Bermuda Personal Taxation

In Bermuda there is no income tax, capital gains tax, purchase or sales tax, VAT or capital transfer tax. Employees pay some fairly minor taxes, and there are taxes on property; customs duties can be significant for immigrants. There is 'stamp duty' on Bermudan assets at death.

Bermuda Residence and Liability for Taxation

The Bermudan payroll tax and social contributions apply to persons 'employed in Bermuda'. For a non-Bermudian this is equivalent to 'having a work permit' since it is illegal to work in Bermuda without one. Other Bermudan taxes or duties are related to events, rather than residence status.

Under the Payroll Tax Act 1995 and later legislation, Bermudan employers have traditionally had to pay a tax of 12.75% of payroll.

Employers have also been able to recover 4.5% of the payroll tax from employees (on their actual salary, not the notional amount).

In the 2004/2005 financial year, the 12.75% rate was raised to 13.5% for firms with payrolls amounting to more than BMD200,000 per year. In the February budget for 2005/2006, Bermuda’s Minister of Finance Paula Cox announced a restructuring of the payroll tax system in an attempt to assist small and medium-sized enterprises and attract new business to the jurisdiction.

In the 2008/9 budget, the standard rate of payroll tax was raised again, by 0.5% to 14%, for businesses with annual payrolls of BMD1 million or more. The payroll tax salary cap, which was raised from BMD225,000 to BMD235,000 in 2004/5, and to BMD350,000 in 2007/8, was left on hold in the 2008/9 budget. In the 2009/10 budget, the salary cap was raised to BMD750,000 and the tax raised by two percentage points to 16%.

In an attempt to stimulate Bermuda's economy the tax rate was rolled back to 14% in the 2011/12 budget, keeping the salary cap at BMD750,000.

The 2011 rates are as follows:

14.00% applicable to: Taxpayers with an annual payroll greater than BMD1,000,000 and exempt undertakings.
12.75% applicable to: Taxpayers with an annual payroll greater than BMD500,000 and up to BMD1,000,000.
10.75% applicable to: Taxpayers with an annual payroll between BMD200,000 and BMD500,000.
9.75% applicable to: Taxpayers operating an hotel or restaurant with an annual payroll of BMD200,000 or greater.
7.75% applicable to: Remuneration paid to employees in Special Situations, e.g. persons on jury duty or on duty with the Bermuda Regiment or Bermuda Volunteer Reserve, persons employed as farmers, fishermen or horticulturists and hotel employees in December, January or February.
7.25% applicable to: Employers and self-employed persons with an annual payroll of less than BMD200,000. Educational, sporting, or scientific institutions or societies. Taxi drivers, farmers, fishermen and horticulturists. The Bermuda Hospitals Board and the Corporations of Hamilton and St. George’s.
5.25% applicable to: The Government, Parish Councils, Government Boards, the Bermuda College, approved schools, registered charities, religious and cultural organizations and the Bermuda Festival Ltd.

Under the Acts, taxable remuneration is defined to include various benefits, including pension contributions, rental value, profit-sharing, stock option gains, etc.

'Employer' means anyone, company or individual, who employs another person; however, there are reduced rates for employers with a payroll below $100,000 annually. Just about enough to have a part-time gardener in Bermuda.

Social insurance contributions are BMD60.80 per week, BMD30.40 (2011) due from each of the employer and employee and is unchanged from 2010; this is also deducted by the employer.

Bermuda Miscellaneous Taxes and Duties

Land Tax: An owner of property (or a lessee if the lease is for more than 3 years) is charged tax according to the ARV (Annual Rental Value, which is a notional figure, or the actual rent, whichever is the higher). The rates are low, but vary.

Stamp Duty: until recently there was a duty on Bermudan assets on the grant of probate after death (excluding shares in an exempt company) at 5% on value between BMD20,000 and BMD100,000, and 10% thereafter.

The estate tax and stamp duty system came under review in 2005 when the government put forward a proposal to establish protection from estate tax on family homes. This review resulted in the passing of the Stamp Duties Amendment Act 2005, announced during the 2006/7 budget, which exempts the Primary Family Homestead from Stamp Duty that would otherwise be payable upon the death of an owner.

It provides that an owner can designate a property for this exemption. In particular, it also allows an owner of more than one property to choose which one should benefit from the exemption. It does not affect the existing exemption from Stamp Duty on assets passing to a surviving spouse.

In 2008, first-time buyers were given exemption from stamp duty on the purchase of properties up to a value of USD750,000.

Stamp duty is also imposed on a large number of legal instruments, and on the conveyance or transfer on sale of land at rates of between 2.5% and 7% (2010).

Betting Tax: 20%

Departure Tax: BMD20-BMD35 on every departure from Bermuda.

Hotel Tax: 7.25% on revenue received from hotels and other forms of accommodation.

Bermuda Customs Duties

Customs duties are imposed on almost all goods arriving in the island, and represent a major source of government revenue. The belongings of individuals arriving to take up residence are charged at 22.25% of assessed value (33.5% for electrical goods) plus 1.25% wharfage charge, at the time of writing. Books and clothes (if used) are not charged.

Duties are waived on construction materials for hotels.

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Lowtax Jurisdictions

Bermuda: Personal Taxation

Bermuda Residence and Liability for Taxation

Bermuda Payroll Taxes

Bermuda Miscellaneous Taxes and Duties

Bermuda Customs Duties

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