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BERMUDA
LINKS IN THIS SECTION
FORMS OF OFFSHORE OPERATION
TAX TREATMENT OF OFFSHORE OPERATIONS
TAXATION OF FOREIGN EMPLOYEES
EXCHANGE CONTROL
OFFSHORE ACTIVITIES IN BERMUDA
EMPLOYMENT AND RESIDENCE
RELATED INFORMATION


Offshore Legal And Tax Regimes


The term 'offshore' is not used in Bermudian legislation or in describing company forms. Non-residence is the key criterion for obtaining exemption from the statutory requirement for 60% local ownership. Since there are no corporate taxes other than employee-related taxes, which apply to all companies, there is no separate 'offshore' sector as such.

Bermuda Forms of Offshore Operation

Offshore operations may take place within the following forms:

Bermuda Tax Treatment of Offshore Operations

In Bermuda there is no income or corporation tax, no capital gains tax, no VAT or sales tax, and no withholding tax. Companies and partnerships pay annual fees to the Government depending on their nature and capitalisation. There are also some employee-related taxes which apply to all employers, payroll tax and social and health insurance contributions. These payments are described in Domestic Corporate Taxes.

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Bermuda Taxation of Foreign Employees of Offshore Operations

This section refers to the taxation of foreign employees in Bermuda. The general principles of individual taxation in Bermuda also apply to the resident employees of non-resident entities. There is in fact no distinction between the employees of resident or non-resident operations. Most types of compensation and benefit paid to employees are subject to the payroll tax, which is the only significant tax for individuals; there are no special privileges or exemptions for expatriate workers.

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Bermuda Exchange Controls

Bermuda has exchange controls which apply to residents in respect of the Bermudian dollar. The forms of company listed above are considered to be non-resident, and there are no controls on their freedom to make transfers and carry out transactions in all other currencies.

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Bermuda Offshore Activities

Generally, the forms of company and partnership described above which are those used for offshore operations are allowed to trade freely from Bermuda with external partners, but must limit their dealings on the island to other exempt entities, to dealing in securities, (for mutual funds) to selling shares, and to managing the affairs of other exempt or non-resident entities. It is possible to obtain a license from the Minister of Finance to carry out other types of business activity on the island, if he considers it is in the interests of Bermuda. In view of the Government's support for e-commerce, these licenses are readily issued for Internet providers and infrastructure companies.

Exempt entities are not allowed to buy freehold property on the island, but may lease office accommodation for their own use. An exempt entity can hold a mortgage on a Bermudian property (usually to assist an executive in purchashing accommodation) but needs the consent of the Minister of Finance if the amount is greater than BMD50,000.

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Bermuda Employment and Residence

In common with some other crowded and attractive offshore jurisdictions, Bermuda limits immigration through tough controls on work permits and housing.

The Bermuda Immigration and Protection Act 1956 requires that a non-Bermudian, not being married to a Bermudian, must obtain a work permit, and this will only be granted if there is no suitably qualified Bermudian. Positions must first be advertised locally before a permit is applied for, although this requirement is often waived for senior positions. Work permits are normally granted for one year (longer in the case of senior posts). Permits are not normally given to people with more than two children. Effective 1st April 2010, work permits costs range from USD700 for a one-year permit to USD5,000 for a five-year permit. The soon-to-be-introduced ten-year permit will cost USD20,000. The ten-year permit was announced during a speech to the Bermuda Chamber of Commerce by Minister for Economy, Trade and Industry, Kim Wilson in late April, 2011 and is expected to be available in a few months.

Foreigners are more or less unable to buy land or property, other than houses with a high Annual Rental Value (ARV). The Bermuda Immigration and Protection (Minimum Annual Rental Values) Regulations 2007 set the minimum ARV at USD153,000. Foreigners may also hold or acquire designated condominium units with an ARV of USD32,400.

In 2007, new legislation attempted to tighten up and clarify restrictions on the ownership of land and property by 'restricted persons,' in other words non-permanent residents of Bermuda and exempted corporations.

Rentals and leases of property from Bermudians have been possible, with permission from the Minister of Labour and Home Affairs, normally given only if the owner is leaving the island (with the idea of preventing speculative property development). Exempt companies have been able to finance and lease newly-constructed houses subject to certain conditions.

Purchase of properties by non-Bermudians requires a license from the Minister, and payment of a fee of 25% (at the time of writing) of the value of the property.

In June 2007, the Bermuda Immigration and Protection Amendment Act 2007 and seven related Regulations come into force. The commencement of this Act and the Regulations represents the first complete overhaul and modernization of Part VI of the Bermuda Immigration and Protection Act 1956 since the Act came into effect.

It marks the culmination of the legislative process through which this Part was amended to bring into law what was the Government’s land policy and, in particular, to address the problem of “fronting”, by which means non-Bermudians have gained control over land in Bermuda either while avoiding the licensing regime or in defiance of the Government’s land-holding policy. Additionally, the Regulations ensconce in law certain administrative rules supporting Part VI of the 1956 Act.

NB: This is a very abbreviated summary of the complex rules governing property purchase or rental in Bermuda.

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LINKS IN THIS SECTION
FORMS OF OFFSHORE OPERATION
TAX TREATMENT OF OFFSHORE OPERATIONS
TAXATION OF FOREIGN EMPLOYEES
EXCHANGE CONTROL
OFFSHORE ACTIVITIES IN BERMUDA
EMPLOYMENT AND RESIDENCE
RELATED INFORMATION

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