Bermuda legal and accounting and tax considerations in 2023
Since 2003, Healy Consultants Group PLC assists our Clients with timely compliance of their annual legal and accounting and tax obligations in Bermuda.
Corporate income tax
- Bermuda imposes no corporate tax on any domestic or international businesses.
- Bermuda has no limit on the accumulation of profit and has no requirement to distribute dividends.
- Healy Consultants Group PLC can assist our Client’s exempted company to obtain the tax assurance certificate through the Bermuda Monetary Authority.
- The tax assurance certificate guarantees that any imposition of taxes will not be applicable to our Client’s company and its operations until 31 March 2035.
Withholding taxes/capital gains tax
- There are no withholding taxes in Bermuda on dividends, interest, royalties or technical services fee.
- There are no branch remittance taxes or capital gains taxes in Bermuda.
Social security & payroll tax
- A payroll tax is levied on the employers at a rate determined by the employer category or the total annual payroll.
- Foreign-owned exempted companies are mostly liable to contribute at a rate of 10.25% of the total employee remuneration of any kind.
- Renumeration received by an employee that exceeds US$900,000 is not subject to payroll tax.
- An employee 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.
- An employer in Bermuda is required to contribute to a social insurance through payroll deductions of US$35.92 per week for each employee. The employee contributes an equal amount through payroll deductions.
- Pension payments commence when employee reaches age of 65.
Value Added Tax (VAT)
- There is no VAT or sales tax in Bermuda.
Vacation rental tax
- The proprietor of a vacation rental unit, a holder of a vacation rental (rent control) certificate or the appointed agent shall pay to the Bermuda tax authorities a vacation rental fee equal to 4.5% of the rack rate charge.
Filing due dates
- Since income taxes are not imposed on corporations in Bermuda, tax returns are not required to be completed for corporate income tax compliance purposes.
- Payroll tax must be paid in Bermuda on the 15th of January, April, July and October every year.
- All exempted companies and companies with annual remuneration greater than US$500,000 must submit payroll tax online.
Consequences of late/non-filing of tax returns
- All companies are subject to penalties for late or underreporting of taxes.
- The penalty fee is equivalent to 5% of the payroll tax due for each month or part of a month that the tax is unpaid or underpaid to a maximum of 30%.
- An additional tax equivalent to the amount of tax may also be levied.
Healy Consultants Group PLC’s fees for accounting and tax support
Bermuda accounting & tax task US$ Tax assurance certificate registration fees 750 Annual tax and accounting fees (active trading company)
(if required by our Clients, not a legal requirement)
2,400 Annual tax and accounting fees (dormant company)
(if required by our Clients, not a legal requirement)
These accounting and tax fees are an estimate of Healy Consultants Group PLC’s fees to efficiently discharge your annual company accounting and tax obligations. Following receipt of a set of draft accounting numbers from your company, Healy Consultants Group PLC will provide a more accurate advise accounting and tax fees.
Monthly bookkeeping service
Healy Consultants Group PLC will be happy to provide a monthly bookkeeping service for your British overseas territory company. Typically, our Accounting & Tax Department (ATD) team will receive a Dropbox of data from our Client and will immediately thereafter timely supply our Client with i) a general ledger, ii) trial balance, iii) monthly and quarterly management accounts and iv) quarterly government reporting, including payroll tax.
For further details of our bookkeeping service and our fees, visit this page.
Legal and complianceBermuda economic substance requirements (ESR)
In December 2018, Bermuda introduced Economic Substance Act 2018 for local companies to comply with European Union tax governance principles.
- All local entities in Bermuda must meet ESRs if they are engaged in i) insurance, ii) banking, iii) fund management, iv) financing and leasing, v) headquarters, vi) shipping, vii) intellectual property, viii) distribution and service centre and ix) holding entity.
- Entities in scopes of economic substance requirements need to demonstrate any of the following: i) managed and directed in Bermuda, ii) core-income generating activities undertaken in Bermuda, iii) adequate number of suitably qualified full time employees in Bermuda, iv) adequate operating expenditure in Bermuda and v) adequate physical presence in Bermuda.
- Our Client’s business must demonstrate that it has satisfied the ESRs in respect to any relevant financial period and is required to file a declaration form on the Economic Substance Declarations (ESDs) portal and each non-resident entity is required to file its evidence of tax residency (no later than 6 months after the last day of each relevant financial period).
Problems and solutions
New legal requirement Simple, practical low-cost solution
Bermuda companies engaged in relevant activities must i) conduct income-generating activities in Bermuda, ii) rent physical office space in Bermuda, iii) hire staff in Bermuda and iv) have active directors in Bermuda.
Healy Consultants Group PLC will assist you to:
Effective December 2018, all Bermuda companies must complete an annual economic substance declaration confirming whether the company is conducting relevant activities within six months after the end of the fiscal year. The notification must be a Declaration Form on the Economic Substance Declarations (ESDs) portal.
The declaration includes i) tax residence, ii) business activities, iii) amount and type of gross income, iv) premises, v) number of employees, including number of full-time employees and vi) information on core income-generating activities.
- For a fee of US$1,500, Healy Consultants Group PLC will prepare and file this report for an active company. For a dormant company, the fee is US$650.
- The contents of this report will be agreed with our multinational Clients, to ensure their business goals continue to be met.
Failure to timely comply with the above may result in i) a fine of approximately US$10,000 and/or ii) suspension or revocation of license iii) dissolution of the company.
- Together with our multinational Client, Healy Consultants Group PLC will timely accurately and completely discharge your Bermuda annual legal and accounting and tax obligations.
- If required, Healy Consultants Group PLC will assist you to prepare accurate and complete financial statements for your Bermuda business, for these accounting and tax fees.
- While the preparation of annual financial statements is not legally required, Healy Consultants Group PLC recommends our Clients prepare them, in case the government of Bermuda or of their country of domicile requires to sight them.
Our multinational Client does not want to submit an annual ESR report to the Bermuda government.
As a short-term solution, engage Healy Consultants Group PLC to register your Bermuda company for economic substance requirements and complete its international tax filing obligations.