Bermuda Tax and Duty

 
 
Bermuda is known as the tax haven. In Bermuda there is no income tax, capital gains tax, VAT, sales or wealth tax. No wonder so many International Business have either shifted their head quarters in Bermuda or have set up new operations here. There are thousands of expatriates who apply for jobs in Bermuda to get benefits of both high earnings and no income tax. Having said that, cost of living in Bermuda is one of the highest in the world. Because there are indirect taxes and duties. 
 
 
 
Import tax is quite heavy in Bermuda. Almost everything in Bermuda is imported including food. So in effect prices are high in Bermuda and the Cost of living in Bermuda is far higher than many other countries. As per the Bermuda tax law, following are all the direct and indirect taxes that are levied on working individuals or businesses as applicable. The tax and duty rates given below are indicative and can change from time to time. 
 

Bermuda Payroll Tax

 
Bermuda payroll Tax which was earlier levied only on the employer, is also now levied on employees since April 2017, though both components can still be borne by the employer (partially or fully). This is a tiered tax for both. For employers, it is calculated based on the total annual remuneration paid out to its employees, and for employees, it's based on the gross salary received by the employee. 
 
For employers, it can be as high as 10.25% for those companies whose total payroll size is over $1M, and as low as 0% for approved schools, colleges, charities and other government and religious bodies. The employees payroll tax is applicable for both Bermudians and non-Bermudians working in the island and can range from 4% to 8.75% of the total remuneration received. 
 
Employee's payroll tax (April 2019 - March 2020): 
Total Pay (BMD)
Tax Rate (%)
0-48,000
4
48,001-96,000
6.5
96,001-235,000
7.75
Over 235,000
8.75
 
From about the middle of the year 2019, taxpayers with annual payrolls of $500,000 or higher need to electronically file their taxes. Also, according to this law, restaurant and hotel owners get a special relief. They are entitled to a deduction (equal to $600 per employee per quarter) from total remuneration paid during the tax period. 
 
Others who are exempt from this tax include- 
  • Students on weekend or vacation employment 
  • Employees who care for a person with mental/physical disability at that person’s home 
  • Employer’s contribution to approved pension, life and health insurance 
  •  

    Bermuda Customs Duty

     
    Customs duties in Bermuda are levied on almost all goods arriving in the island. It's a major source of government revenue. There are some relaxation for the tourists though. 
     
    If you have taken up a job and relocating to Bermuda, almost all belongings that you bring in to take up residence are charged at 25% of assessed value, and that includes electronic and electrical goods like laptops, digital cameras, DVD players etc. Plus there is a 1.01% wharfage fee imposed. Books, used clothes and software packages are not charged. Duties are also waived on hotel construction materials. Check out Bermuda Customs Duty for details. 
     

    Land or Property Tax in Bermuda

     
    If you own a property in Bermuda, you will need to pay the land or property tax. Non-Bermudians can buy only top-end properties and at a price far higher than what a Bermudian would get it for, and usually cost in millions. You will also be required to pay this tax if you are a leaseholder for 3 or more years or a periodic (monthly/yearly) tenant of property owned by the Government of Bermuda. 
     
    The tax amount is assessed based on an Annual Rental Value (ARV) of the property and has 7 bands or tiers. In the lowest band which is up to an ARV of $11,000, the land tax is 0.8%. For the highest band (of ARV over 120,000), one needs to pay a land tax of 47%. 
     
    This is a six monthly tax and has to be paid twice in a year in March and September. 
     
     
     

    Bermuda Stamp Duty

     
    Stamp duty in Bermuda is applicable on legal instruments like in case of property deeds, affidavit of property, agreement, bonds etc. where you will need government stamps for authentication.  
     
    Individuals and businesses are required to pay this duty amount to get certain official documents stamped.  Unstamped documents are not admissible as evidence in any proceeding. Other types of documents that need subject to stamp duty are Appointment, insurance premium receipt, Policy of insurance or reinsurance, Release or renunciation, marketable securities and shares, power of attorney etc. The rate of stamp duty varies for various instruments. 
     
    For example, for conveyance or transfer on sale of land, on the first $100,000 of the value the rate is 2%, on the next $400,000 of the value, it's 3%, on the next $500,000 it's 4%, on the next $500,000 (over $1,000,000 but not exceeding $1,500,000) duty is 6%, thereafter 7%. 
     
    The stamp duty that is payable on lease agreements: 
  • Up to 3 years: 1% of the total rent payable for the lease term. 
  • More than 3 years: Apart from the 1% for the first 3 years, there is an additional 0.5% of the total rent payable for any period beyond 3 years 
  • The law states that there will be no stamp duty on any mortgage refinancing for amounts up to $750,000 
  • Stamp duty is payable by cheque/cash to the Accountant General.  
     

    Bermuda Timesharing Tax

     
    There are two types of Time Sharing Taxes in Bermuda - Service Tax and Occupancy Tax
     
    Timesharing Services Tax is charged on the managing agent of a timesharing property. It's a percentage of the membership and maintenance fees charged to clients for operational and maintenance costs of the timesharing scheme. The tax is charged at the rate of 5% and is payable on a monthly basis. 
     
    Timesharing Occupancy Tax is charged on the developing owner of a timesharing property. It's a percentage of the purchase price of each timesharing interval. The tax is chargeable on the initial purchase and the resale of each interval. The tax is charged at the rate of 10% and is payable within a specified period of the sale/resale of each timesharing interval. 
     
    This information is however, just a guide for the taxpayer. Details of all requirements and amendments can be found on Government of Bermuda's website. 
     

    Bermuda Hotel Occupancy Tax

     
    Hotel Occupancy Tax in Bermuda is charged to the hotel owners. It is calculated as a percentage of the rack rate, i.e. total charge made by a hotel to its guests for accommodation and includes meal plans where a separate charge has not been made. The tax is charged at the rate of 9.75% and is payable on a monthly basis. The hotel in turn recovers this tax from the guests and adds it to the bill. 
     
     
     

    Bermuda Foreign Currency Tax

     
    The foreign currency tax in Bermuda is applicable for the residents and is charged as a percentage of the foreign currency purchased by a resident from a local bank. Payment must be made at the end of every calendar quarter at the rate of 1.25% of foreign currency purchased. 
     

    Bermuda Passenger Cabin Tax

     
    (for cruise ships) 
    The passenger or cruise cabin tax in Bermuda is charged to the owner of the cruise line. This is generally passed on to the passengers by the cruise line as part of the overall cruise package. The tax is calculated based on the number of passenger cabins on a ship and the number of nights during which the ship is docked or anchored in Bermuda. 
     
    The rates vary by the time of the year. Here are the current rates for Bermuda Passenger Cabin Tax per cabin and per night: 
     
    May 1 to August 31: $14.00 
    September 1 to October 31:  $10.00 
    November 1 to April 30:  Nil for non listed ships 
    November 1 to April 30:  $10.00 for Schedule 2 ships   
     
    The tax needs to be paid out by the cruise line to Bermuda Tax Commissioner within 7 days of departure. 
     
    Update: Passenger Cabin Tax has been repealed with effect from April 1, 2019.  In its place there will be a Passenger Departure Tax and a Large Ship Infrastructure Tax.  Besides this, the Bermuda Tourism Authority will administer a Cruise Ship Passenger fee. For queries on Cruise Ship Passenger fees you may contact at (441) 296-9200 
     

    Bermuda Passenger Departure Tax

     
    Aircraft 
    Although the passenger departure tax in Bermuda is levied to the owner of Airline for every departing passenger, this is squarely passed on to the passenger as part of the overall ticket fare. There are exceptions in case of children under 2 years, transit passengers and in some other cases. A tax of $35 is charged for every departing passenger. 
     
    Cruise Ships 
    This is levied on the owner/operator/agent of a vessel. Charges vary based on the months of the year: 
  • Ships that dock in Hamilton or St. George, the rate is $20 per 24-hour period for every departing ship passenger from 1 April to 31 October (up to a maximum of $60) 
  • Ships that dock in Dockyard, the rate is $25 per 24-hour period for every departing ship passenger from 1 April to 31 October (up to a maximum of $75). 
  • For the rest of the year there is no charge. 
  • Here too, there are exceptions and for children under 2, officers and crew and in certain other cases, there are exemptions. 
  •  

    Bermuda Yacht Arrival Tax

     
    The Yacht Arrival Tax in Bermuda is charged to the owner of the arriving yacht. Presently $35 is charged for each passenger arriving by the yacht. 
     

    Large Ship Infrastructure Tax

     
    This is charged to the owner/operator/agent of a vessel (a passenger ship that has a gross tonnage exceeding 149,000 tons; exceeds 1,120 feet in length or carries in excess of 4,000 passengers). The rates are $22 per passenger between April 1 and October 31.  There is no charge for the rest of the year. 
     

    Bermuda Corporate Services Tax

     
    Corporate Services Tax in Bermuda is charged on a provider of corporate services (who can be individuals, or partnership firms or companies, associations, or bodies of persons - incorporated or unincorporated). The tax is levied at 7% of gross earned revenue derived from an exempted undertaking to which, or on behalf of which, corporate services are provided. 
     
    Banking, auditing, and managing an insurance company are not considered corporate services for the purposes of the Corporate Service Tax. 
     
    The returns must be completed and filed with payment within 15 days of the end of each calendar quarter. 
     

    Bermuda Betting Duty

     
    Betting Duty in Bermuda is charged on all bets made, received or negotiated by a person. The person must be licensed under the Betting Act 1975. The licensed persons generally include bookmakers or pool betting agents who negotiate bets. 
     
    The duty is charged at the rate of 20% on all bets. The duty must be paid on bets received or negotiated during the course of the week, upon close of business at the end of that week, or as soon as practicable thereafter. Moreover, betting Duty payments must be accompanied by a return that shows the amounts received as bets and the amount of tax charged. 
     
     
    Raj is an avid traveler, a travel journalist and a blogger. As an author of this website, he shares deep insights on Bermuda and related areas of interest. Since years, he has been helping countless viewers by posting quality articles, answering questions and sharing experiences on this website. Launched in 2008, this website is Bermuda's one of the leading sources of information since many years. 
     
     
     
     

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