Bermuda

The island of Bermuda is 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.

General Information

• Full name: Bermuda
• Population: 63,532 (World Bank, 2022)
• Capital: Hamilton
• Major Languages: English
• Monetary Unit: Bermudian dollar
• Main Exports: Planes, helicopters, petroleum gas, packaged medicament's, liquor and fruit juice
• GNI per Capita: US $125,240 (World Bank, 2022)
• Internet Domain: .bm
• International Dialling Code: +1

Bermuda, known for its stunning pink-sand beaches and crystal-clear waters, is not just a paradise for tourists but also a thriving hub for international business. Strategically located in the Atlantic, a mere two hours from major US east coast cities, Bermuda offers a unique blend of stability, sophistication, and connectivity, making it an attractive destination for businesses.

The island's economy is bolstered by its robust insurance and reinsurance sectors, but it doesn't stop there. Bermuda has diversified into other sectors such as tourism, international business, and financial services, including fintech and asset management.

The government of Bermuda actively supports business development with a favourable tax regime – no corporate income tax, VAT, or capital gains tax – and policies that encourage innovation and growth.

Bermuda's regulatory environment is world-renowned for its high standards, offering businesses a framework that is both robust and flexible. The workforce here is highly educated, professional, and adept in handling the demands of a global business clientele. For companies looking to establish a presence in a reputable jurisdiction that offers both lifestyle and corporate advantages, Bermuda presents an unmatched proposition.

Bermuda's reputation as a premier destination for investment is built on its political stability, advanced infrastructure, and business-friendly climate.

The island is particularly appealing to investors in the insurance and financial services sectors, given its global standing as a leader in these industries. However, the opportunities in Bermuda extend beyond these sectors, with prospects in hospitality, real estate, and renewable energy gaining traction.

Investors in Bermuda benefit from the island's regulatory excellence and transparency, ensuring a secure and efficient investment environment. The government's proactive approach to attracting investment is evident in its streamlined processes, supportive policies, and initiatives aimed at fostering innovation and sustainability.

Real estate investment, particularly in commercial properties and high-end residential developments, offers attractive returns, supported by a strong legal framework and property rights protection. Additionally, Bermuda's commitment to sustainability and the blue economy presents emerging opportunities in sectors such as renewable energy and marine technologies.

Bermuda warmly welcomes foreign direct investment (FDI), recognising its vital role in driving economic growth, innovation, and job creation.

The island's strategic location, coupled with its reputation as a safe, sophisticated, and well-regulated jurisdiction, makes it an ideal choice for FDI. FDI in Bermuda is diverse, spanning various sectors:

• Insurance and Reinsurance: Bermuda's global leadership in insurance and reinsurance attracts significant FDI, with companies benefiting from the island's expertise, supportive regulatory environment, and access to global markets.
• Financial Services: The financial sector, including banking, asset management, and fintech, is another primary recipient of FDI, supported by Bermuda's robust legal framework and world-class infrastructure.
• Real Estate and Development: Investment in commercial and luxury residential real estate is popular, offering stable returns in a jurisdiction known for its high standard of living and excellent property rights protection.
• Tourism and Hospitality: With its natural beauty and reputation as a luxury destination, Bermuda offers investment opportunities in the tourism and hospitality sector, including hotels, resorts, and leisure facilities.
• Renewable Energy and Sustainability: Bermuda's commitment to sustainability opens avenues for investment in renewable energy, environmental technologies, and the blue economy.

The Bermuda Business Development Agency (BDA) provides valuable support and resources to foreign investors, assisting with navigating the investment landscape, understanding regulatory requirements, and connecting with local networks and partners.

Bermuda offers a compelling environment for doing business, investing, and attracting foreign direct investment. The combination of its strategic location, supportive policies, and commitment to innovation and quality positions Bermuda as a top-tier destination for businesses and investors seeking growth and success in a reputable and welcoming jurisdiction.

It is not mandatory to make payments to employees and authorities from an in-country bank account.

Bermuda offers a welcoming business environment, combining a robust regulatory framework with a strategic location. If you're considering establishing your business presence here, you'll find a range of flexible and efficient options tailored to your needs.

In Bermuda, you can choose from several legal structures, each catering to different business needs and objectives. The time frame for setting up your business can vary, typically ranging from one day to one week, depending on the complexity of your setup and specific regulatory requirements.

Limited Companies (Ltd.)

Ideal for businesses looking to limit personal liability and benefit from a separate legal identity. Limited companies are a popular choice due to their flexibility and scalability.

Partnerships

Suitable for professional groups or businesses where two or more individuals wish to jointly own and manage the business. Partnerships in Bermuda can take various forms, each with its own implications for liability and tax treatment.

Limited Liability Companies (LLCs)

Combining elements of partnerships and corporations, LLCs offer flexibility in management and distribution of profits, along with limited liability protection for its members.

Sole Proprietorship

A simple and straightforward option for individual business owners. While this structure offers direct control and all profits go to the owner, it also means personal liability for business debts and obligations.

Registration Process

Most businesses in Bermuda register as a limited company, partnership, or LLC. The registration process is streamlined and can be completed swiftly.

Preparation of Documents

• Prepare the necessary documentation, including business plans, company bylaws, and agreements among founders or partners

Ministerial Consent (if required)

• Certain business activities or structures may require the consent of the Minister of Finance. If applicable, this consent is typically processed within a week, provided all necessary information and personal declarations from beneficial owners are submitted

Registration with the Registrar of Companies (ROC)

• Submit your application and documents to the ROC. The processing time can be as quick as one day for structures that do not require ministerial consent

Compliance and Further Steps

• Ensure compliance with local regulations, including obtaining any necessary permits or licenses specific to your industry. Consider opening a corporate bank account in Bermuda and setting up your accounting and tax arrangements.

Bermuda does not issue work visas for those seeking employment in Bermuda.

Instead, a work permit from the Bermuda Government, issued to a Bermuda immigration-approved Bermuda-registered and Bermuda-operating employer, not employee, is required by all non-Bermudian applicants for the specific full time or limited period or consulting or representative or pastoral (religious) position they accept from a specific local employer - and every time they change jobs.

Bermuda offers various categories of work permits and visas for businesses and individuals. Here are the key types of work permits and visas relevant for businesses in Bermuda:

Standard Work Permit

• For individuals employed in a regular full-time job
• The employer must demonstrate that no suitable Bermudian, spouse of a Bermudian, or Permanent Resident Certificate (PRC) holder is available for the position
• The duration of a standard work permit varies and can be up to five years

Short-Term Work Permit

• Intended for assignments not exceeding six months
• This permit is suitable for temporary workers or those visiting Bermuda for specific short-term projects or assignments

Global Work Permit

• Designed for international companies that wish to relocate existing employees to Bermuda.
• The global work permit allows for a streamlined process, recognising the need for companies to move personnel efficiently between locations.

New Business Work Permit

• Tailored for new businesses setting up operations in Bermuda
• This permit allows such companies to receive automatic approval for the first five work permits to ensure that they can bring in essential personnel right from the start

Periodic Work Permit

• For individuals who need to visit Bermuda regularly for work but are not permanently based on the island
• This is common for consultants or individuals in certain professions who need to visit multiple clients in Bermuda

Permanent Resident Certificate (PRC)

• Although not a work permit, the PRC allows individuals to reside and work in Bermuda indefinitely
• Criteria for obtaining a PRC include a substantial period of continuous residence in Bermuda and other conditions as stipulated by immigration laws

The application process for work permits typically requires detailed documentation, including proof of qualifications, job descriptions, and evidence that the position cannot be filled locally. Employers are responsible for applying for work permits on behalf of their prospective employees.

The tax year runs from 1^st April to 31^st March.

Payroll Tax

Taxable remuneration includes the sum of wages/salaries and benefits paid in cash or in-kind to employees, self-employed persons, and deemed employees for services provided in Bermuda. The remuneration of a self-employed person or a deemed employee is the total amount taken out of his business for personal use. Remuneration subject to Payroll Tax is capped at $1,000,000 per annum per person and is taxed in two portions - the Employer portion and the Employee portion. Foreign contractors and subcontractors in Bermuda must also pay Payroll Tax.

Payroll tax is paid quarterly on form PR1 and must be paid within 15 days of the end of each quarter (Jan-Mar, Apr-Jun, Jul-Sept, and Oct-Dec).

E-Tax

All Exempted Companies and companies with annual remuneration greater than $200,000 must submit Payroll Tax online at www.etax.gov.bm. 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.

Employer Contribution 

The employer is required to pay tax on gross taxable remuneration as defined in the Payroll Tax Act 1995 based on the following rates:

Employee Contribution

The employee portion of the payroll tax is a separate amount and must be calculated separately from the employer portion.

Employers have the option to deduct the employee portion of the payroll tax from their employees, however the responsibility to pay the full amount of tax (employer and employee portion) to the Office of the Tax Commissioner still rests with the employer.

The employee portion will be calculated using the marginal or progressive tax rate structure as follows:

This tax is a fixed amount of BM$71.84 (unchanged since August 2018) per employee per week. The number of weeks is based on the number of Mondays in the month. The employer pays 50% and the 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.

Pension

Employers must hire a pension plan provider. Employer and employee pay the same rate – 5% of pensionable earnings.

In Bermuda, businesses are required to adhere to specific payroll tax reporting obligations to ensure compliance with local tax laws. These requirements involve both monthly and annual submissions. Here’s a breakdown of the required business payroll tax reporting in Bermuda.

Monthly Reporting

Payroll Tax Payments

• Businesses are required to make monthly payroll tax payments to the Office of the Tax Commissioner (OTC).
• The amount of payroll tax owed is based on the total remuneration paid to employees, including wages, bonuses, and benefits.

Payroll Tax Returns

• Along with the monthly payments, businesses must submit a payroll tax return, detailing the remuneration paid to employees and the corresponding tax withheld.
• This return is due by the 15th of the month following the end of the tax period.
  
  

Annual Reporting

Annual Reconciliation

• At the end of the fiscal year, businesses must complete an annual payroll tax reconciliation.
• This involves reconciling the monthly payroll tax payments and returns submitted throughout the year with the actual payroll figures.

Employee Tax Statements (TCD)

• Businesses are required to provide each employee with a Tax Contribution Data (TCD) statement annually.
• This statement outlines the total remuneration paid to the employee during the year and the payroll tax withheld.
• The TCD serves as an important document for employees, especially for their personal tax filings and records.

Final Adjustments and Payments

• If there are any discrepancies or adjustments needed based on the annual reconciliation, businesses must settle these with the OTC.
• This may involve additional payments or requests for refunds, depending on the situation.

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:

• Full company data
• Employee HR data
• All employee payments and deductions
• Chart of accounts
• After the information above has been received, it should take a week to set up the program to run the payroll.

Reports

Payroll reports must be kept for at least ten years.

Holiday Accrual 

Employees are entitled to a period of 2 weeks of annual vacation after completing the first year of employment and are entitled to a week’s wages for each week of their annual vacation, which is paid in advance of the vacation.

Employees are entitled to receive full payment for public holidays, unless the employee does not work on his working day immediately preceding and his working day immediately following the public holiday. If an employee is required to work on a public holiday, he/she will be entitled to be paid at least one and a half times the employee’s normal hourly wage.

Maternity Leave

Employees are entitled to 13 weeks of paid leave, provided they have worked for the employer for one continuous year.

During maternity leave, the employee is eligible to receive maternity pay. The Employment Act specifies that the employee should receive her full pay for the first eight weeks of maternity leave if she has been employed for at least one year.

For employees with less than one year of service, the pay may be a percentage of their full pay, as determined by the specific terms of employment or any collective agreement.

It's the employer's responsibility to provide maternity pay during the leave period, as specified by the employment contract and in accordance with Bermuda's employment legislation.

Paternity Leave

Employees are entitled to 5 days of paid paternity leave, provided they have worked for one continuous year by the expected date of birth. To qualify for paid paternity leave, the father must have been employed by the employer for at least one year prior to the commencement of the paternity leave.

Employees who have not worked for a full year will be entitled to five days of unpaid leave.

It's the employer's responsibility to provide paternity pay during the leave period, as specified by the employment contract and in accordance with Bermuda's employment legislation.

Parental Leave

Apart from maternity and paternity leave, Bermuda's Employment Act also includes provisions for parental leave. This leave is designed to give both parents additional time to care for their child.

Parental leave is unpaid and is available to employees who have completed at least one year of continuous employment with their employer.

Eligible employees are entitled to a period of unpaid leave to care for their child, in addition to any maternity or paternity leave entitlements.

The specific duration and conditions for parental leave may be subject to the terms of the employment contract or collective bargaining agreements.

Sickness

Employees are entitled to 8 days of sick leave with pay after the first year of continuous employment except that the employee will not be entitled to more than two consecutive days unless he provides the employer with a doctor’s certificate.

National Service

National service is not mandatory in Bermuda.

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.

For the financial year 2023/2024 and as of June 1, 2023, Bermuda has implemented a national minimum hourly wage rate set at $16.40.

This rate was introduced to benefit all low-income earners in Bermuda, ensuring that employees have the right to a dignified wage

There are multiple statutory holiday schedules within Bermuda. Below are the statutory national holidays in Bermuda for 2024.

Expenses

The local legislation does not offer any other specific benefits beyond the statutory ones.

All elements such as general expenses, car mileage and company cars will be incorporated based on the company policies and how companies normally choose to pay them.

Legislative changes applicable to employment taxes are typically done annually based on the budget speech usually given in February and applying to the tax year beginning April 1st.

There are currently no announced updates for the 2024-2025 Tax year.

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.