Bermuda – Taxation

How does the taxation system work in Bermuda?

Bermuda is a British Overseas Territory with no income tax, corporate tax, capital gains tax, or VAT. Rather than taxing personal income directly — as most countries do — the government generates revenue primarily through payroll taxes, customs duties, and various fees. This makes Bermuda’s approach quite different from systems like those in France or Germany, where progressive income tax can reach 45% or more.

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). This payroll tax, while technically levied on employers, can be partially passed on to employees, meaning workers do feel some of its effect — just not as a direct income tax deduction in the conventional sense.

The territory is implementing a Corporate Income Tax (CIT) effective for fiscal years beginning on or after January 1, 2025, at a 15% rate to comply with the OECD Pillar Two global minimum tax framework. However, this affects only very large multinational businesses and has no impact on individual expats or smaller companies. All other companies, including local businesses and smaller international companies, remain exempt from corporate income tax and continue to benefit from Bermuda’s traditional 0% rate.

The Bermuda tax authority is the Office of the Tax Commissioner (OTC). The official currency is the Bermuda Dollar (BMD), which is at par with the US Dollar (USD). This equivalence is useful to bear in mind when reviewing any tax thresholds or fees quoted in BMD.

Does Bermuda offer any double taxation agreements?

Bermuda’s treaty network is extremely limited, largely because it does not tax personal income — making a traditional double taxation agreement (DTA) largely unnecessary from the island’s perspective. Since income taxes are not imposed on individuals in Bermuda, foreign tax relief is not relevant in the context of Bermuda taxation.

Bermuda has just one tax treaty, and that is with the United States. However, this treaty is primarily focused on the exchange of tax information and the prevention of fraud rather than providing relief from double taxation in the conventional sense. There is no double taxation agreement between the UK and Bermuda, though the UK does have a Tax Information Exchange Agreement (TIEA) with Bermuda, which entered into force on 10 November 2008.

A Tax Information Exchange Agreement (TIEA) exists with the United States and over 40 other jurisdictions, and Bermuda participates in the Common Reporting Standard (CRS) for automatic exchange of financial information. This means that even though Bermuda does not tax you, your financial information may still be shared with the tax authorities of your home country.

The territory is also party to the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters. For expats who retain tax obligations elsewhere — for example, citizens of countries that tax worldwide income regardless of residence — the absence of a comprehensive DTA network means professional tax advice is strongly recommended. With the introduction of the CIT, Bermuda may develop a broader treaty network over time.

What are the main taxes expats need to be aware of in Bermuda?

While Bermuda is rightly regarded as a low-tax jurisdiction for individuals, there are several taxes and levies that expats will encounter in daily life. Understanding these will help you plan your finances accurately from the outset.

Payroll Tax

Historically, the Bermuda payroll tax was imposed on the employer, and the employer had the right to recover a portion from employees. Effective April 2017, the payroll tax was split into a portion imposed upon the employer and a portion imposed upon the employee, though the payment obligation remains with the employer. Employees are taxed on a sliding scale: 0.5% on income up to BMD 48,000; 9.25% on BMD 48,001–96,000; 10% on BMD 96,001–200,000; 11.5% on BMD 200,001–500,000; and 12.5% on BMD 500,001–1,000,000.

A person who ordinarily works outside of Bermuda and whose period of employment in Bermuda does not exceed four consecutive weeks is exempt from payroll tax entirely. Self-employed expats should note that if you are self-employed, you are required to pay Payroll Taxes yourself.

Land Tax

Land Tax is a real property tax assessed on all developed land (commercial and residential) with some exceptions. Land Tax is imposed on the Annual Rental Value (ARV) of each unit, payable by the owner. All homeowners and long-term tenants are required to pay Land Tax twice yearly. Land Tax is due twice a year, in March and September.

The Land Tax on Commercial Properties is 9.5%, with a rate of 8.9% for tourist properties, and the Land Tax on Commercial Properties in an Economic Empowerment Zone remains at 7%. Residential rates are graduated based on ARV and are calculated by the Office of the Tax Commissioner. Note that non-Bermudians can buy only top-end properties and at a price far higher than what a Bermudian would pay, usually costing in the millions.

Customs Duties

Customs import duties are imposed on almost all goods arriving on the island at varying rates, with the most common rate at 25%. The government relies on customs duties ranging from 0% to 33.5% on imported goods. Since almost everything is imported, these duties contribute significantly to Bermuda’s high cost of living.

There is a useful concession for new arrivals: customs duties are waived for new residents for their personal and professional goods for a period of 90 days from the date of arrival to set up residence in Bermuda, provided the goods have been in the possession of the new resident for a prior period of six months. Residents also receive a BMD 200 per passenger per landing exemption, compared to BMD 50 for non-residents.

Social Insurance Contributions

Bermuda’s contributory pension scheme requires employers to make monthly contributions to the Contributory Pensions Fund for every employee above 18 years of age for each week in which the employee works more than four hours. An employer must ensure that each qualifying employee registers with the department and obtains a social insurance number. Employees contribute a matching sum via weekly payroll deduction. The current total contribution is BMD 75.30 per employee per week (as of 2025), split equally between employer and employee.

Expatriate and other employees who pay into the system but fail to qualify for a pension due to insufficient contributions may apply at age 65 for a refund of the total value of the contributions made on their behalf, including both employer and employee contributions. This is an important consideration for expats who may not stay long enough to qualify for a full pension.

Stamp Duty and Other Levies

Bermuda imposes stamp duty on a wide variety of legal instruments, such as transfers of property, deeds, and rental agreements. Rates vary according to the type of instrument and its value, and are periodically updated by Parliament. There is also a foreign currency purchase tax imposed at the rate of 1.25% on foreign currency purchased by a Bermuda resident from a local bank.

What Expats Are Not Taxed On

Bermuda does not impose any personal income tax. There is no tax on employment income, self-employment income, investment income, or any other form of personal income, and this applies to both residents and non-residents. Bermuda does not impose any capital gains tax, and all gains from the sale or disposal of assets are completely tax-free for individuals. There is no VAT or sales tax in Bermuda.

How and when do I file a tax return in Bermuda?

Tax return filing is not required in Bermuda. Because there is no personal income tax, the concept of filing an annual self-assessment return — as is standard in countries like Australia, France, or Spain — simply does not exist in Bermuda. Your tax obligations as an employee are managed entirely through the payroll system by your employer.

Payroll tax is payable on a quarterly basis, commencing on the first day of April, July, October, and January. Payments are due within 15 days of the end of each tax period. This quarterly cycle applies to employers and self-employed individuals; employees do not need to file or pay anything directly to the tax authority themselves.

If you are self-employed in Bermuda, the process is different. You are responsible for registering with the Office of the Tax Commissioner, calculating your own payroll tax liability, and making payments on the quarterly schedule. Taxes can be paid online directly to the Bermuda government. You can also pay in person, by mail with a cheque, or through your bank, according to the Government of Bermuda’s official tax guidance.

While Bermuda itself imposes no income tax return requirement, many expats retain obligations in their country of citizenship or prior residence. For example, some countries tax citizens on their worldwide income regardless of where they live, meaning a Bermuda-based expat may still need to file returns abroad and may be able to use certain exclusions or credits to reduce their foreign liability. Always seek professional tax advice relevant to your personal circumstances and nationality.

What are the tax exit procedures when leaving Bermuda?

Bermuda does not operate a formal tax exit procedure for departing individuals in the way that some countries do — for example, Canada’s “deemed disposition” rules, which treat your assets as sold on the day you cease to be a tax resident. Because Bermuda levies no personal income tax, capital gains tax, or wealth tax, there is no equivalent mechanism for the territory to “settle” your personal tax affairs upon departure.

Bermuda does not impose a wealth tax, and taxation of investment income and capital gains does not apply, and dividends, interest, and rental income are not taxed, with no withholding tax on such payments. This means there is nothing to crystallise or settle in terms of personal capital position when you leave.

That said, there are practical steps every departing expat should take before leaving Bermuda:

1. Settle all outstanding payroll tax. If you are self-employed, ensure all quarterly payroll tax payments are up to date with the Office of the Tax Commissioner before your departure date. Unpaid obligations remain enforceable.
2. Pay any outstanding Land Tax. All homeowners and long-term tenants are required to pay Land Tax twice yearly. If you own or rent property in Bermuda, ensure your March and September bills are fully settled and that any tenancy or ownership is formally ended.
3. Claim your pension refund if eligible. Expatriate and other employees who pay into the system but fail to qualify for a pension due to insufficient contributions may apply at age 65 for a refund of the total value of the contributions made on their behalf. If you are approaching or past retirement age, explore this entitlement before leaving.
4. Notify your employer. Your employer is responsible for your payroll tax payments. Ensure they are aware of your departure date so that contributions are correctly finalised.
5. Consider your home-country tax obligations. Leaving Bermuda may trigger tax consequences in your country of previous residence or citizenship. Re-establishing tax residency elsewhere, declaring overseas assets, or resuming income tax filings may all be required depending on your personal circumstances.
6. Seek professional advice. Because Bermuda’s tax exit procedures are minimal, the greater complexity typically lies in your obligations abroad. A tax adviser with cross-border expertise can help you manage the transition correctly.

The Government of Bermuda’s Money and Taxes page is the authoritative source for current rates and payment procedures, and the Office of the Tax Commissioner can be contacted directly for any outstanding compliance queries before you depart.

Frequently asked questions

Does Bermuda have an income tax?

Bermuda does not impose any personal income tax. There is no tax on employment income, self-employment income, investment income, or any other form of personal income. This applies regardless of whether you are a resident or non-resident of the territory.

Do I need to file a tax return in Bermuda?

Tax return filing is not required in Bermuda. Because there is no personal income tax, there is no annual self-assessment return to file. Employers handle payroll tax on a quarterly basis, and employees have no direct filing obligations with the tax authority.

Is there capital gains tax in Bermuda?

Bermuda does not impose any capital gains tax. All gains from the sale or disposal of assets are completely tax-free for both individuals and companies (subject to the new corporate income tax rules for the very largest multinationals). This includes property sales, share disposals, and cryptocurrency gains.

Is there VAT or a sales tax in Bermuda?

There is no VAT or sales tax in Bermuda. However, customs import duties are imposed on almost all goods arriving on the island, with the most common rate at 25%. These duties are embedded in the prices of most goods you buy, which is a key reason why the cost of living in Bermuda is comparatively high.

Does Bermuda have a double taxation agreement with my country?

Bermuda has just one formal tax treaty, which is with the United States. There is no double taxation agreement between the UK and Bermuda, and most other countries also have no DTA with Bermuda. However, a Tax Information Exchange Agreement (TIEA) exists with the United States and over 40 other jurisdictions, and Bermuda participates in the Common Reporting Standard (CRS).

Will my employer deduct payroll tax from my salary?

The Bermuda payroll tax is imposed upon both the employer and the employee, though the payment obligation remains with the employer. In practice, as an employee, your employer may deduct a portion from your salary to contribute toward the total payroll tax obligation. The employee portion is calculated using a progressive rate structure based on your income band.

Are cryptocurrency gains taxed in Bermuda?

Bermuda does not tax cryptocurrency gains or income for individuals, as there is no personal income tax. The Digital Asset Business Act (DABA) of 2018 provides a comprehensive regulatory framework for digital asset businesses, making Bermuda one of the first jurisdictions to regulate crypto. While your gains are not taxed locally, you may still have obligations to declare these in your home country.

Are there any customs duty concessions when I first arrive in Bermuda?

Customs duties are waived for new residents for their personal and professional goods for a period of 90 days from the date of arrival to set up residence in Bermuda. To qualify for the exemption, the goods must have been in the possession of the new resident for a prior period of six months. This is a valuable concession when shipping household and professional items to the island.