Bermuda

Registrations and Establishing an Entity

To process a Bermuda payroll, a foreign company must establish a legal entity within the jurisdiction. This typically involves incorporating a local company or registering as an exempted company under Bermuda’s Companies Act. Entities must comply with local business licensing and immigration rules if they intend to hire non-Bermudians.

Unlike many jurisdictions, Bermuda does not require an in-country bank account for payroll or tax purposes, though maintaining one is considered best practice for operational efficiency.

Banking

While not legally required, many businesses choose to establish a local bank account to streamline salary payments and pension contributions. Standard banking hours are Monday to Thursday from 09:30 to 15:00 and Friday from 09:30 to 16:30. Online banking services are widely used.

Working Week

The standard working week in Bermuda is Monday to Friday, with typical business hours from 09:00 to 17:00. Most employees are entitled to a one-hour unpaid lunch break. Overtime is regulated by employment contracts or collective agreements.

Employment Law

Holiday Accrual

Employees earn two weeks of annual paid vacation after completing one year of service. Holiday pay must be given in advance of the leave period. Employees are also entitled to paid public holidays if they work the day before and after.

Maternity Leave

Employees who have completed one continuous year of service are entitled to 13 weeks of paid maternity leave. Employees with less than a year’s service receive the same leave entitlement but unpaid.

Paternity Leave

Eligible employees who have worked continuously for a year are entitled to 5 days of paid paternity leave. Employees with less than one year of service are entitled to 5 days of unpaid leave.

Sick Leave

Employees are entitled to 8 days of paid sick leave annually, after one year of continuous service. To qualify for more than two consecutive days, a doctor’s certificate is required.

National Service

Bermuda does not require national military or civilian service for its residents.

Tax & Social Security

Bermuda is a tax-neutral jurisdiction with no personal income tax, capital gains tax, or inheritance tax. However, the government levies Payroll Tax on employers and employees.

Payroll Tax

Payroll Tax is calculated on total remuneration (wages, bonuses, in-kind benefits), up to an annual cap of $1,000,000 per employee. The tax comprises two parts:

Employer Portion (2024/2025)

• Ranges from 1.00% to 10.25% based on payroll size and industry
• Exemptions and reduced rates apply to charities, new start-ups, and Economic Empowerment Zone businesses

Employee Portion

• Progressive rates from 0.5% to 12.5% based on total annual income:
  
  • Up to $48,000 – 0.5%
  • $48,001–$96,000 – 9.25%
  • $96,001–$200,000 – 10.00%
  • $200,001–$500,000 – 11.5%
  • $500,001–$1,000,000 – 12.5%

Employers may choose to cover the employee portion or withhold it from employee wages, but are legally responsible for the full tax remittance. Payroll tax is filed quarterly, using Form PR1.

Social Security

Mandatory contributions to the National Pension Scheme (NPS) and Social Insurance are required:

• Social Insurance: Fixed weekly amount of $71.84, split equally between employer and employee
• Pension: 5% of pensionable earnings from both employer and employee (private pension plan required)

Payments must be made monthly, and late payments incur penalties.

Payroll

There are no statutory restrictions on providing electronic payslips. Payroll must reflect all taxable benefits and withholdings. Employers must ensure compliance with filing deadlines and maintain auditable records of employee compensation.

Reports

Payroll and related records must be maintained for a minimum of 10 years. This includes salary history, tax filings, and benefit contributions.

Payslip Example

Payslips should clearly outline gross pay, deductions (Payroll Tax, social insurance, pension), and net pay. There is no fixed format, but transparency is expected.

Reporting

All Payroll Tax filings must be submitted online via the eTax portal. Employers with remuneration above $200,000 are required to e-file, and penalties apply for non-compliance. Reports include:

• Quarterly Payroll Tax (PR1)
  
• Monthly Social Insurance
  
• Pension fund statements

New Employees

Employees must register with the Department of Social Insurance and obtain a social insurance number before employment begins. The employer must submit relevant documentation and ensure registration with a pension plan provider.

Leavers

There is no statutory time limit for making a final salary payment, but it must be processed promptly and in accordance with employment terms. Employers must:

• Update pension and social insurance records
• Issue a termination statement confirming final entitlements
• Cease Payroll Tax reporting for the individual.

Employee Benefits

Statutory employee benefits include:

• Annual leave (2 weeks minimum)
• Public holiday pay
• Maternity and paternity leave
• Social insurance and pension enrolment

Additional benefits such as health insurance, bonuses, and allowances are common, particularly in professional and expatriate roles. These are often negotiated via contract.

Expenses

Reimbursable business expenses (e.g., travel, meals, accommodation) are governed by company policy. These are not taxable if not deemed part of remuneration. Company cars and mileage allowances may be taxable if considered a benefit-in-kind.

Bermuda does not issue work visas directly to individuals. Instead, employers must apply for a Work Permit on behalf of non-Bermudian employees. Key features include:

• Short-Term Work Permit: Valid up to 90 days
• Annual Work Permit: Required for employment exceeding 3 month
• Employers must demonstrate that no qualified Bermudian is available for the role
• Applications must include:
  
  • Medical and police certificates
  • Employer’s letter of request
  • Completed application form
  • Passport photos and relevant pages
  • Proof of qualifications and references
  • Evidence of job advertisement
  • Labour Certificate

Processing is conducted by Bermuda’s Department of Immigration. Work permits are specific to the employer and role.

• Payroll Tax applies to all residents working in Bermuda, including expatriates
• Employers must manage multiple layers of compliance: payroll tax, social insurance, pension contributions
• Bermuda operates a high wage, high cost employment market, especially in international business
• Minimum wage is $16.40/hour, with proposals in 2025 to increase to $16.81–$17.23/hour
  
• All non-Bermudians require an employer-sponsored work permit before commencing employment
  
  

Further Information

For more information, or assistance with Bermuda Tax enquiries please contact: gi@activpayroll.com

About This Payroll and Tax Overview

Please note that this document gives general guidance only and should not be regarded as an authoritative or complete statement of the law, regulations or tax position in any country. You should always seek specific advice for each specific situation. This document should not be relied upon as professional advice and activpayroll accepts no liability for reliance on its contents.