Your guide to doing business in Bermuda
Bermuda is an island nation in the North Atlantic Ocean situated over 1000 kilometres east of the United State’s southeast coast. Officially a territory of the United Kingdom since 1707, Bermuda has always been a historic global trading destination. In the 20th century, however, Bermuda established itself as an offshore financial centre, offering international businesses a low taxation, low regulation environment in which to operate. Bermuda’s economy is based primarily on its financial services industry which serves thousands of international businesses. Tourism also plays an important financial role, accounting for 28% of Bermudian GDP and attracting the vast majority of its patronage from North America. With Bermuda’s government currently making efforts to further promote its business potential on the world stage, the territory represents a flexible, streamlined environment in which to set up and incorporate a company.
With thousands of organisations operating in Bermuda, there are plenty of reasons for investors to target the territory:
The government of Bermuda (GOB) welcomes foreign direct investment (FDI). Bermuda’s economy is almost wholly dependent on FDI which derives primarily from the influx of international businesses – principally insurance, reinsurance, and financial services – with a small contribution from the tourism sector.
A foreign company is required to have a legal entity in Bermuda in order to process a Bermuda payroll.
It is not mandatory to make payments to employees and authorities from an in-country bank account.
The working week in Bermuda is Monday to Friday. The majority of businesses operate from 9 am to 5 pm, with one hour for lunch.
The island of Bermuda is actually an archipelago of volcanic rock in the North Atlantic Ocean. Bermuda was first discovered in 1503 by the Spanish but was not settled until the early 17th century by representatives of the Virginia Company. The island eventually became a British colony in 1707, and remains an Overseas Territory of the United Kingdom, recognising Queen Elizabeth II as head of state but maintaining a governor and a cabinet to exercise authority on her behalf. Bermuda is represented by the United Kingdom in all international affairs, but has ‘representative offices’ in cities in countries all over the world. Bermuda’s climate is hot and humid, and island weather remains warm throughout the year. With a spectrum of beautiful landscapes and natural attractions, including 103 kilometres of coastline, Bermuda has a reputation as a luxury holiday destination, drawing visitors from all over the world.
Full name: Bermuda
Population: 63,918 (World Bank, 2019)
Major Languages: English
Monetary Unit: Bermudian dollar
Main Exports: Planes, helicopters, petroleum gas, packaged medicaments, liquor and fruit juice
GNI per Capita: US $86,600 (World Bank, 2019)
Internet Domain: .bm
International Dialing Code: +1
The tax year runs from 1st April to 31st March.
It is not necessary to be licensed to make any tax and/or social security filing on behalf of a customer.
Companies looking to process payroll in the country must:
Payroll tax is paid quarterly on form PR1EX and must be paid within 15 days of the end of each quarter (Jan-Mar, Apr-Jun, Jul-Sept, and Oct-Dec). The employer pays payroll tax based on a sliding scale of total annual remuneration. The employer may withhold up to 6% from employee wages to offset their payroll tax liability. The employer can get relief of $600 per employee per quarter if they pay 11.25% or higher in payroll taxes, providing that tax paid does not fall under 6% of gross wages paid for the quarter. The applicability of the employer receiving the special relief deduction per employee is that the employee must be employed at the end of the quarter and the employee must have worked 3 months for permanent employees and 172 hours for temporary employees
It is mandatory for all taxpayers with payrolls of $350,000 or more per annum to e-file, starting from the returns for the quarter April - June 2020 which must be filed on or before July 15, 2020. Penalties will be levied where tax is not submitted in the required format. To register please click here. The Office of the Tax Commissioner encourages all taxpayers to e-file for fast and easy reporting.
This tax is a fixed amount of US$71.84 (2018) per employee per week. The employer pays 50% and employee pays 50% for employees between the ages of 16 to 64. For employees 65 and over, only the employer payment is due.
The employer is billed monthly based on the number of employees registered and this bill must be paid by the last Friday of that month.
Employers must hire a pension plan provider. Employer and employee pay the same rate – 5% of pensionable earnings.
The employee must have a Social Insurance Number that has to be obtained before working at and after the age of 18.
There are no legislative specifications regarding the time-scale for an employee’s final payment, however the employer must ensure all records are up to date with payment to social insurance payment/pension. The employer must also produce a termination statement.
There are no restrictions in the law or further procedures required in order to provide online payslips in Bermuda.
For the implementation of the payroll the following are required:
After the information above has been received, it should take a week to set up the program to run the payroll.
Payroll reports must be kept for at least ten years.