Is Bermuda a Tax Haven or Just a No-Tax Jurisdiction?

Why Bermuda Wears the Tax Haven LabelCopy link to section

Bermuda has long carried the tax haven label because it imposes no corporate income tax on most companies, no personal income tax, and no tax on dividends, interest, or capital gains. That structural reality still holds for the vast majority of entities, even after a 15% corporate income tax took effect on 1 January 2025 for large multinational groups; the change reached only a narrow band of businesses, and Bermuda is not on the EU list of non-cooperative jurisdictions.

The question matters most to foreign business owners weighing where to place a holding vehicle, an insurance structure, or an operating company outside their home country. This article examines what the label means in practice: the tax model, the legal and regulatory standing, how incorporation works for non-residents, the transparency obligations now in force, and an honest verdict on whether the description still fits.

It is written for non-resident owners and their advisers evaluating Bermuda against other low-tax options, particularly those in insurance, reinsurance, and global holding structures.

The No-Tax Model: How Bermuda Raises Revenue Without Income TaxCopy link to section

The foundation of the reputation is straightforward: corporate income tax is nil for companies below the threshold, personal income tax is nil, and investment income, capital gains, dividends, and interest go untaxed. There is no withholding tax on those payments and no VAT or sales tax anywhere on the island.

A government can run without income tax only if it raises money elsewhere, and that is exactly what happens here. Revenue comes mainly from payroll tax, customs and import duties, real property tax, a corporate services tax, and fuel taxes.

Payroll tax, set under the Payroll Tax Act 1995, falls on the employer and is calculated on gross taxable remuneration. Customs duties apply to almost all goods arriving on the island, most commonly at 25%, which is how an import-dependent economy funds itself without taxing profits.

A 7% corporate services tax applies to firms providing corporate administration, management, secretarial, registered office, and accounting services to exempted companies and partnerships. For a foreign owner, this is a cost embedded in the fees your service providers charge, not a tax you file directly.

The Corporate Income Tax Act 2023, signed into law in December 2023, introduced a 15% rate for entities inside multinational groups with annual revenue of EUR 750 million or more. Every company below that bar stays at 0%, and the government forecasts the new tax will yield BMD 187.5 million in fiscal year 2025/26.

The body administering these taxes is the Office of the Tax Commissioner. For an exempted company with no Bermuda employees, the only charge imposed is an annual government fee, and the responsible Minister may give such a company a statutory assurance that future taxes on profits, income, or capital gains will not apply to it.

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Political and Legal Stability Under British Overseas Territory StatusCopy link to section

As a British Overseas Territory with a democratic government and an English common law system, Bermuda offers the kind of legal predictability that institutional capital requires. The final court of appeal sits with the Judicial Committee of the Privy Council in London, which gives commercial disputes a route to a senior independent bench.

The Bermuda dollar has held a 1:1 peg to the US dollar since 1972, removing currency volatility from financial planning. Oversight rests with the Bermuda Monetary Authority, which implements standards set by the IAIS, IOSCO, and the Basel Committee.

Regulatory recognition runs deeper than reputation. The European Commission granted full Solvency II equivalence by Delegated Act, recognising the BMA as group supervisor for international insurance groups; only two jurisdictions, Bermuda and Switzerland, hold full equivalence.

The US National Association of Insurance Commissioners has qualified Bermuda as a reciprocal jurisdiction, a status reached by only seven jurisdictions worldwide: Bermuda, France, Germany, Ireland, Japan, Switzerland, and the United Kingdom. FATF recommendations are coordinated through the National Anti-Money Laundering Committee, and the island is a member of the Caribbean Financial Action Task Force.

Sovereign credit sits at A+ long-term from major rating agencies, and the jurisdiction is absent from the EU non-cooperative list. That combination, low tax sitting alongside tier-one supervision, is what separates this place from jurisdictions that trade purely on secrecy.

Speed and Ease of Incorporation for Non-Resident OwnersCopy link to section

Two structures dominate for foreign owners: the Exempted Company, formed under Part X of the Companies Act 1981, and the Exempted LLC, registered under Part 3 of the Limited Liability Company Act 2016. Both let you conduct business outside the island free of the rule that local companies must be at least 60% Bermudian-owned.

Full foreign ownership is permitted, so a non-resident may own and control an exempted company outright. Incorporation generally takes about two weeks.

1. Submit a non-objection application to the BMA, with certified identification and proof of address for all directors, beneficial owners, and shareholders; this is typically processed within one week.
2. File the Memorandum of Association with the Registrar of Companies through the online portal.
3. Receive the Certificate of Incorporation, usually issued within one to two business days of filing.

At least one director is required, who may be an individual or a corporate body and need not be resident; director details appear on a public file. The company must appoint a resident company secretary or resident representative, and a resident agent is required by law.

Effective 1 January 2024, the Ministry of Finance introduced new regulatory fees reflecting the Registrar's wider duties, which now cover Economic Substance filings, AML and anti-terrorist-financing compliance, and the maintenance of beneficial ownership registers. Annual general meetings are not mandatory and may be held anywhere, including by telephone or other electronic means, with proxy voting allowed.

An annual financial summary must be kept at the registered office but is not filed with the Registrar.

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Currency, Exchange Control and the Bermuda Dollar QuestionCopy link to section

All exempted companies are designated non-resident by the BMA, which frees them to deal in any currency other than the Bermuda dollar and exempts them from Exchange Control regulations under the Exchange Control Act 1972. No currency control applies to such companies.

US dollar cheques are accepted at par for entities denominated non-resident, a practical convenience given the long-standing peg. A Foreign Currency Purchase Tax of 1.25% applies when a Bermuda resident buys foreign currency from a local bank, but this falls on residents rather than on your offshore-facing exempted company.

Confidentiality Posture and What Transparency Reform Has ChangedCopy link to section

The old image of an opaque offshore centre no longer matches the filing reality. From 1 January 2024, the Registrar's mandate formally expanded to include maintenance of ultimate beneficial ownership registers, sitting alongside Economic Substance filings and AML compliance.

Some traditional privacy features persist. The Register of Members may be inspected by any person visiting the registered office, nominee shareholders are permitted, and director details sit on a public file, while no annual return of shareholders is required, though beneficial interests are disclosed at incorporation.

Information-exchange commitments are extensive. Bermuda implements the Common Reporting Standard, FATCA through a Model 2 intergovernmental agreement with the United States, and country-by-country reporting.

The treaty footprint reinforces this. More than 40 bilateral Tax Information Exchange Agreements are in place, alongside over 100 tax-transparency relationships under the OECD multilateral instrument, plus country-by-country competent authority agreements with the United Kingdom and the United States.

On the data-protection side, the Personal Information Protection Act 2016 became operative on 1 January 2025, setting rules for processing personal information. Exempted companies must prepare and keep accounting records for five years, though those records may be held anywhere.

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Economic Substance Requirements and the Reshaping of the LabelCopy link to section

The single change that most altered Bermuda's standing was the Economic Substance Act, which came into effect at the start of 2019 after concerns raised by the Council of the European Union about the absence of substance rules. Entities carrying on a "relevant activity" must show that their strategic decisions are made, and their Core Income-Generating Activities are carried out, in the jurisdiction.

In practice, firms meet the test by using local resident directors and holding regular board meetings on the island. An exempted company is subject to these requirements and, where it conducts a relevant activity, must file an Economic Substance Declaration with the Registrar within six months of its financial year-end.

The reform had immediate consequences. Bermuda was briefly added to the EU non-cooperative list in March 2019 for missing the agreed 2018 deadline, then removed on 17 May 2019 once the substance regime was in place, and it has stayed off the list since.

Who Uses Bermuda and for What Legitimate ReasonsCopy link to section

The dominant use case is insurance and reinsurance, a sector that took root in the mid-1980s when companies such as ACE, now Chubb, formed to address a US excess liability capacity shortage. Further waves followed Hurricane Andrew in 1992, the 9/11 attacks in 2001, and hurricanes Katrina, Rita, and Wilma in 2005.

The scale is substantial. In 2023, 25 members of the Association of Bermuda Insurers and Reinsurers wrote more than USD 171 billion in gross property and casualty premium, while the life and annuity sector wrote USD 134 billion in gross written premium in 2022.

• More than 1,200 licensed insurers and reinsurers operate from the island.
• Reinsurance capital exceeds USD 300 billion, with most of the world's insurance-linked securities domiciled there.
• Life players including Athene Life Re Ltd. and Resolution Life Group Holdings Ltd. are established there, and Aegon Ltd. redomiciled from the Netherlands in September 2023.
• The re/insurance sector registered 41 new companies by mid-2025, ahead of the pace that produced 63 in 2024.

Foreign sponsors choose the jurisdiction for reinsurance capital, ILS structures, global holding companies, and institutional vehicles where the BMA's standing and Solvency II equivalence carry real weight. Through the EU Overseas Association Decision, Bermuda has also signed AIFMD cooperation agreements with most EU members, and the corporate tax framework offers credits for substance, community development, and utilities infrastructure.

Reputational Stigma Versus Practical RealityCopy link to section

Bermuda is still commonly described as a tax haven, yet it levies payroll tax on employers and land taxes among others, so the "no tax" shorthand is inaccurate. The Financial Secrecy Index continues to mark it as a jurisdiction with favourable tax policies and confidentiality-oriented structures, a label that has outlasted the reforms behind it.

The practical draw has shifted. The lack of corporate income tax once pulled in startups, but the established solvency regime, the regulatory framework, and the concentration of insurance expertise now rival or exceed tax as a reason to incorporate.

That shift is visible in how firms describe their own choices. Convex Group has indicated that tax policy was not the primary reason for setting up there; its leadership pointed to regulatory standards and Bermuda's role as a reinsurance market, independent of the new corporate tax.

Costs are higher than at many offshore competitors, and the trade-off is credibility, which matters for businesses aiming at global capital markets or a public listing. The BMA's membership of the IAIS, IOSCO, GIFCS, and GIICS, and its A+ sovereign backdrop, point to a posture unlike that of jurisdictions trading on secrecy.

Is Bermuda Really a Tax Haven? An Honest Verdict for Foreign OwnersCopy link to section

The defining structural feature for tax planners is the absence of any double tax agreements. With no DTA network, there is no treaty-reduced withholding in source countries and no tie-breaker provisions to resolve residence conflicts, which limits how the jurisdiction can be used in cross-border structuring.

On rates, the position is split by size. From 1 January 2025 a 15% corporate income tax applies, but only to constituent entities of groups with EUR 750 million or more in consolidated revenue; everything below that stays at 0%, and the 15% rate exists to align with Pillar 2 of the OECD model rules.

The secrecy dimension has largely been dismantled. The Economic Substance Act narrowed the shell-company case, while UBO registers, CRS, FATCA, country-by-country reporting, 40-plus TIEAs, and 100-plus transparency relationships mean any legitimate tax authority can request and receive information.

The honest verdict: Bermuda keeps the structural hallmarks that earned the label, zero personal income tax, zero corporate tax below the threshold, no DTAs, and no VAT, but it has systematically removed the secrecy and shell-entity elements. For a non-resident owner of a sub-EUR 750 million business it remains a legitimately low-tax base; for large multinationals the corporate tax erases the purely tax-driven advantage, leaving the insurance and regulatory infrastructure as the standalone reason to be there.

ConclusionCopy link to section

Bermuda still fits the low-tax description for most foreign-owned companies, but it no longer functions as a secrecy haven, and the gap between perception and filing reality is wide. A sub-threshold holding or operating company can sit at 0% corporate tax while complying with substance rules, beneficial ownership registers, and global information exchange. The practical decision now turns less on tax alone and more on whether the regulatory standing, the absence of treaties, and the higher running costs match your objectives, particularly if your plans involve insurance, reinsurance, or access to capital markets.

How Expanship Can Help Your Business in BermudaCopy link to section

Expanship advises foreign owners on what the tax haven status means in practice, from confirming whether the 15% corporate income tax threshold reaches your group to mapping Economic Substance and beneficial ownership obligations against your structure. The same team handles the wider work of establishing and running an exempted company.

• Forming your exempted company or exempted LLC with the Registrar and securing BMA non-objection
• Acting as resident agent and providing a registered office and company secretary
• Registering for applicable taxes and managing payroll and government-fee filings
• Maintaining ongoing compliance, including Economic Substance Declarations and UBO register upkeep
• Keeping accounting records and preparing the annual financial summary
• Introducing your business to banking providers for account opening

To discuss your structure and the steps involved, contact Expanship Bermuda.

Frequently Asked QuestionsCopy link to section