Published on and written by Cyril Jarnias
Bermuda, a British archipelago in the Atlantic Ocean, has long been known as an attractive tax haven for international businesses. However, recent changes in Bermudian tax legislation are gradually reshaping this landscape. Let’s examine in detail the current tax regime for businesses in Bermuda, its benefits, and new obligations.
A Tax Regime in Transition: The Introduction of Corporate Tax
Historically, Bermuda levied no tax on corporate profits, making it a favored destination for tax optimization. However, this situation is changing significantly starting in 2025.
The Bermudian government has announced the introduction of a Corporate Income Tax (CIT) that will take effect in January 2025. This measure aims to align Bermuda with international tax standards, particularly the global minimum tax initiative.
The new CIT will apply only to businesses that are part of multinational groups with annual revenue reaching or exceeding €750 million. The tax rate has been set at 15%, in line with the minimum rate under the OECD’s Pillar Two[2].
It is important to note that this new tax does not affect all businesses in Bermuda. Local companies and smaller international businesses will continue to benefit from a very favorable tax environment.
Good to know:
Although the introduction of CIT marks a turning point in Bermuda’s tax policy, the country remains very attractive for many businesses, especially those with revenue below €750 million.
A Still Attractive Tax Ecosystem: Other Taxes and Benefits
Despite the introduction of CIT for large multinationals, Bermuda retains many tax advantages for businesses:
The main taxes that businesses may be subject to are:
The Bermudian government has also announced its intention to introduce specific tax credits to support the country’s economic objectives and maintain its overall attractiveness[2].
Good to know:
Despite the introduction of CIT, Bermuda remains a tax-advantaged jurisdiction, particularly for medium-sized businesses and holding companies.
Registering in Bermuda: A Simplified Process for Businesses
Registering a business in Bermuda is a relatively simple and quick process, designed to attract foreign investors.
The main steps to create a company in Bermuda are as follows:
Once these steps are completed, the company receives a certificate of incorporation, typically within 24 to 48 hours.
For tax matters, businesses must register with the Office of the Tax Commissioner. This step is particularly important for companies that will be subject to the new CIT starting in 2025.
It is recommended to engage a local lawyer or accountant to ensure all formalities are properly completed and the company complies with current regulations.
Good to know:
Setting up a company in Bermuda can be done quickly, often in less than a week, making it an attractive destination for time-pressed entrepreneurs.
Tax Obligations: Transparency and Compliance at the Forefront
Although Bermuda’s tax regime remains advantageous, transparency and compliance obligations have strengthened in recent years.
The main tax obligations for businesses in Bermuda include:
Starting in 2025, businesses subject to the new CIT will also need to prepare and submit annual tax returns. The exact procedures for these returns are still being developed by Bermudian authorities.
It is crucial for businesses to stay informed about regulatory developments and ensure they meet all their obligations. Non-compliance with rules can result in significant financial penalties and damage the company’s reputation.
Good to know:
Despite increased compliance obligations, Bermuda remains a relatively simple jurisdiction in terms of administrative formalities compared to many other countries.
Tax Information Exchange Agreements: An Expanding Network
Although Bermuda has not signed many bilateral tax treaties, the country has concluded several Tax Information Exchange Agreements (TIEAs) and actively participates in international tax transparency initiatives.
Bermuda has signed TIEAs with over 40 countries, including the United States, United Kingdom, France, Germany, and Canada. These agreements facilitate the exchange of tax information between competent authorities and help prevent tax evasion.
Additionally, Bermuda is a signatory to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, which significantly expands its network of international tax cooperation.
Although these agreements do not directly provide for the elimination of double taxation, they can help reduce tax risks for businesses operating in Bermuda and other jurisdictions. Businesses can benefit from greater tax certainty and better protection against international tax disputes.
It is important to note that the introduction of CIT in 2025 may encourage Bermuda to negotiate more bilateral tax treaties in the future, further strengthening the country’s attractiveness for international investors.
Good to know:
Although Bermuda does not have an extensive network of tax treaties, its active participation in international tax transparency initiatives enhances its credibility as an offshore financial center.
Comparison with Other Offshore Jurisdictions: Bermuda Facing Competition
In the landscape of offshore financial centers, Bermuda stands out in several aspects but also faces increased competition from other jurisdictions.
Bermuda’s advantages:
Comparison with other jurisdictions:
The introduction of CIT in Bermuda may slightly reduce the tax gap with some of these jurisdictions for large multinationals. However, Bermuda retains many strengths, including its established reputation, robust regulatory framework, and expertise in specific sectors like insurance.
Good to know:
Although other offshore jurisdictions may offer similar or superior tax advantages, Bermuda stands out for its stability, reputation, and sectoral expertise, making it a top choice for many international businesses.
Conclusion: Bermuda, An Evolving Tax Haven
Bermuda is undergoing a significant tax transition with the introduction of CIT in 2025. However, this evolution is part of a broader strategy to maintain the country’s attractiveness while complying with international standards.
For businesses considering establishing in Bermuda, it is crucial to:
Despite ongoing changes, Bermuda remains an attractive jurisdiction for many businesses, particularly those operating in insurance, reinsurance, and financial services sectors.
Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
