Key Takeaways
- Corporate Tax in Bermuda applies mainly to large multinational enterprise groups that meet the defined revenue threshold, aligning with the OECD global minimum tax.
- Companies outside that scope may fall under a zero rate, and tax assurance certificates address their position for non-resident owners.
- Filing duties include registration, instalment payments, and computing taxable income, with deductions, loss relief, and foreign tax credits available to in-scope groups.
- Foreign-owned businesses should review whether their group is in scope and monitor the outlook, since residency and liability rules determine their obligations.
Introduction to Corporate Tax in Bermuda
For most of its history, Bermuda has imposed no tax on corporate profits, income, dividends, or capital gains. That position changed for one narrow group of businesses when the Corporate Income Tax Act 2023 took operative effect on 1 January 2025, introducing a 15% corporate income tax for the first time. The charge reaches only large multinational enterprise groups; the broad base of companies on the island remains outside any income tax. You can confirm the official position through the Government of Bermuda.
This article explains how corporate tax in Bermuda works: who falls within scope, how the rate connects to the OECD global minimum tax, how taxable income is computed, and how filing and payment operate. It will matter most to foreign owners and advisers whose entities sit within a group of significant size, and to anyone weighing whether a Bermuda structure still delivers a zero-tax outcome.
Legal Basis: The Corporate Income Tax Act 2023 and Its Amendments
The governing statute is the Corporate Income Tax Act 2023, which received the Governor's assent on 27 December 2023. Its charging provisions came into force on 1 January 2025, while certain definitional sections took effect a year earlier.
The framework did not arrive complete. Parliament added the Corporate Income Tax Agency Act 2024 to create the body that administers the regime, then layered in further measures across 2025.
On 11 December 2025, two further laws were enacted: the Tax Credits Act 2025, which formalises three domestic credits, and the Corporate Income Tax Amendment (No. 2) Act 2025, which made technical fixes and connected the credit regime to the main Act. The administrative detail sits in the Corporate Income Tax (Administrative) Regulations 2025, which came into operation on 2 June 2025.
Bermuda built this regime in answer to the OECD's Global Anti-Base Erosion Model Rules, known as Pillar Two. The design choice was deliberate: levy a domestic charge rather than cede the same revenue to other countries' top-up taxes.
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Who Is in Scope: Large Multinational Enterprise Groups and the 750 Million Euro Threshold
The tax applies to Bermuda tax-resident entities and permanent establishments that belong to a multinational enterprise group with consolidated annual revenue of at least €750 million. That revenue must be met in two of the four fiscal years preceding the year in question.
An "entity" is read widely here. It covers any legal person, with or without separate legal personality, and any arrangement that prepares separate financial accounts.
Because of the €750 million revenue test and the range of exclusions, the majority of Bermuda entities fall outside the corporate income tax entirely.
Several categories are carved out and not treated as Bermuda Constituent Entities. These include governmental entities, international organisations, non-profit bodies, pension funds, and investment funds or real estate investment vehicles that sit at the top of a group as the ultimate parent.
One subtlety affects group analysis. An excluded entity escapes the charge itself, yet its revenue still counts when testing whether the wider group crosses the threshold.
Ownership matters too. An entity owned less than 80% by value, directly or indirectly, by the group's ultimate parent is not treated as a Bermuda Constituent Entity.
The regime borrows several reliefs from the GloBE Rules. Certain income such as dividends and qualifying gains on equity disposals is excluded, as are particular sectors like international shipping, and groups with a presence in six or fewer jurisdictions receive a five-year exemption while their international footprint stays limited.
The Corporate Tax Rate and the OECD Global Minimum Tax (Pillar Two)
The headline figure is straightforward: a 15% rate applies, effective 1 January 2025, to in-scope groups. Tax is charged on net taxable income, reduced by any applicable tax credits.
This rate is no coincidence. It matches the minimum that Pillar Two seeks to secure on income arising in each operating jurisdiction.
Bermuda's charge is structured as a Qualified Domestic Minimum Top-up Tax, or QDMTT, and qualifies as a Covered Tax under the GloBE framework. The practical effect is that revenue which might otherwise be collected abroad through a top-up mechanism is instead retained domestically.
Two of the three Pillar Two charging rules have not been adopted. Bermuda has no proposals to introduce either the Income Inclusion Rule or the Undertaxed Profits Rule, relying instead on its domestic top-up tax.
For a foreign owner, the consequence is concrete. If your group is in scope, the floor effective rate on Bermuda income is 15%, and paying it locally generally removes exposure to additional top-up charges in other jurisdictions where the group operates.
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Corporate Tax Residency and Liability of Bermuda Companies
The Act introduces a concept of tax residency to Bermuda law. A Bermuda entity is deemed resident there unless, under another country's law, it is resident in that other country based on where its management and control sit.
Entities resident outside Bermuda are not in scope and bear no charge under the regime. The drafting also seeks a fairness ceiling: liability on Bermuda entities should not exceed what would otherwise have been payable elsewhere under the GloBE Rules, with double taxation avoided where possible.
Liability is collective within a group. Each Bermuda Constituent Entity is jointly and severally liable for the tax charged to its Bermuda Constituent Entity Group, so the obligation does not rest on a single company alone.
The Tax Base: Computing Taxable Income and the Economic Transition Adjustment
Taxable income starts from book income, in line with the GloBE approach, then takes specific adjustments. Creditable foreign taxes and the Economic Transition Adjustment are the most significant of these.
The Economic Transition Adjustment, or ETA, recognises that companies entering the regime carry assets and liabilities built up under a no-tax history. It applies to each asset and liability, other than goodwill, recognised by a Bermuda Constituent Entity as of 30 September 2023.
The mechanics differ by asset type. For intangible assets, the ETA is the gap between fair market value and carrying value on that date, spread at 10% per year over ten years; for all other assets and liabilities, the basis is simply reset to fair value as of 30 September 2023.
| Feature | Treatment |
|---|---|
| Reference date | 30 September 2023 |
| Excluded asset | Goodwill |
| Intangibles | 10% of the FMV-to-carrying-value difference per year for 10 years |
| Other assets and liabilities | Basis reset to fair value at the reference date |
| Annual cap | Cannot reduce taxable income by more than 80% in a year |
| Excess | Carried forward to later tax years |
The ETA is the default. It applies automatically unless an entity elects out, and that election interacts with how IFRS 17 and LDTI transition losses are treated for accounting changes adopted before 1 October 2023.
Identifiable intangibles eligible for ten-year amortisation from 1 January 2025 include brand and trade names, software, customer relationships, and the value of in-force insurance business. For insurance contract liabilities, an alternative 15-year straight-line safe harbour exists to determine the run-off of fair value adjustments.
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Deductions, Loss Relief, and Available Elections
Losses do not disappear over time. Tax loss carryforwards never expire, but in any fiscal year they can offset no more than 80% of taxable income calculated before the loss deduction.
The opening position depends on the ETA choice. Where an entity elects out of the ETA, its opening loss carryforward period begins on 1 January 2020; where the ETA applies, the relevant period starts on 1 October 2023.
Elections run throughout the regime and give taxpayers room to shape outcomes. They are made within the return filing process, and they come in different forms:
- Annual elections, revisited each year
- Five-year elections, which must usually run the full period and cannot be revoked during it
- Irrevocable elections, fixed once made
- Pre-commencement period elections, covering the run-up to the first in-scope year
Two specific elections deserve mention. A matching election can strip out unrealised gains or losses on a funds-withheld asset tied to an insurance contract, and an IFRS 17 or LDTI election can adjust taxable income for a cumulative change to retained earnings on adoption.
Related-party dealings must follow arm's-length pricing, with transfer pricing adjustments required accordingly. One relief applies: such adjustments are not needed when calculating the opening tax-loss carryforward.
Foreign Tax Credits and Corporate Tax Credits for In-Scope Companies
Double taxation relief sits at the centre of the design. Foreign tax credits are generally available for current and deferred income taxes, and for taxes in lieu of income taxes such as certain insurance premium taxes and the US federal insurance excise tax, accrued on the entity's financial statements.
Some limits and ordering rules apply. Creditable deferred income taxes are capped at 15%, and foreign tax credits are applied before qualified refundable tax credits.
A point that shifted between draft and final law concerns US-controlled foreign corporations. Taxes paid by a US shareholder of a Bermuda Constituent Entity treated as a CFC are not creditable foreign taxes, though an election can reduce the entity's financial accounting income for 2025 and 2026 to reflect that shareholder's proportionate ownership.
On the domestic side, the Tax Credits Act 2025 formalises three credits to support local economic activity:
- The substance-based tax credit (SBTC)
- The community development tax credit (CDTC)
- The utilities infrastructure tax credit (UITC)
These were introduced to back Bermuda's economic objectives while keeping the jurisdiction attractive to internationally active groups. The detailed mechanics are set out in the EY tax alert.
Filing, Registration, Instalment Payments, and Penalties
Administration runs through the Bermuda Corporate Income Tax Agency, created by the 2024 Agency Act. It collects receipts, manages return filing, and handles assessments and enquiries.
Registration timing depends on the role an entity plays. The Filing Bermuda Constituent Entity must register no later than 10 days before any required instalment, while all other constituent entities must register at least 90 days before the first return's original due date.
Registration happens through an online portal, and each entity receives a Taxpayer Identification Number. Payment is made in US dollars unless the Agency consents to Bermuda dollars.
The payment cycle uses two instalments before the return is filed.
| Step | Timing | Amount |
|---|---|---|
| First instalment | Last day of month 8 (31 August) | Lesser of 50% of yearly tax, or 100% of tax on first 6 months |
| Second instalment | 15th day of month 12 (15 December) | Lesser of 90% of yearly tax, or 120% of tax on first 9 months, less the first instalment |
| Annual return | Last day of month 10 after year-end (31 October 2026 for FY2025) | True-up payment due by the return due date |
A relief applies to smaller liabilities. Instalments are not required where a group's tax for the fiscal year is below $10,000.
Once the return is filed, any shortfall is settled through a true-up payment, due no later than the return's due date regardless of when the return goes in. Underpayments attract interest at 4% plus the one-year US dollar risk-free spot rate published by the Bermuda Monetary Authority, rounded to the nearest 0.5%.
Civil penalties can follow late returns, failure to keep records, and other defaults. Supporting records must be kept for seven years, and the Agency must generally close enquiries within four years of the return's due date or filing, with no time limit where no return was filed or where fraud is involved.
Companies That Remain Outside Corporate Tax: The Zero Rate and Tax Assurance Certificates
The large majority of Bermuda companies pay no income tax at all. This is not a statutory zero rate; rather, the Act simply contains no charging provision that reaches out-of-scope entities, so they continue free of income, profit, dividend, and capital gains tax.
A long-standing assurance mechanism sits behind this position. Under the Exempted Undertakings Tax Protection Act 1966, exempted undertakings can apply for a Tax Assurance Certificate stating that any future tax legislation will not apply to them until 31 March 2035.
Those certificates cover exempted companies, permit companies, exempted partnerships, and exempted unit trust schemes, granted by the Minister on application through the Bermuda Monetary Authority. Exempted companies are commonly international businesses formed by non-Bermudians to operate abroad.
The new tax cuts through these certificates only where it applies. For an in-scope entity, the corporate income tax operates despite any earlier assurance; for out-of-scope entities, assurances remain effective and continue to be issued, adjusted to stay consistent with the regime.
If your Bermuda entity is not part of a €750 million group, it stays outside the corporate income tax and can still hold a Tax Assurance Certificate running to 31 March 2035.
Outlook for Corporate Tax in Bermuda
The regime is still settling. The Government has run several consultations since enactment, including a second public consultation on technical amendments released on 12 September 2025, and a Tax Reform Commission is reviewing existing tax structures with a view to lowering the cost of living and doing business.
International standing supports the framework. The European Union recognises Bermuda as a fully cooperative tax jurisdiction, and the island maintains 41 bilateral Tax Information Exchange Agreements alongside more than 125 multilateral treaty partners.
Two policy choices look set to hold. The IIR and UTPR remain off the table, and the Government has signalled it will keep adding tax credits to back local economic goals.
A narrow treaty also bears on insurance groups. The 1986 US treaty, in force since 1988, is confined to insurance enterprises and exempts qualifying Bermuda insurers' business profits from US taxation where there is no US permanent establishment.
The practical calendar is now fixed. With the administrative regulations operative from 2 June 2025, the first corporate income tax return for calendar-year taxpayers falls due on 31 October 2026.
Conclusion
Whether a foreign-owned business faces a real corporate tax liability in Bermuda comes down to a single structural fact: whether the group clears the revenue threshold that brings it within scope. That determination, not the headline rate, is the operative question, and it shapes everything from registration deadlines to instalment calculations to the relevance of foreign tax credits.
For groups that sit below that threshold, the zero rate and tax assurance certificate regime remain the more immediate concern, and confirming that position in writing is the concrete next step worth prioritising before any incorporation or restructuring decision is finalised.
How Expanship Can Help Your Business in Bermuda
Expanship supports foreign owners and advisers in determining whether an entity falls within the corporate income tax, and in handling registration, instalment scheduling, and return filing where it does. The same team covers the wider needs of a foreign-owned company on the island, from formation through to day-to-day compliance.
- Company formation and structuring for new and existing entities
- Registered agent and registered office services
- Corporate tax registration and return filing with the Agency
- Ongoing compliance management and statutory deadlines
- Accounting and bookkeeping aligned to the tax base
- Introductions to banking partners
To discuss your structure and obligations, contact Expanship Bermuda.
Frequently Asked Questions
Only if it belongs to a multinational group with consolidated annual revenue of at least €750 million in two of the four preceding fiscal years. Companies below that threshold continue to pay no income tax, and most Bermuda entities are not affected.
The rate is 15%, effective 1 January 2025, charged on net taxable income less applicable tax credits. It is structured as a Qualified Domestic Minimum Top-up Tax aligned with the OECD's Pillar Two global minimum tax.
For a calendar-year taxpayer, the return is due on 31 October of the following year, so the first return for fiscal year 2025 falls due on 31 October 2026. Two instalments come earlier, on 31 August and 15 December, with a true-up payment by the return's due date.
Yes, for entities outside the scope of the tax. Such certificates continue to protect exempted undertakings until 31 March 2035, but they do not shield an in-scope entity, which is liable despite any earlier assurance.
It starts from book income, consistent with the GloBE approach, then applies adjustments including creditable foreign taxes and the Economic Transition Adjustment. The ETA recalibrates assets and liabilities held as of 30 September 2023 and is the default treatment unless an entity elects out.
No. Bermuda imposes no withholding tax on profits, income, dividends, or capital gains, and the corporate income tax regime leaves that position unchanged.
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.
