Bermuda Consulting Company: A Guide for Non-Resident Owners

Using a Bermuda Company for a Consulting Business: What It Actually OffersCopy link to section

A Bermuda consulting company appeals to a narrow profile of foreign owner: someone advising international clients who has either genuinely left a high-tax country or already lives somewhere with no personal income tax. The vehicle itself is straightforward. Foreign-owned consulting firms incorporate as exempted companies under the Companies Act 1981, administered by the Registrar of Companies, which lets non-Bermudians conduct business outside the island while paying no tax on profits, dividends, or capital gains at the entity level.

General management consulting also sits outside the regulated perimeter. The Bermuda Monetary Authority, the sole financial services regulator, does not license advisory work such as client reports, project delivery, or strategic counsel, provided the activity stays clear of financial advice, fund management, or digital assets.

The catch is that company-level tax neutrality says nothing about what happens to the owner personally. This article explains where a Bermuda consulting entity genuinely works, where it backfires, and what compliance the owner must handle across borders. It is most relevant to non-resident advisers serving offshore-sector clients or those who have truly relocated to a zero-tax base.

Where a Bermuda Company Fits the Solo and Boutique Consultant, and Where It Does NotCopy link to section

The structure works best in a few specific situations. A consultant who is genuinely non-resident everywhere, or who has relocated to Bermuda and can build real local presence, fits cleanly. So does a boutique advisory firm with multiple clients outside the US and EU and no single home-country nexus, or a specialist serving insurance, reinsurance, and insurance-linked securities clients, where the island is a recognised sector hub.

The poor fits matter more, because they are common. Pure management consulting is not one of the nine "relevant activities" under the Economic Substance Act, which is good news for the substance test but means the company can look like a shell with no local footprint. A solo consultant living and working full-time in a high-tax country gains nothing: the entity does not switch off home-country controlled-foreign-company rules, personal income tax, or permanent-establishment exposure.

Banking adds friction. Limited competition among local banks tends to push fees up, and the infrastructure leans toward insurance and reinsurance rather than general service SMEs.

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Invoicing International Clients Through a Bermuda CompanyCopy link to section

An exempted company can bill clients in any currency without local restriction and hold bank accounts in any currency. There is no Bermuda stamp duty and no outbound withholding tax, so a consulting invoice carries no Bermuda-origin tax cost.

The real exposure sits on the client side. With effectively no double-tax-treaty network, a payer in Germany, France, India, or most treaty-reliant countries cannot use a Bermuda treaty to cut withholding on service fees. Many jurisdictions impose domestic withholding on service payments to offshore companies, and rates differ widely, so each client country must be checked individually.

VAT is a separate point. The company never charges local sales tax because none exists in Bermuda, yet clients inside VAT systems may have to self-assess reverse-charge VAT when they receive the service.

Two documentation realities follow from this. The company name and registered address appear on every invoice, so the issuing jurisdiction is visible to the client. US payers above IRS reporting thresholds will usually request a W-8BEN-E, since Bermuda operates a Model 2 FATCA agreement with the United States.

Tax Neutrality and How Consulting Income Is Treated at the Company LevelCopy link to section

At the entity level the position is simple: no tax on profits, income, dividends, or capital gains, no limit on retained earnings, and no obligation to distribute. A boutique consulting firm will not approach the EUR 750 million group threshold that triggers the new corporate income tax, so for practical purposes the company pays nothing on its consulting margin.

Two items still deserve attention. If the company puts an owner-director or any staff on a Bermuda payroll, employer payroll tax applies at 10.25% of total remuneration. Exempted companies routinely obtain Tax Assurance Certificates, but those certificates do not override the new corporate income tax for in-scope multinational groups, which applies despite earlier assurances until 31 March 2035.

The treaty position is the genuine weakness. The island maintains a single double taxation agreement, with the United States, signed in 1986 and in force since 1988, and that agreement was never designed to relieve double taxation because there is no income tax on the other side. Consulting income therefore receives no treaty protection against withholding in the UK, the EU, or Asia-Pacific markets.

A wide information-exchange footprint exists alongside this. Through bilateral tax information exchange agreements and the OECD multilateral convention, more than 100 countries are reached, but those instruments share data; they do not reduce withholding.

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Economic Substance Rules and Place of Management for a Service BusinessCopy link to section

The Economic Substance Act 2018 and its regulations define nine relevant activities: banking, insurance, fund management, financing and leasing, headquarters, shipping, distribution and service centre, intellectual property, and holding companies. General management consulting appears on none of them, so the full five-part substance test is not formally triggered.

That does not mean the company escapes the regime entirely. Every Bermuda company, LLC, partnership, and registered branch falls in scope to the extent that it must register and file an annual Economic Substance Declaration through the Registrar's online portal. An entity carrying on a relevant activity but earning no gross revenue from it files a "nil" declaration; there is no de minimis carve-out once any relevant-activity revenue arises.

There is also a non-resident route. An entity can be treated as a non-resident entity by showing the Registrar that all income from its relevant activity is taxed in another jurisdiction, supported by a letter or certificate from that overseas tax authority. Entities tax-resident outside Bermuda, in a country not on the EU non-cooperative list, need only file evidence of that residency.

For any consulting firm that does drift into a relevant activity, the five criteria apply in full: direction and management on the island, core income-generating activities performed there, adequate physical presence, qualified full-time staff, and sufficient local spending. Those entities must file the declaration within six months of their financial year-end.

How the Owner's Personal Tax Residence Drives the Real OutcomeCopy link to section

Zero corporate tax helps the company, not the person behind it. What matters is the owner's country of personal tax residence and how it treats money flowing from the entity.

Controlled-foreign-company rules are the central problem. If the owner lives in the UK, Germany, France, Australia, Canada, or the US, undistributed profits of the Bermuda company can be attributed and taxed in the owner's hands each year, whether or not a dividend is paid. For a US citizen or green-card holder, the entity is almost certainly a controlled foreign corporation, and consulting income is generally Subpart F income taxed in the year earned.

UK and EU residents face the same logic through domestic anti-avoidance and HMRC's controlled-foreign-company provisions under TIOPA 2010, Part 9A. The UK information-exchange arrangement supports transparency; it offers no relief.

The benefit only crystallises in one scenario: the owner is personally resident in a place with no personal income tax, such as the UAE, Monaco, the Bahamas, or Bermuda itself, and has genuinely exited the prior high-tax country. In that case profits accumulate untaxed at both levels. An owner-director placed on a local payroll would, however, attract Bermuda payroll tax, which is split between employer and employee with the employer holding the payment obligation.

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The Permanent Establishment Risk When You Work From Another CountryCopy link to section

Where the consultant physically works from somewhere other than Bermuda, that country's law may treat the company as having a permanent establishment locally and tax the attributed profit. Most jurisdictions follow the OECD definition of a fixed place of business or a dependent agent, and a single consultant operating from a home office in London, Berlin, or Sydney is a textbook example of both.

The absence of a treaty network removes the usual safety net. There is no treaty PE definition and no tie-breaker to fall back on, so the domestic rules of the country where the work happens apply without limitation.

Exposure peaks when the owner is the only person delivering the work, signs contracts for the company, and habitually operates from one fixed location in a high-tax state. Reducing that risk requires being genuinely tax-resident in a zero or low-tax country and actually working from there, not merely holding paper residence.

The substance regime interacts with this. Where activity abroad creates a foreign permanent establishment with demonstrable income and core activity, the Registrar may take it into account; income reported in Bermuda rather than in that foreign establishment remains subject to the island's substance requirements.

Reputation and Client Perception When Billing From a Bermuda EntityCopy link to section

On formal standing, the position is strong. The Council removed the jurisdiction from the EU list of non-cooperative jurisdictions in May 2019, and it has stayed off; the EU list timeline confirms its absence. It sits on neither the FATF blacklist nor the grey list, which separates it from the British Virgin Islands, grey-listed in June 2025, and the OECD treats it as having substantially implemented the agreed tax standard.

Transparency obligations run alongside that clean status. The jurisdiction participates in the Common Reporting Standard and the OECD mutual assistance convention, so account data reaches the owner's country of residence automatically.

Client perception is the softer problem. The island is closely tied to insurance, reinsurance, and large offshore finance, so a management consulting invoice from a Bermuda entity will draw questions from sophisticated procurement, legal, and finance teams, and some multinationals bar payments to no-tax jurisdictions regardless of formal list status.

Public-sector and government clients in the EU, UK, Canada, and Australia often have procurement rules limiting contracts with offshore entities, which should be checked client by client. For advisers in insurance, reinsurance, or insurance-linked securities, the connection is a positive signal; for general management or IT consulting, the brand carries little sector weight.

Practical Constraints: Cost, Scale, and When a Different Base Makes More SenseCopy link to section

This is a premium-cost jurisdiction. Government fees, registered office, a resident director or secretary, local compliance, and annual filings combine to exceed roughly USD 5,000 to 10,000 a year for a minimal exempted company, and the exact schedule should be confirmed with the Registrar or a licensed corporate services provider because rates change.

The resident-representative requirement drives part of that cost. An exempted company must keep at least one director, secretary, or representative resident on the island, which means engaging a professional provider if the owner lives elsewhere.

Banking and payments add further drag, with high fees from limited competition, foreign-exchange complexity for foreign sellers, and little fintech infrastructure for small businesses. For a solo consultant billing under roughly USD 200,000 to 300,000 a year, that overhead tends to erode the nominal tax saving once home-country controlled-foreign-company and permanent-establishment rules are applied.

Depending on the owner's residence, other bases often serve better:

• EU-resident owner: Malta, Estonia, or Ireland, with treaty access and EU market reach.
• UAE-resident owner: a UAE free zone, with no personal tax and a growing treaty network.
• UK-resident owner: a UK LLP is frequently simpler.
• Territorial-tax resident (Singapore, Hong Kong, Panama): treaty networks the island lacks.

A Bermuda consulting company makes the most sense when the owner has genuinely relocated to a zero-tax base and the work serves large offshore-sector clients who are comfortable contracting with island entities.

Workarounds for Banking and Getting Paid as a Bermuda-Based ConsultantCopy link to section

All four banks on the island offer non-resident accounts to both individuals and companies: Butterfield Bank, Clarien Bank, HSBC Bermuda, and Bermuda Commercial Bank. Each is connected to SWIFT and can send and receive international wires, and the banks issue Visa and Mastercard payment cards.

Opening the account is the hard part. A foreign-owned exempted company with a non-resident director faces enhanced due diligence, beneficial-ownership evidence, and source-of-funds documentation, and timelines can run long. Two of the four banks will hold fiat accounts for businesses whose activity touches digital assets.

Global card processors are a constraint rather than a solution. Stripe, PayPal for business, and Wise Business do not natively list the jurisdiction as a supported country for merchant registration, so eligibility must be checked directly with each provider.

For business-to-business advisory work, wire transfer to a Bermuda bank account is the dependable route; card-based collection remains limited for offshore-registered service companies.

Structuring Your Consulting Work to Stay Compliant Across BordersCopy link to section

Compliance for a non-resident owner runs on a short sequence of decisions made before the company earns anything.

1. Confirm no relevant activity. Check that the work does not accidentally fall under "distribution and service centre," "headquarters," or "intellectual property" within the Economic Substance Act, ideally with a written classification opinion from a Bermuda lawyer.
2. Decide on non-resident status. If all income is taxed in another country, apply to the Registrar for non-resident entity treatment, supported by a tax-residency confirmation from that overseas authority. Either way, file the annual Economic Substance Declaration within six months of financial year-end.
3. Commission a home-country opinion. Obtain a written controlled-foreign-company and permanent-establishment analysis in the owner's personal country of residence before the first invoice. This is the single most important step.
4. Manage permanent-establishment risk. The owner should avoid habitually concluding contracts for the company from a fixed location in a high-tax country, and should keep minutes, travel records, and evidence that strategic decisions are made where the owner is properly resident.

Where any core income-generating activity is required, it must be performed on the island, including any outsourced portion. Reporting is not optional: under the Common Reporting Standard, the entity's bank data reaches the owner's residence country automatically, and US persons must keep the company current with IRS obligations including FBAR, Form 5471 or 8858, and GILTI reporting.

Keep statutory books, board minutes, and financial statements at the registered office as the Companies Act 1981 requires, and engage a licensed corporate services provider for the resident representative, registered office, and annual filings.

ConclusionCopy link to section

For a foreign consultant, a Bermuda company only delivers its zero-tax promise when the owner has genuinely left a high-tax country and lives somewhere with no personal income tax; absent that, controlled-foreign-company and permanent-establishment rules pull the income straight back into the owner's home system, and the premium running cost buys little. The case strengthens sharply when the clients sit in insurance, reinsurance, or capital markets, where the jurisdiction carries real sector credibility.

Before committing, get a written tax opinion in your own country of residence on how the company's profits and your personal position will be treated. That single answer decides whether the structure works or simply adds expense.

How Expanship Can Help Your Business in BermudaCopy link to section

Expanship sets up and runs Bermuda exempted companies for consultants, handling incorporation, the resident-representative requirement, and the annual substance declaration, while coordinating the home-country tax analysis that determines whether the structure makes sense for you. Beyond formation, we manage the recurring obligations a foreign-owned entity carries on the island.

• Incorporation of your exempted consulting company
• Resident representative and registered office provision
• Economic-substance declaration and tax registration support
• Ongoing compliance and annual filing management
• Accounting and bookkeeping
• Introductions to local banks for account opening

To discuss whether a Bermuda consulting entity fits your circumstances, contact Expanship Bermuda.

Frequently Asked QuestionsCopy link to section