Key Takeaways
- Bermuda levies no capital gains tax, so disposals of shares, securities, and real property fall outside any charge for foreign-owned businesses.
- Because there is no capital gains tax, owners face no gain computation, cost basis tracking, or related filing requirement.
- Residents and non-residents are treated alike, with the zero rate applying regardless of who holds or disposes of an asset.
- A tax assurance guarantee supports the outlook, giving investors and companies confidence that the absence of the tax is expected to continue.
Introduction to Capital Gains Tax in Bermuda
Bermuda does not levy a Capital Gains Tax. No statute has ever imposed a tax on capital gains, and the effective rate for individuals and out-of-scope entities is zero, a position confirmed by independent sources including the PwC tax summary. The island operates a zero-tax model in which investment income, dividends, interest, and gains on the sale of assets remain untaxed locally.
This absence applies to residents and non-residents alike, including foreign-owned exempted companies, investors, and individuals holding shares, securities, or real property. The sections below explain the legal foundation for the zero rate, how it affects companies and investors, the assurance mechanism that protects it, and the single corporate carve-out a foreign owner should understand.
It is most relevant to foreign business owners, fund managers, and high-net-worth individuals weighing where to hold assets or incorporate.
Does Bermuda Levy a Capital Gains Tax? Confirming the Zero Rate
There is no Capital Gains Tax. Gains on the disposal of shares, real estate, and investment portfolios are not taxed, and neither personal income tax nor withholding tax applies.
The effective rate is 0% for individuals and for entities outside the scope of the corporate income tax introduced in 2025. This figure is consistent across PwC, KPMG, and the ICLG Private Client report.
Because no gains regime exists, the concept of a capital loss has no application; there is nothing to offset and no relief to claim. Residents and non-residents stand in the same position.
Large multinational groups with annual revenue of EUR 750 million or more fall within a 15% corporate income tax effective from 2025. That tax is computed on book income, not on discrete asset disposals, and is not a Capital Gains Tax.
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The Legal Basis for the Absence of Capital Gains Tax
The zero position is structural, not an exemption carved out of a wider code. No legislation has ever created a charge on capital gains, so there is no taxing provision to apply, reduce, or claim relief against.
That structural absence is reinforced by the Exempted Undertakings Tax Protection Act 1966. Under it, the Minister of Finance may give an exempted undertaking, on application, an assurance against any future tax computed on profits, income, capital assets, gains or appreciation, or in the nature of estate or inheritance duty.
Any such assurance may run until 31 March 2035. The mechanism does not create a tax; it guarantees that if one were later enacted, the holder would be protected within the assurance period.
Other levies exist but reach different bases. Payroll Tax is charged on remuneration under the Payroll Tax Act 1995, while stamp duty falls under the Stamp Duties Act 1975. Neither touches capital gains, and no equivalent statute for gains has been passed.
Which Asset Disposals Would Fall Within Capital Gains Tax Scope
None. Since there is no governing legislation, no class of disposal is chargeable. The following are explicitly untaxed:
- Gains on the disposition of shares
- Foreign exchange gains and losses
- Gains on a principal residence
- Gains on real estate owned by individuals
- Investment income, dividends, interest, and rental income, with no withholding on such payments
A single gain-like event is taxed, and only under a separate regime. Gains realised on the exercise of employee stock options fall within Payroll Tax. This is not a Capital Gains Tax charge; it arises because the benefit is treated as remuneration.
Beyond that one carve-out, the firm imposes no capital gains, inheritance, or wealth taxes on any asset class.
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Why There Is No Gain Computation, Cost Basis, or Filing Requirement
Without a charging statute, the building blocks of a gains calculation simply do not exist. There is no statutory concept of cost basis, proceeds of disposal, allowable deductions, or chargeable gain for any individual or out-of-scope entity.
The compliance consequences follow directly. No annual capital gains return, self-assessment, or payment-on-account obligation applies, and corporate tax returns have historically not been required for income tax purposes.
Two related reliefs are equally absent because they would have nothing to operate on. Group tax relief has no legislative basis, and foreign tax relief is not available, since there are no double taxation arrangements covering income or gains.
For a foreign owner, this means a capital disposal triggers no local filing. Tax liability can arise only through employment, via Payroll Tax, or through land ownership, via Land Tax and stamp duty.
Capital Gains on Shares, Securities, and Investment Portfolios
Profit on the sale of shares is not taxed, whether the holding is in a local entity or a foreign one. The same applies to securities and wider investment portfolios held by individuals or out-of-scope companies.
Distributions and yield are treated the same way. Dividends, interest, and rental income are not taxed, and no withholding applies when such amounts are paid out.
Exempted companies and permit partnerships are treated as non-resident for exchange control purposes. That status lets them distribute capital, pay dividends, hold foreign bank accounts in any currency, and buy securities without tax or governmental controls.
There is no limit on the accumulation of profit and no obligation to distribute dividends. Investment funds and certain entities less than 80% owned by an ultimate parent may also sit largely outside the 2025 corporate income tax, leaving their investment returns untaxed locally.
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Treatment of Gains on Your Main Residence and Other Real Property
Selling property generates no Capital Gains Tax. Gains on a principal residence are not taxed, and the same is true of other real estate held by individuals.
The cost on a disposal is stamp duty alone, charged on deeds of conveyance on sale or voluntary conveyance. There is no separate transfer tax and no tax on the gain itself.
Holding property carries an annual charge rather than a gains charge. Land Tax is assessed twice yearly on developed land, with exceptions for government land, a Bermudian pensioner's primary homestead, and certain charities.
Foreign buyers face practical constraints. Non-Bermudians may acquire only higher-value properties, at prices well above what a Bermudian would pay, and often pay higher Land Tax rates. Any eventual gain on resale, however, remains untaxed.
How the Absence of Capital Gains Tax Affects Companies and Investors
Companies pay no tax on income or capital gains, and there is no branch profits tax. Businesses outside the scope of the corporate income tax continue not to be subject to local income tax.
Exempted companies and permit partnerships enjoy wide latitude over capital. They may distribute capital, pay dividends, hold accounts in any currency, and purchase securities free of tax or exchange controls.
Investors commonly concentrate on non-local property, such as shares in exempted companies or foreign assets, which sit outside any local estate charge. The result draws multinational groups and high-net-worth individuals structuring their holdings.
Bermuda does not tax these gains, but your country of residence or citizenship may. US citizens, for example, are taxed on worldwide income and must report Bermuda-source earnings to the IRS.
The one qualification concerns large groups. The Bermuda Corporate Income Tax Act 2023, enacted 27 December 2023, applies a 15% tax to in-scope MNE groups with revenue of EUR 750 million or more. That charge is calculated on book income and is not a standalone Capital Gains Tax; details sit on the official CIT page.
Capital Gains Tax Treatment of Residents and Non-Residents
Residents and non-residents are treated identically: neither faces any individual income or Capital Gains Tax. A non-resident acquiring, holding, or disposing of investments locally incurs no liability on those events.
Domicile and residence matter only for Bermudian-dollar or Bermuda-situate assets, and only in connection with stamp duty and Land Tax. They are irrelevant to capital gains because no such tax exists.
One reservation appears in the assurance regime: a tax assurance will not shield persons ordinarily resident in Bermuda from a future tax. Since no Capital Gains Tax has been enacted, that reservation has no practical effect at this time.
Treaty coverage is narrow by design. The jurisdiction has signed no double tax agreements addressing capital gains; its treaty network functions chiefly as exchange-of-information arrangements, with 41 bilateral TIEAs and more than 125 multilateral partners.
The Tax Assurance Guarantee and the Outlook for Capital Gains Tax
The assurance mechanism gives foreign-owned entities a documented safeguard. Under the Exempted Undertakings Tax Protection Act, the Minister of Finance may assure an exempted undertaking against taxes on capital assets, gains, or appreciation.
All exempted entities may apply, and the assurance runs until 31 March 2035. Eligible applicants include exempted companies, permit companies, exempted partnerships, and exempted unit trust schemes, applying through the Bermuda Monetary Authority.
| Feature | Detail |
|---|---|
| Governing law | Exempted Undertakings Tax Protection Act 1966 |
| Who may apply | Exempted undertakings, on application |
| Protection | Against future taxes on income, profits, capital gains, appreciation, estate or inheritance |
| Validity | Until 31 March 2035 |
| CIT override | Does not protect in-scope entities against corporate income tax |
One limit applies to large groups. Section 4(4) of the corporate income tax statute provides that an in-scope entity's CIT liability stands notwithstanding any assurance, so such groups cannot rely on the certificate against that charge.
For entities outside the corporate income tax, assurances continue to be issued, with wording adjusted for consistency with the newer rules. The Tax Reform Commission continues to study the regime, and no proposal for a standalone Capital Gains Tax has been announced. The island is recognised by the European Union as a cooperative tax jurisdiction.
Conclusion
What actually drives this decision is not merely that the rate is zero, but that no compliance machinery exists around it: no computation, no filing, no residency distinction that could create an unexpected trap for a foreign owner. That structural absence is what separates Bermuda from jurisdictions that nominally exempt gains yet still impose reporting or holding-period conditions.
The tax assurance guarantee is the single thread worth weighing next, because it addresses the one remaining question a foreign business owner should ask before committing: whether the zero rate will hold.
How Expanship Can Help Your Business in Bermuda
Expanship confirms your entity's position on Capital Gains Tax, secures the relevant tax assurance where you qualify, and clarifies whether the corporate income tax reaches your group, while handling the wider setup and upkeep of a foreign-owned business.
- Company incorporation and structuring
- Registered agent and registered office services
- Tax registration and filing where applicable
- Ongoing compliance and statutory maintenance
- Accounting and bookkeeping support
- Introductions to banking partners
Speak with Expanship Bermuda to discuss your structure and obligations.
Frequently Asked Questions
No. Gains on the disposition of shares are not taxed, regardless of whether the holding is in a local or foreign entity. The effective rate is 0% for individuals and out-of-scope companies.
No. Non-residents face no income, withholding, or capital gains charge on the acquisition, holding, or disposal of investments held there. The treatment is identical to that of residents.
There is no tax on the gain. The cost on a sale is stamp duty on the conveyance, and Land Tax applies as an annual holding charge, but neither taxes the profit realised on disposal.
It is an assurance from the Minister of Finance, available to exempted undertakings on application, that future taxes on income, profits, capital gains, or appreciation will not apply to them. Issued under the Exempted Undertakings Tax Protection Act 1966, it can run until 31 March 2035.
No. The 15% charge applies only to MNE groups with annual revenue of EUR 750 million or more and is computed on book income, not on discrete asset disposals. It is a corporate income tax, not a Capital Gains Tax.
Yes. Bermuda does not tax these gains, but your country of residence or citizenship may; US citizens, for instance, report worldwide income to the IRS. Verify your home-country obligations independently before relying on the local zero rate.
Legal Disclaimer
The information provided in this article is for general informational purposes only and does not constitute legal, tax, or professional advice. While we strive to ensure the accuracy and timeliness of the content, laws and regulations are subject to change, and the application of laws can vary widely based on specific facts and circumstances.
Readers should not act upon this information without seeking professional counsel tailored to their individual situation. Expanship and its authors disclaim any liability for actions taken or not taken based on the content of this article.
For specific advice regarding your business setup, compliance requirements, or any legal matters, please consult with qualified legal and tax professionals in the relevant jurisdiction.
