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BERMUDA
LINKS IN THIS SECTION
PAYROLL TAXES
SOCIAL INSURANCE
FILING REQUIREMENTS AND PAYMENT OF TAX
HEALTH INSURANCE
RELATED INFORMATION


Direct Corporate Taxation

In Bermuda there are no taxes on profits, dividends or income; there is no capital gains tax, no withholding tax and no sales tax. The main tax impinging on companies is payroll tax. See Types of Company for details of annual fees payable depending on status.

When the European Savings Tax Directive came into effect in 2005, most offshore dependent territories of the UK and other EU member states rolled over and accepted the necessity of implementing a withholding tax on savings interest payments to EU residents. Bermuda, however, appears to have escaped the worst.


Bermuda Payroll Taxes

Under the Payroll Tax Act 1995 and later legislation, Bermudan employers have traditionally had to pay a tax of 12.75% of payroll; in the case of 'local' companies or partnerships, ie those with 60% Bermudan ownership, this is calculated on the actual payroll cost; in the case of exempt or permit companies or partnerships, ie those with foreign ownership, there is a choice between paying 12.75% on actual salaries like local companies, or paying the 12.75% on a notional amount of BMD66,000 per employee, when it amounts to BMD7,920 per employee per year. (See Types of Company for descriptions of the different types of company.)

Employers have also been able to recover 4.5% of the payroll tax from employees (on their actual salary, not the notional amount).

In the 2004/2005 financial year, the 12.75% rate was raised to 13.5% for firms with payrolls amounting to more than BMD200,000 per year. In the February budget for 2005/2006, Bermuda’s Minister of Finance Paula Cox announced a restructuring of the payroll tax system in an attempt to assist small and medium-sized enterprises and attract new business to the jurisdiction.

In the 2008/9 budget, the standard rate of payroll tax was raised again, by 0.5% to 14%, for businesses with annual payrolls of BMD1 million or more. The payroll tax salary cap, which was raised from BMD225,000 to BMD235,000 in 2004/5, and to BMD350,000 in 2007/8, was left on hold in the 2008/9 budget. In the 2009/10 budget, the salary cap was raised to BMD750,000 and the tax raised by two percentage points to 16%.

In an attempt to stimulate Bermuda's economy the tax rate was rolled back to 14% in the 2011/12 budget, keeping the salary cap at BMD750,000.

The 2011 rates are as follows:

  • 14.00% applicable to: Taxpayers with an annual payroll greater than BMD1m and exempt undertakings.
  • 12.75% applicable to: Taxpayers with an annual payroll greater than BMD500,000 and up to BMD1m.
  • 10.75% applicable to: Taxpayers with an annual payroll between BMD200,000 and BMD500,000.
  • 9.75% applicable to: Taxpayers operating an hotel or restaurant with an annual payroll of BMD200,000 or greater.
  • 7.75% applicable to: Remuneration paid to employees in special situations, e.g. persons on jury duty or on duty with the Bermuda Regiment or Bermuda Volunteer Reserve, persons employed as farmers, fishermen or horticulturists and hotel employees in December, January or February.
  • 7.25% applicable to: Employers and self-employed persons with an annual payroll of less than BMD200,000, educational, sporting, or scientific institutions or societies, taxi drivers, farmers, fishermen and horticulturists, the Bermuda Hospitals Board and the Corporations of Hamilton and St. George’s.
  • 5.25% applicable to: The Government, Parish Councils, Government Boards, the Bermuda College, approved schools, registered charities, religious and cultural organizations and the Bermuda Festival Ltd.

Under the Acts, taxable remuneration is defined to include various benefits, including pension contributions, rental value, profit-sharing, stock option gains, etc.

Taxpayers paying the top three rates of payroll tax and those operating an hotel or restaurant are entitled to Special Relief. Taxpayers in this category are entitled to a deduction from total remuneration paid during the tax period. This deduction is equal to BMD600.00 per employee per quarter.

The qualifying criteria are that the employee must be on the payroll at the end of the tax period and must have worked for the employer for a minimum of 180 hours in that quarter. However, the amount of Payroll Tax payable by any such employer in respect of an employee whose remuneration is subject to the Special Relief, cannot be less than 5.25% of gross remuneration. Self-employed persons and deemed employees are not eligible for Special Relief.

'Employer' means anyone, company or individual, who employs another person; however, there are reduced rates for employers with a payroll below BMD100,000 annually. Just about enough to have a part-time gardener in Bermuda.

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Bermuda Social Insurance

Bermudan employers must pay social insurance contributions in respect of every employee over 16 years old, and who works more than 4 hours per week; half of the amount paid may be deducted from the employee's pay.

Foreign (non-Bermudian) employees are covered by the tax, retrospectively if necessary, if they work for six months or more in the country.

Employers must provide the Social Insurance Department at the Government Administration Building with a list of their employees and their social insurance numbers; the Department bills employers monthly.

For 2011, the social insurance contributions are BMD60.80 per week, BMD30.40 due from each of the employer and employee and is unchanged from 2010.

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Bermuda Filing Requirements and Payment of Tax

An employer must register with the Tax Commissioner's office as soon as he becomes liable to pay tax. There is a quarterly return which must be accompanied by payment. The payment process must be completed by the 15th of the month following the quarter in question.

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Bermuda Health Insurance

Under the Hospital Insurance Act 1970, Bermudan employers must take out health insurance for each employee under a contract with a licensed health insurer, or through the Government's Hospital Insurance Premium Scheme. It is possible to have a new insurer approved as a licensed health insurer on application to the Government.

Half of the cost of health insurance may be deducted from the wages of employees. Employees working fewer than 45 hours per month can be exempted from the scheme; employees working in Bermuda for less than six months are not included.

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