Key Takeaways
- Bermuda levies no income tax, so tax residency turns on incorporation, management and control rather than the rate of tax owed.
- The Corporate Income Tax Act 2023 reshapes how company residency is assessed and where Bermuda-connected entities stand.
- Individual residency depends on day-count and ties, while companies and people can both acquire or lose status under specific conditions.
- Tax residency certificates, dual-residence tie-breakers, economic substance and a global minimum tax all shape what residency means for foreign owners.
Why Tax Residency Works Differently in Bermuda: A No-Income-Tax Starting Point
Tax residency in Bermuda departs from what most foreign owners expect, because the island has historically levied no corporate or personal income tax. Where other jurisdictions use residency to decide who is taxed on worldwide income, that link had no domestic income-tax consequence here for most of the territory's history.
That changed with the Corporate Income Tax Act 2023, which wrote a formal definition of corporate tax residency into Bermuda law for the first time. The official CIT portal sets out how this regime operates.
This article explains what residency now means for a company or individual connected to Bermuda, how it is acquired or lost, and why it matters even though no general income tax applies. It is most relevant to foreign owners of Bermuda-incorporated entities, members of large multinational groups, and the advisers assessing exposure on their behalf.
What "Tax Residency" Really Means for a Zero-Tax Jurisdiction
In a conventional system, residency answers a single question: which country gets to tax your income. Bermuda funds itself differently, drawing revenue from payroll taxes, customs duties, and a range of fees rather than taxes on profits, income, capital gains, dividends, interest, or royalties.
Because no income or profit tax applied to companies for most of the island's history, corporate residence was never defined in the domestic-tax sense familiar elsewhere. The concept entered the statute book only with the 2023 reform.
There is a second reason residency carries less weight here than in treaty countries. Bermuda has not signed comprehensive double tax agreements, so the residency tests used to resolve treaty claims or break a tie between two states simply have no application.
For a foreign owner, the practical relevance of Bermuda tax residency reduces to three areas:
- Self-certification of tax residency under CRS and FATCA, collected by financial institutions
- Determining whether the new corporate income tax reaches a large multinational group
- Economic substance compliance for relevant activities
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Corporate Tax Residency in Bermuda: Incorporation, Management and Control
A company is a Bermuda tax resident if it is incorporated, formed, or organised here. That default holds unless the entity is tax resident in another jurisdiction under that jurisdiction's laws, based on where its management and control sit.
This produces a simple rule with one escape route. Form an entity in Bermuda and it is resident here by operation of law; show that management and control, and therefore residency, lie elsewhere under another country's rules, and the Bermuda classification yields.
Bermuda companies fall into two categories. Local companies must be at least 60 percent owned by Bermudians, while exempted companies may be wholly owned by non-Bermudians and sit outside exchange controls.
Most foreign-owned structures are exempted companies, formed to do business outside the island. Each must keep at least one director, secretary, or representative resident in Bermuda.
An overseas company that opens a branch in Bermuda needs a government permit, and that permit establishes the branch as Bermuda resident. Incorporation is not the only route into residency.
For exchange-control purposes, exempted companies and permit partnerships count as non-residents unless Bermudians beneficially own 80 percent or more of the issued share capital, or half or more of the partners are resident locally. That status lets such entities pay dividends, distribute capital, hold foreign bank accounts, and buy securities without government clearance.
The Corporate Income Tax Act 2023 and Its Impact on Company Residency
The Corporate Income Tax Act 2023 became law on 27 December 2023. It applies a 15 percent corporate income tax to Bermuda businesses within a multinational group whose annual revenue reaches EUR 750 million or more, with the regime taking effect from 2025.
The measure tracks the OECD's Pillar Two GloBE Rules in design, but it is not an enactment of those rules. Bermuda built a domestic tax to avoid being treated as a non-adhering jurisdiction under the global minimum tax framework, capturing top-up tax that would otherwise be collected abroad.
Scope is the central question for any in-scope group. The tax reaches Bermuda tax resident entities and Bermuda permanent establishments that belong to multinational groups with consolidated revenue of at least EUR 750 million in two of the four preceding fiscal years.
| Factor | Position |
|---|---|
| Effective date | From 1 January 2025 |
| Rate | 15% |
| Revenue threshold | EUR 750M consolidated, in 2 of 4 prior years |
| Default resident | Entity incorporated, formed or organised in Bermuda |
| Out of scope | Entities tax resident in another jurisdiction; groups below threshold |
| Worldwide income | Taxed unless a Branch Exemption Election is made |
Because of the threshold and its exclusions, most Bermuda entities never come within the tax. Smaller companies and stand-alone businesses remain untaxed on profits.
A Branch Exemption Election removes the income of a resident entity's non-Bermuda permanent establishment from the tax base. Without that election, a resident entity is taxed on worldwide income.
Administration sits with the Bermuda Corporate Income Tax Agency, created by the Corporate Income Tax Agency Act passed in July 2024. The Agency runs registration and collects receipts.
One point deserves emphasis for entities that hold older exemptions. Liability under the new tax applies despite any assurance granted under the Exempted Undertakings Tax Protection Act 1966, so an in-scope group cannot rely on a historic Tax Assurance Certificate to escape the charge.
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Individual Tax Residency: Day-Count, Ties and Resident Status Under Bermuda Law
There is no individual income tax in Bermuda, so personal tax residency carries no income-tax consequence. No statutory day-count test, ties test, or physical presence test determines an income-tax liability, because no such liability exists.
Individual "residence" here is an immigration concept, addressed in the next section, not a tax one. No statute attaches an income-tax charge to days spent on the island.
What does exist is Payroll Tax, an employer-side obligation under the Payroll Tax Act 1995 rather than a personal charge triggered by an individual's residency. It is not levied on remuneration paid to individuals ordinarily employed outside Bermuda, provided their local engagement stays within set thresholds.
Social insurance contributions are not required from non-residents who work for fewer than 26 consecutive weeks.
Acquiring or Losing Bermuda Residency Status for Companies and Individuals
For companies, residency is automatic and rules-based. A few practical points govern how it attaches and falls away:
- Corporate tax residency arises on incorporation, formation, or organisation in Bermuda.
- It is lost only if the entity proves it is tax resident elsewhere on management-and-control grounds under that other jurisdiction's laws; the burden of evidence rests on the entity.
- In-scope constituent entities must register with the CIT Agency through an online portal. Existing entities were required to register on or about 31 March 2025, and new entities must register within 60 to 90 days of a qualifying event.
Individuals follow immigration pathways, none of which creates a tax residency in the statutory sense. Working in Bermuda without a permit is unlawful, and the routes below grant physical residence, not a tax status.
- Permission to Reside on an Annual Basis can be held for up to five years. Applicants must be over 18, may not take local employment, though remote work for a non-Bermuda employer is allowed, and must show good character, sufficient funds, and continuing medical cover. Government fees are USD 263 for one year and USD 1,155 for five years.
- One Year Residential Certificate permits residence and remote work, while barring gainful local employment.
- Permanent Resident Certificate is open, from 1 January 2022, to non-Bermudians ordinarily resident for at least 20 years, or 15 years for a non-Bermudian parent of a Bermudian child.
None of these statuses produces an individual income-tax liability, because the island levies no such tax.
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Tax Residency Certificates: When You Need One and How to Obtain It
Bermuda does not issue tax residency certificates to individuals for income-tax purposes. With no personal income tax and no treaty network requiring proof of residence for relief, there is no product to apply for and no form, fee, or processing time to report.
The corporate equivalent is different in nature and name. Exempted undertakings, including exempted companies, permit companies, exempted partnerships, and exempted unit trust schemes, apply for a Tax Assurance Certificate through the Bermuda Monetary Authority, addressed to the Minister.
Such a certificate confirms that any future parliamentary imposition of taxes will not apply to the holder until 31 March 2035. It remains a useful evidence of no local tax exposure for entities outside the corporate income tax.
The new regime, however, supersedes any existing exemption held by an entity within its scope. Out-of-scope entities keep their assurances, and fresh ones continue to be issued, adjusted for consistency with the tax rules.
Self-certification under the Common Reporting Standard is a separate matter entirely. Bermuda financial institutions collect tax identification numbers and self-certifications from account holders, but these record residency in other jurisdictions, not a Bermuda certificate; reporting has applied to financial accounts since 1 January 2016.
Dual Residence and Tie-Breaker Issues for Bermuda-Connected Entities
Without comprehensive double tax agreements, Bermuda has no treaty tie-breaker to resolve a dual-residence conflict. The Article 4 mechanism of the OECD Model that other jurisdictions rely on does not operate here.
One narrow instrument exists. The 1986 US–Bermuda Tax Convention, in force from 1988, is confined to insurance enterprises, sparing qualifying Bermuda insurers' business profits from US tax absent a US permanent establishment; it gives no relief from US federal excise tax on insurance or reinsurance premiums.
The corporate residency rule is sometimes mistaken for a tie-breaker. It is not. It is simply the exit from Bermuda residency: an entity escapes the local classification by demonstrating residency elsewhere through management and control under that jurisdiction's own laws.
Where the same income is taxed both in Bermuda and abroad, the corporate income tax provides for crediting an in-scope entity's foreign tax against its Bermuda liability, reducing double taxation. The accounting follows the dual-resident model often called branch accounting, where temporary differences and foreign tax credits on the same item must be reconciled.
Why Bermuda Residency Matters to a Foreign Owner or Adviser
Even in a jurisdiction with no general income tax, residency drives several practical exposures. The table below pulls the key ones together.
| Area | Why it matters |
|---|---|
| Corporate income tax | A Bermuda-resident entity in a ≥EUR 750M group is in scope from 1 January 2025 unless residency sits elsewhere |
| CRS reporting | Residency classification decides whether and where financial institutions report account data; reporting since 1 January 2016 |
| FATCA | Bermuda has a Model 2 IGA with the US; local financial institutions register and enter FFI agreements with the IRS |
| TIEA network | 41 bilateral agreements as of January 2022, including the US, Australia, Canada and the UK |
| Economic substance | Exempted companies face substance requirements; failure risks sanctions and disclosure to partner jurisdictions |
Bermuda also participates in the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters, extending information exchange to more than 100 countries. Nominal residency in a transparent jurisdiction is therefore visible, not hidden.
A point that catches individuals out: relocating personally to Bermuda yields no usable tax residency certificate to deploy against a home-country tax authority. Foreign owners must instead rely on their home jurisdiction's rules for ceasing residency there.
The Bermuda Government itself advises One Year Residential Certificate holders to take tax advice on what residing here means for their home jurisdiction.
The Outlook: Economic Substance, Global Minimum Tax and Future Direction
Substance sits at the centre of where the island is heading. The Economic Substance Act 2018, effective from 1 January 2019, was enacted in response to the EU Code of Conduct Group and defines the relevant activities and core income-generating activities that an entity must carry on locally.
Ten sectors fall within the substance rules: banking, insurance, fund management, financing, leasing, headquarters, shipping, distribution and service centres, intellectual property, and holding entities. EU finance ministers have deemed Bermuda a co-operative jurisdiction on good tax governance.
Treaty policy may shift over time as the corporate income tax beds in, though no formal double tax agreement negotiations have been publicly announced. Bilateral TIEA negotiation has largely stopped since accession to the OECD Multilateral Convention in 2018, which already supports exchange with a wide partner network.
Administration of the new tax continues to evolve. The Government released CIT FAQs version 6.0 in November 2024 and published a Technical Amendments consultation in May 2025, while the Ministry of Finance issued an updated CRS compliance review in May 2024 tightening collection of tax identification numbers and dates of birth.
The direction is toward deeper transparency and substance, not retreat. With CRS, FATCA, country-by-country reporting, the substance regime, and the corporate income tax operating together, shell or nominal residency has become difficult to sustain for large multinational structures.
Conclusion
For most foreign-owned Bermuda entities, tax residency is a status with limited bite: the island taxes no profits or personal income, issues no individual residency certificate, and offers no treaty tie-breaker. The exception matters greatly to those it touches, since a company inside a EUR 750 million multinational group is resident by default and within the 15 percent corporate tax unless residency genuinely sits elsewhere. Substance, CRS, and FATCA classifications turn on the same residency question, so the label carries reporting and compliance weight even where no tax is due. Match your structure to where management and control truly lie, and confirm the home-country position before assuming any benefit from a Bermuda connection.
How Expanship Can Help Your Business in Bermuda
Expanship advises foreign owners on whether a Bermuda entity is tax resident, what that means for corporate income tax scope and CRS and FATCA reporting, and how management-and-control evidence is documented, then supports the wider formation and compliance work that follows. Our work covers the full life of a foreign-owned company on the island.
- Incorporation of exempted companies and other Bermuda structures
- Registered agent and resident representative arrangements
- Tax registration, including CIT Agency registration for in-scope entities, and ongoing filings
- Economic substance and continuing compliance management
- Accounting and bookkeeping aligned to reporting obligations
- Introductions to banking partners
To discuss your structure and obligations, contact Expanship Bermuda.
Frequently Asked Questions
Yes. A company incorporated, formed, or organised in Bermuda is tax resident there by default under the Corporate Income Tax Act 2023, unless it can show it is tax resident in another jurisdiction based on management and control under that country's laws.
Not for most entities. The 15 percent corporate income tax applies only to Bermuda residents and permanent establishments within multinational groups with consolidated revenue of at least EUR 750 million, effective from 1 January 2025; entities below that threshold remain untaxed on profits.
No. Bermuda has no individual income tax and no comprehensive treaty network, so it does not issue individual tax residency certificates; the corporate equivalent is the Tax Assurance Certificate, obtained through the Bermuda Monetary Authority.
Residency statuses such as Permission to Reside or the One Year Residential Certificate are immigration permits, not tax statuses, and create no Bermuda income-tax liability. The Government advises certificate holders to take advice on the implications for their home jurisdiction, since cessation of home-country residency follows that country's rules.
It must demonstrate that, under another jurisdiction's laws, it is tax resident there based on the location of its management and control. The burden of proof rests on the entity, which must provide sufficient evidence.
Yes. Bermuda reports under CRS for accounts held since 1 January 2016, operates a Model 2 FATCA agreement with the United States, maintains 41 bilateral Tax Information Exchange Agreements, and participates in the OECD Multilateral Convention covering over 100 countries.
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.
