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Expat taxes in Bermuda

After speaking about expat taxes in numerous countries, including  Thailand, South Korea and Japan,  Germany, Singapore, France the Philippines and Switzerland, this article will speak about Bermuda.

Alongside looking at income taxes for individuals, we will also focus on other forms of tax, including for firms and on capital gains taxes.

Whilst it shouldn’t be considered as tax advice, it is correct as far as we are aware at the time of writing.

If you are looking for portable expat tailored investment solutions, which is what we specialise in, you can contact me on this form or via WhatsApp on the screen.

Often it is far more tax-efficient to invest overseas, in a portable structure, as an expat, as opposed to sending money home.


Bermuda, a self-governing British Overseas Territory in the western North Atlantic. It is an archipelago of seven main islands and about 170 additional (named) islets and rocks, located approximately 650 miles (1,050 km) east of Cape Hatteras, North Carolina, USA. 

Bermuda neither geologically nor spatially is related to the West Indies, which lies more than 800 miles (1,300 km) to the south and southwest.

About three-fifths of the population is of full or mixed African descent, including immigrants from the West Indies, their descendants, Cape Verdeans, and descendants of slaves brought from other parts of the New World, or Africa before Great Britain outlawed the slave trade in 1807. 

Whites (people of European descent) make up another third of the population and include people of British and American descent, as well as the descendants of Portuguese workers from Madeira and the Azores who immigrated to Bermuda in the mid-19th century.

The official language is English, but Portuguese is also spoken. Christianity prevails, and about a sixth of the population are Anglicans. Bermuda’s population growth rate is low by world standards, comparable to that of the United States. Less than one fifth of the population is under 15 years of age.

Virtually all of the major islands of Bermuda are inhabited and Main Island is home to the largest number of people. Bermuda has one of the highest population densities in the world.

Bermuda is dominated by a market economy based on tourism and international finance. The gross national product (GNP) is growing faster than the population, and the per capita GNP is one of the highest in the world.

Agriculture plays a minor role in the economy as a whole, and most of the food must be imported. Fresh vegetables, bananas, citrus fruits, milk, eggs and honey are produced locally. There is a small fishing industry. 

Tourism and international financial services account for the bulk of GNP and directly or indirectly employ virtually the entire workforce. About half a million tourists visit Bermuda every year, most of them are from the USA.

In terms of diversity, Bermuda is home to around 10,000 expats from all over the world, most of whom are British, American and Canadians. The attitude of Bermudians towards these people is ambiguous, since some think that expatriates are firing Bermudians to work, “added another expat from Bermuda.

Many American expats call Bermuda their home, and in fact, between 10 and 15% of the island’s inhabitants are American citizens or expats from other countries. The island boasts great weather, impeccable beaches, beautiful sunsets and an entertaining culture, but in exchange for these amenities, you can expect a relatively high cost of living. One such consideration is the US foreigners tax in Bermuda.

Most expats tend to work in professional industries such as accounting, law, banking, insurance and IT, but some also work in the tourism industry. The most popular areas to live in are Hamilton, St. George and Somerset Village. If you are an American, you live or think of moving to Bermuda, you need to think about your tax obligations.

Depending on your situation, you may have to file and pay taxes in both Bermuda and the United States. Later in our article you can find out more about the taxes in Bermuda as an expat, rates and other necessary information, let’s go.

Who is responsible for paying income tax in Bermuda?

Bermuda has no income tax or capital gains tax for residents, regardless of whether they are citizens or non-citizens. In other words, you do not need to file a tax return declaring your earned or investment income, and you do not need to pay tax on these amounts.

However, payroll tax and social security contributions must be paid based on your income. You may also need to pay land tax on your property or long-term rent, and inheritance tax may be applied to your Bermuda property after your death. So now let’s start reviewing the tax system in Bermuda. 

Taxation in Bermuda

Bermuda is considered a tax haven; however, Bermuda levies a number of taxes, such as employers’ payroll tax and land tax.

There is no corporate income tax in Bermuda and a company is considered tax resident in Bermuda if it is registered in the country. Bermuda has not entered into double taxation treaties. 

Bermuda has no income tax, capital gains tax, investment or dividend tax, and VAT.

In place of income tax, Bermuda levies a payroll tax from employers of up to 14.5% on employee wages, up to 8.5% of which can be reimbursed from employees. There is also a land tax if you own or rent property for at least 3 years, up to 50% (depending on the value of the property) of the annual rental value.

Land tax is levied twice a year, in March and September. Taxes can be paid online directly to the government of Bermuda.

It is strongly recommended, that if you have any doubts or questions about your tax situation as a US expatriate resident in Bermuda, you contact a US expatriate tax specialist.

Payroll tax in Bermuda

Payroll tax is based on earnings, and employers and employees must pay a portion of this tax. If you are an employee, your employer is responsible for these payments, but if you are a small business owner, you must take care of both parts of this tax.

In the United States, sole proprietors are responsible for paying payroll taxes for both employees and employers, which include social security contributions and insurance premiums. But in Bermuda, foreign workers are not allowed to be self-employed.

Employer’s payroll tax share

As of 2017, the portion of payroll tax charged by the employer is based on the employer’s gross annual wage. Basically, employers must add up all income paid to their employees for the year before deducting deductions or payroll taxes. However, income used for social security contributions, a hospital insurance plan, some retirement plans, hospital and medical programs, life insurance schemes, and workers’ compensation schemes are not included in the total.

Employers then have to list payroll taxes in the following amounts.

1.75% of payroll up to 200,000 BMD

7% of the payroll from 200,000 to 500,000 BMD

9% of payroll from 500,001 to 1 million BMD

10.25% of the payroll over 1 million BMD

To give you an example of how this works, imagine you own a business and pay 1.2 million BMD annually in gross salary (subject to the exceptions listed above). In this situation, you pay 1.75% of the first 200,000 BMD, which is 3,500 BMD. 

Then you pay 7% of the next 300,000 BMD wages, which is 21,000 BMD; 9% of the next 500,000 BMD, which is 45,000 BMD; and, finally, 10.25% of the next 200,000 BMD, which is 20,500 BDK. 

To calculate your total payroll tax, you add together the tax from each group, resulting in a total of 90,000 BMD. This is your portion of the national payroll tax.

Share of employee payroll tax

The payroll tax rate for employees is calculated differently and is based on the individual salary of each employee. Effective July 1, 2017, the following rates apply for employee payroll tax:

4.75% of the first 48,000 BMD

5.75% of the next 48,000 BDK

7.75% of the next 139,000 BMD

8.75% of all income in excess of this amount

In Bermuda, employers can withhold this amount from their employees’ salaries or can choose to pay the tax themselves. However, in all cases, the employer is responsible for these payments. They cannot delegate this responsibility to their employees.

Social Security Contributions in Bermuda

In Bermuda, social security contributions are recorded every week, regardless of your earnings. At the time of writing, this figure is 68.94 BMD. The employee must pay half and the employer the other half. Thus, each payment is 34.47 BMD.

If you have employees, you need to transfer these payments to the Bermuda Department of Social Security. If you are an employee, your manager must make these payments on your behalf.

Inheritance tax

If you own a property in Bermuda after death, you may have to pay inheritance tax. Your personal representative must submit a sworn affidavit to the Supreme Court of Bermuda after your death.

Inheritance tax is based on the value of your real estate and personal property in Bermuda, as well as any ships and aircraft registered in Bermuda at the time of your death. If you live in Bermuda after death, life insurance is also included in the total, but if you do not reside in Bermuda, life insurance is included only if paid in Bermuda or in Bermuda dollars.

If your property is worth less than BMD 100,000, the property tax is 0%. The rates in excess of this value are as follows:

5% for the next 100,000 BMD

10% for the next 800,000 BMD

15% for amounts over 1 million BMD

Land tax in Bermuda

If you own land or are a long-term tenant, including life tenants and tenants who have been on the property for three years or more, you must also pay land tax. This tax is based on the annual rental value (ARV) of your property and has the following rates:

0.80% on properties up to 11,000 BMD

1.80% on properties with a value of 11,001 to 22,000 BMD

3.50% on properties with a value between 22,0001 and 33,000 BMD

6.50% on land valued from 33,001 to 44,000 BMD

12.00% on properties with a value between 44,0001 and 90,000 BMD

25% on properties with a value of 90,001 to 120,000 BMD

47% on properties over 120,001 BMD

As of 2019, the land tax on commercial property is 12%, while the land tax on commercial property in economic expansion zones is only 7%. Seniors can qualify for tax exemption up to BMD 1566. 

Basically, this means that if you are over 65, you only pay land tax on that part of your property that has an annual rent of more than 45,500 BMD. These rates are subject to change and you must make payments twice a year.

License Fees

Companies incorporated in Bermuda are either local companies or exempt companies. Local companies must be at least 60% owned by Bermudians, and directors must be Bermudians. 

Exempt companies can be wholly owned by non-Bermudians and are exempt from foreign exchange controls. Bermuda companies do not pay income or capital gains tax, and Bermuda has no branch tax.

All companies pay an annual commission based on the level of share capital. For tax-exempt companies, fees range from $ 1,995 to $ 31,120; and for local companies the fees are lower.

If the exempted company operates a mutual fund scheme, the fee is $ 2,905 for each mutual fund scheme managed by the company.

Tax-exempt companies that want to set up their business in Bermuda need a permit and must pay the annual corporate fee listed above. 

If the main business of the company is to raise money from the public by issuing bonds or other securities, insurance business or open-end mutual funds business, the commission is $ 4,125. Revenue from tax-exempt companies’ levies in 2015/16 was $ 61 million.

Tax year, filing deadlines and payment rules in Bermuda

As explained above, individuals do not need to file income tax in Bermuda, but if you have employees, the tax year for payroll tax runs from April 1st to March 31st. You must file payroll tax payments by the 15th day after the end of each quarter.

Land tax is paid in March and September. The exact date is on the demand letter that says how much you owe.

Tax returns in the United States usually need to be filed on April 15 of the year following the tax year for which you are filing. If April 15 falls on a weekend, the refund is made the next business day.

US – Bermuda connection

  • US-Bermuda Tax Treaty

A tax treaty is a special agreement signed by both the United States and another country, and it sets out tax obligations and treaties for people who might be affected by taxation in both countries. For example, some treaties allow taxpayers to claim credit on their U.S. federal income tax return for income taxes paid in another country. The agreement between the United States and Bermuda was signed in 1986 and primarily concerns only the insurance industry.

If at least half of the insurance company is owned by Bermuda residents or US citizens, the company may not have to pay US tax on its profits. 

However, the company also does not have to distribute a significant portion of its income to non-Bermuda or US citizens. If you own an insurance company and are eligible for these benefits, you will still have to pay excise tax on insurance and reinsurance premiums.

  • United States – Bermuda Universal Social Security Agreement

Accumulation agreements are similar to tax agreements, but they specifically address issues related to social welfare programs. Currently, the US and Bermuda do not have a totalization agreement.

As explained above, you must pay social security contributions on your earnings in Bermuda, but you may also be required to pay social security contributions for these amounts when filing your U.S. tax return. Fortunately, social security contribution rates are relatively low, and you receive a pension or survivor’s benefit as you pay.


As a lot of questions may be unanswered, or not clear for future expats to Bermuda, here is a quick Q&A for you. 

  • Do you need to file a tax return if you live in Bermuda?

Yes! If you do not reside in or within the United States or have any income in the United States, you must still file and pay taxes on your worldwide income. Congress has passed some very convoluted new tax laws that will take effect this tax season. 

By changing everything around, Congress made it nearly impossible to submit an accurate declaration. In addition to your income tax returns, you may be required to comply with the reporting requirements for foreign banks and financial accounts and statements of foreign financial assets. If you do not report correctly, very expensive fines can be imposed.

  • What if you haven’t filed your tax returns for years?

Find professionals who specialize in processing overdue tax returns. The IRS is offering taxpayer offenders a new special filing process that can benefit you if you haven’t filed tax returns for years. With their help, you can get back on track with the IRS.

  • How can you reduce the US tax on foreigners in Bermuda?

To reduce your tax liabilities, you need to work with an accountant to help you find loans, understand deductions, and make smart tax planning decisions. In most cases, it is nearly impossible to find a firm that understands both Bermuda tax rules and US tax rules.

Instead, you should consider hiring a local tax professional who understands the laws of Bermuda. 

At the same time, you should also hire someone who understands US taxes, and in particular, you need a tax professional who is aware of the unique challenges faced by Americans living in another country. It can be someone who is well versed in taxes on foreigners in the United States in Bermuda.

What you need to know about your U.S. expat tax return while living and working in Bermuda

There are many professionals who help their clients process both US federal and state tax returns, and they work with many expats who live in countries around the world. Unfortunately, many people think that they do not need to file a US tax return if they live in another country and do not have to pay US income tax.

However, in many cases, your tax liability can be zero only because of the foreign earned income tax exemption or foreign income tax credits. Keep in mind that you must file a refund in order to receive these loans.

If you do not apply, you may face a failure to report penalties and other fees and interest. Just in case, you should always consult with a tax professional about your situation. 

Why do we pay taxes?

Governments provide public services to the population such as police services and roads. The government also pays salaries to civil servants. 

The public does not pay directly for these goods and services or for the time spent by government officials when they visit government offices, but is indirectly a taxation tool. 

Therefore, the government must regularly decide how much to spend, what to spend it on and how to finance its spending. This is the reason why we pay taxes.

We all want public services, such as better education, stronger law enforcement and better roads. All this costs money.

The government faces constant demands to increase its spending as people want more goods and services from the government. These requirements include free houses and free basic services such as electricity and water. 

Providing these services to those in need through taxes levied on the more fortunate represents a significant redistribution of income from payers to recipients.

Living in Bermuda is an incredible experience for a number of reasons, including the friendly people, the warm climate, and the incredible beaches. Except for all the advantages Bermuda suggest to its visitors, it is also a great place to move. 

Here in this article, all the necessary information was for every expat planning to move to Bermuda. In terms of taxes, Bermuda is a real heaven and here you can have lower taxes, compared to European countries. 


Bermuda can be a very tax-efficient place to live as an expat. That depends, however, on many factors.

One of those factors is what your citizenship is. If you are American, for example, you might still have to pay taxes in Bermuda as an expat.



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