirements: Not Applicable

Exit taxes: Not Applicable

General anti-avoidance rule: Not Applicable

Digital services tax and Other significant anti-avoidance legislation: Not Applicable

Value-added tax/Goods and services tax

Type of tax: Not Applicable

Standard rate: Not Applicable

Reduced rates: Not Applicable

Registration: Not Applicable

Filing and payment: Not Applicable

Social security contributions

	Employer	Employee
	Rate is not a percentage	Rate is not a percentage
Band 1	$35.92	$35.92
Band 2	0	0
Band 3	0	0

Self-employed

$71.84

Other taxes

Capital duty: Customs import duties are imposed on almost all goods arriving on the island at varying rates. The most common rate of customs import duties is at 25%. Annual company fees are levied on exempted companies and is based on the share capital of that company. Annual partnership fee Exempted partnership fees are due on registration and annually in January thereafter. This fee is set at BMD 2,350 per year. For an initial registration after 31 August, the fee is half the annual fee. Corporate services tax Bermuda imposes a 7% corporate services tax on the providers of corporate services on the gross revenue earned from exempted companies and partnerships.

Corporate services are defined to include corporate administration, corporate management, corporate secretarial, the provision of a registered office, and accounting and financial services. Directors and resident representation services are subject to the tax where the provider is in the business of providing corporate services. Financial services tax A financial services tax is charged on the following financial services providers at the following rates effective 1 April 2019: Banks: 0.0075% of assets.

Domestic insurers: 3.5% of gross premiums written in a tax period, excluding premiums relating solely to health insurance and annuities. Money service businesses: 1% of aggregated incoming and outgoing money transmission volume in a tax period. Foreign Currency Purchase Tax Foreign Currency Purchase Tax is imposed at the rate of 1.25% on foreign currency purchased by a resident from a local bank. Stamp duty is imposed on a wide variety of legal instruments , such as transfer of property deeds, rental agreements. Rates vary according to the type of instrument and its value.

Immovable property taxes: Land Tax is imposed on all developed land in Bermuda with exceptions for government land, Bermuda pensioner’s primary homesteads and certain charitable organizations The tax is based on an assessed annual rental value (ARV) of each valuation unit.

Transfer tax: There is no transfer tax imposed in Bermuda

Stamp duty: Bermuda imposes stamp duty on a wide variety of legal instruments, such as transfers of property, deeds, and rental agreements. However, international businesses and partnerships ordinarily register as exempted companies and, as such, are not subject to stamp duty.

Net wealth/worth tax: Not Applicable

Inheritance/gift taxes: Not Applicable

Tax treaties

Bermuda has a tax treaty with the United States, which was signed in 1986 and entered into force in 1988. The agreement limits its applicability to insurance enterprises and specifically exempts insurance business profits of qualified Bermuda insurance companies from US taxation, unless the company has created a PE in the United States.

Of note, the treaty provides no relief for US federal excise tax (FET) on insurance or reinsurance premiums. In brief, the requirements to maintain this tax benefit include greater than 50% direct or indirect ownership by Bermuda residents or US citizens, and that the income is not substantially used to make distributions to non-Bermuda residents or non-US citizens. For further guidance in this complex area, please consult your tax adviser.

Bermuda also has a Mutual Legal Assistance Treaty with the United States, which entered into force in 2012. This agreement provides for cooperation in the area of criminal investigation, including economic crimes and money laundering, and for mutual assistance in document service, search and seizure, evidence production, and potential freezing and forfeiture of assets, which may be the proceeds or instruments of crime.

Tax information exchange agreements (TIEAs) Bermuda has an extensive tax agreement network via its bilateral TIEAs and participation in the OECD’s Convention on Mutual Administrative Assistance in Tax Matters, which includes over 100 countries.