Key Takeaways
- Bermuda does not levy a dividend tax, so no charge applies on dividends at either distribution or receipt.
- Resident and non-resident shareholders are treated equally, meaning foreign investors face no distinct dividend charge.
- Tax assurance certificates offer protection against future dividend charges, while narrow exceptions and the global minimum tax may interact with distributions.
- Understanding the legal basis and outlook helps foreign-owned businesses anticipate how dividend treatment could evolve.
Introduction to Dividend Tax in Bermuda
Dividend tax in Bermuda does not exist. The jurisdiction has never enacted any charge on dividends, whether at the moment a company distributes profit or at the moment a shareholder receives it, and the same position holds for income, capital gains, and withholding. Government revenue comes instead from payroll taxes, customs duties, and a range of fees, a structure confirmed by the PwC tax summary for the island.
This article explains what that zero position means in practice for a foreign owner: the legal basis, the treatment of resident and non-resident shareholders, the role of tax assurance certificates, and the one recent measure that changes the picture for very large groups. It is most relevant to non-resident investors, holding-company planners, and their advisers weighing where to locate an entity or distribute profit.
Does Bermuda Levy a Dividend Tax? The Short Answer
No. There is zero tax on dividends at both the corporate and individual level, and zero at distribution and at receipt.
A company paying a dividend withholds nothing. A shareholder receiving one declares nothing locally and pays nothing. Because the island imposes no income tax on individuals, the concept of a personal dividend rate simply has no application here.
The same is true for interest and royalties paid to non-residents: no withholding applies to any of these payment streams.
Company Incorporation in Bermuda
Set up your company in Bermuda with Expanship handling registration end to end.
The Legal Basis for the Absence of Dividend Tax
The absence of a dividend tax is not a special exemption written into a statute. It is the default state of Bermudian law, where no Act has ever imposed such a charge on companies or individuals.
Companies are formed under the Companies Act 1981, most commonly as a company limited by shares. Nothing in that framework creates a tax on distributions.
Two later measures are worth distinguishing from a dividend tax, because foreign owners often confuse them with one. The Economic Substance Act 2018, effective 1 January 2019, addresses substance requirements for relevant activities but introduces no tax on profit or distribution.
The Bermuda Corporate Income Tax Act 2023, which became law on 27 December 2023, applies a 15% corporate income tax to entities within multinational groups whose annual revenue reaches EUR 750 million or more, from 2025 onward. That is a charge on corporate income, not a dividend tax, and it touches only a narrow band of large groups.
The Zero Rate: No Charge on Dividends at Distribution or Receipt
Every relevant rate on dividend flows sits at zero. The table below sets out the position by point of charge and recipient.
| Point of charge | Recipient | Rate |
|---|---|---|
| Withholding at distribution | Any shareholder, resident or non-resident | 0% |
| Receipt by an individual | Individual shareholder | 0% |
| Receipt by a company | Bermuda company from a Bermuda or foreign subsidiary | 0% |
The zero treatment extends across the wider tax base that a distribution might otherwise touch. There is no capital gains tax on the disposal of shares, no transfer tax, no branch profits tax, and no VAT or sales tax.
Ongoing Compliance in Bermuda
Keep your Bermuda entity compliant with filings, returns, and statutory obligations.
Resident and Non-Resident Shareholders: Equal Treatment of Dividends
Bermudian law draws no line between resident and non-resident shareholders for dividend purposes. Both receive distributions at a 0% rate, and the exemption from withholding on dividends, interest, and royalties paid abroad is stated explicitly.
Exempted companies and permit partnerships are treated as non-resident for exchange control, which lets them pay dividends, distribute capital, hold foreign bank accounts in any currency, and buy securities without tax or governmental controls. This freedom is one of the practical reasons foreign-owned structures favour the jurisdiction.
Bermuda imposes nothing on your dividend, but your own jurisdiction may. A shareholder resident in the US, UK, or an EU state will usually be taxed on the dividend under domestic rules, and no relief flows from the source side.
One point sharpens this caveat. The island has not concluded any general double tax agreements, apart from a limited US treaty on insurance, so there are no treaty-reduced rates to claim on dividend flows.
Dividends Received by Bermuda Companies from Subsidiaries
For the great majority of companies, dividends received from foreign subsidiaries carry no Bermuda tax at all. No participation exemption is needed, because there is no underlying corporate income tax to exempt against.
The position differs only for in-scope multinational groups caught by the corporate income tax. For those entities, intra-group dividends fall within the Act's definition of Bermuda-source income but may qualify for a dividend exclusion that mirrors the OECD GloBE rules.
The Act also permits offsetting of overseas taxes, including upstream charges such as controlled foreign corporation and GILTI taxes, and downstream withholding taxes. The result is that even where a large group sits inside the regime, dividend income is generally excluded from the taxable base rather than singled out for charge.
Bermuda Incorporation Pricing
See transparent pricing to incorporate and maintain a company in Bermuda.
Tax Assurance Certificates and Protection Against Future Dividend Charges
The Exempted Undertakings Tax Protection Act 1966 gives qualifying entities a written guarantee against future taxation. On application to the Minister through the Bermuda Monetary Authority, an exempted undertaking can obtain a Tax Assurance Certificate.
The certificate states that if Parliament later enacts a tax on profits, income, capital gains, or any charge in the nature of estate or inheritance duty, that tax will not apply to the holder until 31 March 2035. Because dividends are distributions of income or profit, the assurance is framed to cover any future charge on them.
Eligible holders are exempted companies, permit companies, exempted partnerships, and exempted unit trust schemes. You can review the governing Act for the precise wording of the undertaking.
Section 4(4) of the Corporate Income Tax Act 2023 states that liability under that Act applies notwithstanding any assurance given under the 1966 Act. For groups inside the corporate income tax scope, the certificate provides no shelter; for everyone outside it, the assurance continues to run.
The same limit applies to the OECD Pillar Two global minimum tax. The certificate offers no protection against those rules where a large group meets the revenue threshold.
Narrow Exceptions and the Global Minimum Tax Interaction with Distributions
There is no standalone exception to a dividend tax, for the simple reason that no dividend tax has ever existed. The only feature that resembles an exception sits inside the corporate income tax regime and its interaction with Pillar Two.
That regime applies a 15% rate to constituent entities of multinational groups with revenue of EUR 750 million or more, from 2025. Taxable income is built on book income, in line with the GloBE rules, with adjustments such as creditable foreign taxes and the Economic Transition Adjustment.
Crucially, the Act mirrors the GloBE exclusions for dividends and certain equity gains. So even for an in-scope entity, dividend income is generally lifted out of the taxable base. The charge bites on residual profit, not on distributions as such.
Several categories fall largely outside the regime altogether:
- Investment funds
- Entities less than 80% owned by an Ultimate Parent Entity
- Entities qualifying for the branch exemption election
- Groups with a limited international footprint, meaning constituent entities in five or fewer jurisdictions outside Bermuda and tangible assets outside the island not exceeding EUR 50 million
- Groups under the de minimis threshold, with average revenue below EUR 10 million and average net taxable income below EUR 1 million
The regime aligns with the GloBE framework and qualifies as a Covered Tax. No proposal exists to introduce the Income Inclusion Rule or the Undertaxed Profits Rule, the two Pillar Two measures that might otherwise reach distributions. Every business outside the corporate income tax scope continues to face no income tax of any kind.
What the Absence of Dividend Tax Means for Companies and Investors
A company can distribute profit, retain it, or accumulate it without limit, and without any local tax consequence at the point of payment. There is no requirement to distribute and no penalty for holding earnings, so distribution policy is left entirely to the owners.
For investors, the practical effect is direct: nothing is withheld at source, no reclaim or withholding certificate is needed, and the only liability that arises is whatever the shareholder's home jurisdiction imposes. That simplicity is one reason the island serves as a base for international investment funds, with more than 800 registered or authorised vehicles holding over USD 292 billion in assets.
For most operating companies, smaller international businesses, and local firms, the 0% position is unchanged by recent reform. The corporate income tax reaches only the largest multinational groups; everyone else continues outside its scope. The PwC summary of corporate taxes sets out the same distinction.
Outlook for Dividend Taxation in Bermuda
No proposal to introduce a dividend tax exists. The government's stated position is that dividend, income, and capital gains taxes do not apply, save for the corporate income tax on large multinational groups.
On 29 May 2025, a public consultation opened on technical amendments to the Corporate Income Tax Act, with feedback invited until 19 June 2025. Its purpose was to clarify provisions and align the Act more closely with the GloBE rules; no dividend charge formed any part of it.
Two factors point toward continued certainty. The 1966 Act guarantee runs to 2035 for entities outside the corporate income tax scope, and there are no plans to adopt the Income Inclusion Rule or Undertaxed Profits Rule.
One factor points the other way. Sustained OECD and EU pressure keeps broader tax reform on the agenda, and the Tax Reform Commission retains a mandate to examine the existing regime. No timeline and no dividend-specific proposal has been announced, so the runway for the qualifying universe of companies remains intact for now.
Conclusion
For a foreign business owner, the absence of any dividend charge on either side of the transaction is only half the story; the half that actually drives the decision is how reliably that position holds over time. The tax assurance certificate mechanism is therefore the specific instrument worth examining before any incorporation or restructuring choice is finalised.
Awareness of how the global minimum tax may interact with distributions is the one thread that warrants active monitoring, because it is the point where an otherwise clean dividend position can quietly acquire complexity that Bermuda's domestic rules alone do not resolve.
How Expanship Can Help Your Business in Bermuda
Expanship advises foreign owners on the practical handling of dividends, including confirming the 0% position, securing a Tax Assurance Certificate where eligible, and assessing whether a structure falls inside or outside the corporate income tax regime; alongside that, we manage the full lifecycle of a foreign-owned entity on the island.
- Company incorporation under the Companies Act 1981
- Registered agent and registered office services
- Tax registration and filing, including corporate income tax where applicable
- Ongoing compliance and economic substance management
- Accounting and bookkeeping
- Introductions to banking partners
To discuss your structure and distribution plans, contact Expanship Bermuda.
Frequently Asked Questions
No. Dividends paid to any shareholder, resident or non-resident, carry a 0% rate, and there is no withholding tax on the payment. The recipient may still owe tax in their own country under domestic rules, but nothing is imposed at source.
No. Because the rate is zero and nothing is withheld, there is no reclaim process and no withholding certificate to obtain. A shareholder receives the gross dividend without any source-side deduction.
No. The Act applies a 15% corporate income tax to constituent entities of multinational groups with revenue of EUR 750 million or more, from 2025, and it is a charge on corporate income rather than on distributions. It even mirrors the GloBE exclusions for dividends, so dividend income is generally lifted out of the taxable base.
A certificate issued under the Exempted Undertakings Tax Protection Act 1966 guarantees that any future tax on profits, income, or capital gains, including a tax on dividends, will not apply to the holder until 31 March 2035. It does not override the Corporate Income Tax Act 2023, which applies notwithstanding any such assurance, nor does it shield a group from Pillar Two.
No, for the great majority of companies. There is no corporate income tax to charge them against, so foreign subsidiary dividends flow in free of local tax. For an in-scope multinational group, such dividends fall within the Act's definition of Bermuda-source income but generally qualify for the GloBE-mirrored dividend exclusion.
Yes. There is no limit on the accumulation of profit and no requirement to distribute dividends, so owners retain full control over distribution policy. Profits may be held indefinitely without any local tax consequence.
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.
