This country-specific Q&A provides an overview to tax laws and regulations that may occur in Bermuda.
1. Which factors bring an individual within the scope of tax on income and capital gains?
There is no income tax or capital gains tax in Bermuda.
2. What are the taxes and rates of tax to which an individual is subject in respect of income and capital gains and, in relation to those taxes, when does the tax year start and end, and when must tax returns be submitted and tax paid?
The financial year runs 1 April to 31 March, but for private clients there are no relevant tax payment dates or deadlines because there is no income or profits tax, capital gains tax, capital transfer taxes, withholding tax or inheritance tax in Bermuda.
3. Are withholding taxes relevant to individuals and, if so, how, in what circumstances and at what rates do they apply?
There is no withholding tax in Bermuda.
4. Is there a wealth tax and, if so, which factors bring an individual within the scope of that tax, at what rate or rates is it charged, and when must tax returns be submitted and tax paid
There is no wealth tax in Bermuda.
5. Is tax charged on death or on gifts by individuals and, if so, which factors cause the tax to apply, when must a tax return be submitted, and at what rate, by whom and when must the tax be paid?
There is no inheritance tax in Bermuda. The only relevant tax payable is stamp duty, which is payable on the value of the deceased’s Bermudian property (that is real property situated in Bermuda, Bermudian dollars and shares in Bermudian companies).
On death, the rates vary between 0% for Bermudian assets below BM$100,000 to 20% for Bermudian assets over BM$2 million. The rate is applied to the market value of the assets, and secured debt on real property in Bermuda will reduce the amount of stamp duty payable.
Lifetime gifts of Bermudian property (other than cash) are subject to a lower rate of stamp duty, at a maximum of 7% for gifts with a value of over BM$1.5 million.
Exemptions from stamp duty apply to:
- the value of any interest in an estate that passes to a spouse;
- gifts to charities registered in Bermuda (or international charities that the Minister of Finance deems to be charitable); and
- the value of a principal family home (this only applies for persons who hold “Bermuda Status”, as defined in the Bermuda Immigration and Protection Act 1956).
This article was first published in The Legal 500.