Key Takeaways
- Bermuda imposes no personal income tax, so employment, self-employment, and investment income held by individuals are not taxed locally.
- Individuals generally face no personal income tax filing or payment obligations, simplifying compliance for expats, investors, and company owners.
- Home-country tax rules may still apply to individuals living in or earning income through Bermuda, so foreign obligations should be reviewed separately.
- While the zero-rate position currently holds, the outlook for personal income tax is worth monitoring for anyone planning long-term arrangements.
Personal Income Tax in Bermuda: An Introduction
Bermuda levies no personal income tax. There is no tax on employment income, self-employment income, investment income, or any other form of personal earnings, and this position applies equally to residents and non-residents. No statute has ever created such a tax, so the personal income tax rate in Bermuda stands at zero with no bracket structure or threshold to consider.
Government revenue in this British Overseas Territory comes instead from payroll tax, customs duty, stamp duty, land tax, and various fees, all administered by the Office of the Tax Commissioner. This article explains what the absence of income tax means in practice for a foreign owner, investor, or employee connected to the jurisdiction, along with the payroll obligations that do apply and the home-country exposures that remain. It is most relevant to non-resident business owners and their advisers weighing the tax consequences of operating or relocating staff to the island.
Does Bermuda Have a Personal Income Tax? Confirming the Zero-Rate Position
No. Individuals are not subject to any income tax, and no rate schedule, bracket, or filing threshold exists because the tax has never been enacted.
The zero position covers wages, business profits earned personally, dividends, interest, rental receipts, and gains on disposals. Both residents and non-residents fall outside any income tax charge.
With the exception of payroll tax, there is no income tax, capital gains tax, or withholding tax applied to individuals in Bermuda. Payroll tax is a separate levy on employers and the self-employed, not an income tax.
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The Legal Basis for the Absence of Personal Income Tax in Bermuda
The zero-rate outcome is a matter of legislative omission rather than a granted exemption. Parliament has never passed an income tax law applicable to individuals, so there is nothing to repeal and nothing to claim relief from.
What does exist is payroll tax, established under the Payroll Tax Act 1995 and the Payroll Tax Rates Act 1995. That charge falls on employers, self-employed persons, and deemed employees as a tax on remuneration, and it is structurally distinct from a tax on personal income.
Two other points sharpen the picture for a foreign reader. The Corporate Income Tax Act 2023, which became law on 27 December 2023, introduced a 15% charge that applies only to companies within multinational groups reporting annual revenue of EUR 750 million or more from 2025; it is a corporate measure with no personal counterpart. Separately, the government has long issued Tax Assurance Certificates to exempted undertakings, confirming that any future Parliamentary imposition of such taxes will not apply to them until 31 March 2035.
Because the territory imposes no income or capital gains tax, it has signed no income tax treaties. That absence is the direct consequence of having no tax base to allocate between countries.
What "No Personal Income Tax" Means for Employment and Self-Employment Income
Income from working is not assessed for income tax purposes, so the concept of taxable income for individuals does not arise. The charge that touches remuneration is payroll tax, levied on employers and, for those working for themselves, payable directly.
Since April 2017 the payroll tax has been split between an employer portion and an employee portion. The legal obligation to pay nevertheless sits with the employer, who may deduct the employee share from salary; a self-employed person registers and pays in their own right.
Rates are graduated and apply to total remuneration up to a cap of BMD 1,000,000 per person per year. Anything paid above that ceiling is not taxed.
| Annual remuneration (BMD) | Employee rate |
|---|---|
| Up to 48,000 | 0.25% |
| 48,001 – 96,000 | 7.75% |
| 96,001 – 200,000 | 10.75% |
| 200,001 – 500,000 | 11.5% |
| 500,001 – 1,000,000 | 12.5% |
The employer portion runs on its own graduated scale up to 10.25%, with a reduced rate of 9.75% available to international businesses with exempted undertakings from April 2026. Remuneration is read broadly: it captures salaries, fees, bonuses, leave pay, profit sharing, housing allowances, and stock option gains at vesting. From 1 July 2025, payments tied to the permanent termination of employment, whether redundancy or otherwise, are exempt.
A short-stay exemption helps inbound staff. A person who ordinarily works outside the island and whose employment there does not exceed four consecutive weeks is exempt from payroll tax entirely.
Payment falls quarterly, on 15 January, 15 April, 15 July, and 15 October each year. The Office of the Tax Commissioner administers the system and can be referenced through its payroll tax pages.
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Treatment of Investment and Other Personal Income in the Absence of Income Tax
Passive income receives the same treatment as earned income: none of it is taxed at the individual level. Gains on the sale or disposal of assets, including shares, are entirely free of tax for individuals, and there is no capital gains tax to compute.
Dividends are not subject to any income tax. One narrow payroll-tax interaction applies to persons providing services to local companies: from 1 April 2026 the deductible on dividends received by such persons rises to BMD 20,000 per person per year, and each dividend dollar above that figure is treated as gross remuneration for payroll tax purposes, up to the BMD 1,000,000 ceiling.
Stock option gains follow the payroll-tax logic rather than an income-tax one. Since the quarters beginning on or after 1 July 2014, options granted to employees are caught only when vested and exercisable.
A few further points round out the picture for an investor:
- Cryptocurrency gains and income are not taxed for individuals, as no personal income tax exists.
- There is no VAT, sales tax, or wealth tax.
- Estate tax is collected through stamp duty under the Stamp Duties Act 1975.
- A foreign currency purchase tax of 1.25% applies to foreign currency bought by a resident from a local bank.
Why Individuals Face No Personal Income Tax Filing or Payment Obligations
There is no individual income tax return, no payment, and no income tax year, because the tax does not exist. No registration with an income tax authority is required, no self-assessment is filed, and no tax identification number is issued for income tax purposes.
For employees, all payroll tax reporting happens at the employer level. The individual employee therefore carries no direct filing duty, even though the cost may be passed through in their salary.
Self-employed persons are the exception that proves the point. They must register and file quarterly with the Office of the Tax Commissioner, but this is payroll tax administration, not income tax filing.
Every employer and self-employed person liable for payroll tax must register with the Office of the Tax Commissioner within seven days of the end of the first tax period in which they begin business. Failure to register is a criminal offence.
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What the Zero Personal Income Tax Regime Means for Expats, Investors, and Companies
For an individual relocating or investing, the headline is simple: neither residents nor non-residents pay personal income tax, and residency carries no direct income tax consequence. That removes a layer of cost that would otherwise sit on salaries, dividends, and disposals.
The flip side is that no income tax treaty network exists. Inbound individuals cannot rely on double tax treaties for income tax relief, because the territory has none to offer.
Transparency, however, is real. A Tax Information Exchange Agreement is in place with the United States and more than 40 other jurisdictions, the island participates in the Common Reporting Standard, and it is party to the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters. Financial account information flows to home-country authorities under these arrangements.
Companies outside the scope of the corporate income tax continue to face no income tax. Two related employment costs do apply per worker, summarised below.
| Item | Amount |
|---|---|
| Social insurance contribution | BMD 75.30 per week |
| Pension (employer share) | 5% of pensionable earnings |
| Pension (employee share) | 5% of pensionable earnings |
Social insurance contributions are required for every employee over 18 for each week in which they work more than four hours, under the contributory pension scheme.
Important Caveats: Home-Country Income Tax Obligations for Individuals in Bermuda
Zero local income tax does not erase obligations elsewhere. An individual's home-country tax position is unaffected by their presence on the island, and that is where most foreign owners and staff retain real exposure.
US citizens illustrate the point. They are taxed on worldwide income regardless of where they live, so a US person must continue to file with the IRS, although the Foreign Earned Income Exclusion and the Foreign Tax Credit may reduce the liability.
Information flows reinforce this. Under the Tax Information Exchange Agreement, US authorities can request financial data on US persons, and through the Common Reporting Standard, residents' accounts are reportable to home-country tax authorities across more than 100 participating jurisdictions.
Because no income tax treaty exists, treaty-based tools are off the table. There are no tiebreaker rules or reduced withholding rates to call on when sheltering home-country income tax.
UK-resident individuals warrant particular care. A move to the island may leave UK-source income within the UK charge, and ceasing UK residency depends on satisfying HMRC's statutory residence test, so jurisdiction-specific advice is essential before relying on any change in status.
One further trigger affects visitors. The activities of extended business travellers may create payroll tax or social insurance obligations and may also require a Bermuda work permit.
The Outlook for Personal Income Tax in Bermuda
No personal income tax legislation for individuals is proposed, announced, or in consultation. The zero-rate position for individuals is stable, and the government's budget continues to rest on payroll taxes, duties, and fees rather than any charge on personal income.
The single new income tax is corporate. The Corporate Income Tax Act 2023 applies a 15% charge to in-scope multinational groups from 2025 and has since been amended to track the OECD's Pillar Two Model Rules, described by officials as part of a continuing process of refinement.
Policy direction points toward lighter, not heavier, taxation of individuals. The 2026 Budget delivers a reduction in payroll taxes, with the stated outcome that no person working in the territory will pay more, following the Tax Reform Commission's report of July 2025 and its focus on substance-based credits rather than any personal levy.
The driver behind the corporate change does not extend to individuals. The corporate measure was a pragmatic response to the risk of other countries imposing top-up taxes on profits booked locally; Pillar Two targets corporate profits, not personal earnings. No OECD or G20 initiative proposes a global minimum personal income tax, and the zero-rate position for individuals faces no identified near-term legislative threat.
Conclusion
The absence of personal income tax is not, by itself, the whole story for a foreign business owner. The decision-relevant question is whether your home country will follow you to Bermuda, because local compliance is simple precisely because there is nothing to comply with, yet the foreign tax exposure many owners carry from their country of residence or citizenship can fully offset that simplicity. Monitoring the outlook for personal income tax matters, but the more immediate step is auditing your home-country obligations before drawing any income through a Bermuda structure.
How Expanship Can Help Your Business in Bermuda
Expanship supports foreign owners with the practical side of operating where there is no personal income tax but where payroll tax, social insurance, and pension duties still apply, helping you register correctly and meet quarterly deadlines while extending to the wider needs of a foreign-owned entity on the island.
- Company formation and structuring for exempted and local entities
- Registered agent and registered office services
- Tax registration and quarterly payroll tax filing
- Ongoing compliance and statutory deadline management
- Accounting and bookkeeping support
- Banking introductions for new and existing businesses
To discuss your requirements, contact Expanship Bermuda.
Frequently Asked Questions
No. There is no personal income tax on residents or non-residents, covering employment income, self-employment income, dividends, interest, and capital gains. The personal income tax rate is zero because no such tax has ever been enacted.
Payroll tax is a separate charge on remuneration levied under the Payroll Tax Act 1995, falling on employers, the self-employed, and deemed employees rather than on individual income. The employer carries the legal obligation to pay, though an employee share may be deducted from salary, and from 1 April 2026 employee bands run from 0.25% up to 12.5% on remuneration capped at BMD 1,000,000.
No. There is no income tax return, no payment, no tax identification number for income tax, and no income tax year. Self-employed persons do file quarterly, but that is payroll tax administration handled through the Office of the Tax Commissioner, not income tax filing.
Capital gains, including gains on shares, are free of tax for individuals, and dividends are not subject to income tax. A limited payroll-tax interaction applies to persons providing services to local companies, where dividends above a BMD 20,000 annual deductible from 1 April 2026 are treated as remuneration up to the BMD 1,000,000 ceiling.
Not automatically. Your home-country obligations are unaffected by your presence on the island, and US citizens in particular remain taxed on worldwide income and must keep filing with the IRS. With no income tax treaties available and participation in the Common Reporting Standard, professional advice on your specific home jurisdiction is essential.
No personal income tax is proposed, announced, or under consultation, and the recent direction has been to reduce payroll taxes. The 15% corporate income tax enacted in 2023 applies only to large multinational groups and has no personal equivalent, and no global initiative targets a minimum personal income tax.
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.
