1. Tax

1.1 Tax Regimes

In Bermuda there is no income or profits tax, withholding tax, capital gains tax, capital transfer tax or inheritance tax. There is no exit or similar such tax based on a resident’s wealth when ceasing to be resident and there are no other consequences of leaving the jurisdiction. Customs duties and stamp duty are major government revenue earners, with stamp duties charged at different rates and in different manners on a variety of legal documents, excluding wills.

1.2 Stability of the Estate and Transfer Tax Laws

There is no inheritance or capital transfer tax in Bermuda. Estate tax is payable on death where the property passing is Bermudian property.

1.3 Recent Developments or Forthcoming Regulatory Changes

Bermuda has enacted several key pieces of legislation in the trusts arena, consisting of:

  • legislation concerning the retention of powers over trusts by settlors and the grant of powers over trusts to third parties (the Trusts (Special Provisions) Amendment Act 2014);
  • legislation reintroducing into Bermudian law provisions similar to those contained in the rule in Hastings-Bass as that rule was understood in England and Wales, and other common law jurisdictions prior to 2011 (the Trustee Amendment Act 2014); and
  • legislation making it easier to vary the perpetuity periods of trusts that were settled prior to the abolition of the rule against perpetuities for new Bermudian trusts (the Perpetuities and Accumulations Amendment Act 2015).

Bermuda has an active trust law reform programme and is continually looking to modernise and improve its trust laws. At the moment, it is considering improving its firewall laws (ie, those laws that protect trusts from attack on the basis of foreign laws).

1.4 Income Tax Planning

There is no income tax in Bermuda.

1.5 Efforts to Address Real or Perceived Abuses/Loopholes

The Stamp Duties Act 1976 contains provisions to deal with evasion of stamp duty (which are specific to Bermuda property); Section 19 states that any person who, with intent to evade the payment of duty, executes any instrument in which all the facts and circumstances affecting the liability of an instrument to duty, or the amount of the duty with which an instrument is chargeable, are not truly and fully set forth, or neglects or omits to set forth fully and truly all the facts and circumstances, commits an offence. In addition, Section 70 states any person who practises or is concerned in any fraudulent act, contrivance or device with intent to defraud the government of any stamp duty commits an offence.

This article was first published in Chambers Global Practice Guides.

Helen E. Cooper

Director, Co-Head of Bermuda Private Client and Trust


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