Bermuda - Income Tax

Bermuda - Income Tax

Taxation of international executives

Related content

Tax returns and compliance

Residence rules

Taxation of investment income and capital gains

 

Bermuda does not impose an income tax, but rather assesses a Payroll Tax on Employers per the Payroll Tax Act of 1995 (and as amended).

Tax returns and compliance

Payroll Tax

Payroll Tax is levied on every employer and self-employed person at standard rates ranging from 5.5% to 14.5% of total remuneration paid, up to a maximum of $750,000 of remuneration per annum per person.  Under certain circumstances, employers will recover a portion of the Payroll Tax (generally 5.5%) from employees.

The tax base consists of actual remuneration paid, given, or assessed by any employer or self-employed person to every employee or deemed employee. Remuneration includes any benefits derived by the employee/deemed employee or self-employed person as a result of his/her employment, whether paid in cash or in kind. The remuneration of a self-employed person or a deemed employee is the greater of his actual or notional remuneration. 

Payroll Tax is not levied with respect to remuneration paid to individuals who are ordinarily employed outside Bermuda, provided that the period of employment in Bermuda (whether for one or more employers) does not exceed four consecutive weeks.  

Every employer and self-employed person who is liable for tax must register with the Office of the Tax Commissioner within seven days of the end of the first tax period in which the person commences business. It is a criminal offence to fail to register. Foreign contractors/sub-contractors and professionals, who offer their services on a contract or fee basis, are also required to register and pay Payroll Tax on the value of those services performed in Bermuda. 

Tax returns with full payment are due within fifteen days of the end of each period of three months commencing on the first day of April, July, October or January. Tax returns are available from the Office of the Tax Commissioner.  Payroll Tax must be paid at the time that the tax return is filed.  Tax returns filed late or underpaid are subject to a penalty. The Bermuda fiscal year is 1 April through 31 March.

Residence rules

For the purposes of taxation, how is an individual defined as a resident of Bermuda?

Work permit / Visa requirements

Generally, all persons must obtain a work permit to engage in gainful occupation in Bermuda unless they are Bermudian (including a spouse of a Bermudian) or have been granted permanent resident status.  However, there is no need for an employer to obtain a work permit to land a business visitor in Bermuda provided that:

(i) the business visitor is in possession of a return ticket (as well as a valid multi-re-entry visa if the business visitor is a visa controlled national

(ii) the total length of the stay does not exceed twenty-one consecutive days; and

(iii) the business visitor only undertakes certain activities prescribed by the Department of Immigration.

Employers seeking to hire non-resident individuals who will make multiple visits to Bermuda over a period of time, staying no greater than thirty days for each visit, may apply for a periodic work permit.  Periodic work permits may be granted for periods of one to five years.

Employers may use short term work permits to employ individuals to work for periods of up to six months.  At the conclusion of the term of the short term work permit, the holder will be expected to leave Bermuda, unless an extension has been sought within the proper processing period.  Short term work permit holders will not normally be granted permission to reside and seek employment.

Work permits are granted for periods of one, two, three, five (senior executive or “specialists”), and ten years (special category work permits).

Taxation of investment income and capital gains

Are investment income and capital gains taxed in your country? If so, how?

No.

Dividends, interest, and rental income

Not taxed in Bermuda.

Gains from employee stock option exercises

Stock option gains are subject to the Payroll Tax. Capital Gain on disposition of shares are not taxed in Bermuda.

Foreign exchange gains and losses

Not taxed in Bermuda.

Principal residence gains and losses

Not taxed in Bermuda.

Capital losses

Not applicable.

Foreign property reporting

Not taxed in Bermuda.

Non-resident trusts

Not taxed in Bermuda.

© 2016 KPMG, a group of Bermuda limited liability companies which are member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Connect with us

 

Request for proposal

 

Submit

KPMG's new digital platform

KPMG's new digital platform