1.1 In Bermuda, what pre-entry estate and gift tax planning can be undertaken?

Stamp Duty on Death:

In Bermuda, the tax levied on estates is known as stamp duty and the applicable rates are set out in Head 2 of the Schedule to the Stamp Duties Act 1976 (as amended) (the 'Stamp Duties Act') at the following rates:

First $100,000


Next $100,000


Next $800,000


Next $1,000,000




There is no stamp duty on (i) non-Bermuda Dollar assets, (ii) bequests to spouses, (iii) bequests to charities registered under the Charities Act 1978 or other bodies whose purposes are charitable, in the opinion of the Minister of Finance, or (iv) the value of any Bermuda residential property which has been designated as the deceased's primary family homestead in accordance with the provisions of the Stamp Duties Amendment Act 2005.

Stamp duty is payable on the net value of all of the deceased's Bermuda Dollar assets (including real and personal property situated in Bermuda, vessels and aircraft having a Bermuda registry, most Bermuda denominated cash or investments and shares of a local company) (other than exempted assets) as defined under section 47 of the Stamp Duties Act. Stamp duty on estates is levied at the rates described above regardless of the status, nationality or domicile of the person. Therefore, individuals can exercise their pre-entry estate planning by taking into consideration the exemptions stated above when making their will.

On death, stamp duty is only payable on Bermuda Dollar assets and there is no recognition of foreign taxes. The estate is liable for the stamp duty, unless there is evidence of contrary intention stated in the will.

Stamp Duty on Lifetime Gifts:

Lifetime gifts of certain Bermuda assets, for example, homes and shares in private Bermuda companies, are subject to stamp duty regardless of the nationality of the person making the gift. In certain circumstances, if gifts are made outside of Bermuda and are not intended to be enforced in Bermuda, then stamp duty may not be charged on the transfer. Gifts of Bermuda property between spouses are dutiable (that is, subject to taxation), except where such gifts are made on death.

The stamp duty payable on immovable Bermuda Dollar denominated assets as defined in the Stamp Duties Act and shares in local Bermuda companies which are not listed on the Bermuda Stock Exchange, is at the following ad valorem rates on gifts, as set out in Head 17 of the Schedule to the Stamp Duties Act

First $100,000


Next $400,000


Next $500,000


Next $500,000


Over $1,500,000


Stamp duty concerning lifetime transfers of non-Bermuda Dollar assets is set at 1% of the value of the asset, up to a defined maximum.

An individual can make lifetime gifts to reduce stamp duty either by transferring to another individual or to a trust. Lifetime gifts are subject to lower rates of stamp duty, up to a maximum of 7%. The transfer can either be of an absolute or joint interest, or the individual can retain a life interest in the asset transferred. This is to retain some control and enjoyment of the asset while still limiting the impact on his estate on death. A debt can also be secured on an estate asset to reduce the stamp duty payable.

1.2 In Bermuda, what pre-entry income tax planning can be undertaken?

Bermuda does not have any taxes on profits, income, dividends, withholding, capital transfers, capital gains or inheritance.

The Bermuda Government has exacted legislation under which the Minister of Finance is authorised to give an assurance to an 'exempted' company, permit company, exempted partnership or exempted unit trust scheme (each an 'exempted undertaking') that 'in the event of there being enacted in these Islands any legislation imposing tax computed on profits or income or computed on any capital asset, gain or appreciation, then the imposition of any such tax shall not be applicable to such entities or any of their operations'. In addition, there may be included an assurance that any such tax 'and any tax in the nature of estate duty or inheritance tax, shall not be applicable to the shares, debentures or other obligations' of such entities. Currently, this assurance is granted up until 31 March 2035, on payment of an application fee.

1.3 In Bermuda, can pre-entry planning be undertaken for any other taxes?

The main taxes consist of payroll tax, stamp duty and land tax, which generally all have specific exemptions designed to avoid taxes on foreign trusts, foreign property or foreign businesses or minimise taxes on Bermuda assets.


2.1 To what extent is domicile relevant in determining liability to taxation in Bermuda?

There are no strict tests for domicile or residence in Bermuda.

2.2 If domicile is relevant, how is it defined for taxation purposes?

This is not relevant in Bermuda.

2.3 To what extent is residence relevant in determining liability to taxation in Bermuda?

See the answer to question 2.1 above.

2.4 If residence is relevant, how is it defined for taxation purposes?

This is not relevant in Bermuda.

2.5 To what extent is nationality relevant in determining liability to taxation in Bermuda?

Stamp duty is payable on death on Bermuda dollar assets and on certain gifts, regardless of the status, nationality or domicile of the person. The primary family homestead exemption from stamp duty on death referred to in question 1.1 above, is only available to persons possessing Bermuda status.

2.6 If nationality is relevant, how is it defined for taxation purposes?

See the answer to question 2.5 above.


3.1 What gift or estate taxes apply that are relevant to persons becoming established in Bermuda?

See the answer to question 1.1 above.

3.2 How and to what extent are persons who become established in Bermuda liable to income tax?

See the answer to question 1.2 above.

3.3 What other direct taxes (if any) apply to persons who become established in Bermuda?

The two main direct taxes are payroll tax and land tax. Payroll tax is levied on salaries of employees based in Bermuda under the Payroll Tax Act 1995 and the Payroll Tax Rates Act 1995. Payroll tax is levied at the rate of 4.75%, to a maximum of 14%. Land tax is charged on all developed land (including unoccupied property) in Bermuda, with some minor exceptions under the Land Tax Act 1967 and the Land Valuation and Tax Act 1967.

3.4 What indirect taxes (sales taxes/VAT and customs & excise duties) apply to persons becoming established in Bermuda?

There are no sales taxes or VAT under Bermuda law. However, there are certain customs and import duties which are discussed in question 4.2 below.

3.5 Are there any anti-avoidance taxation provisions that apply to the offshore arrangements of persons who have become established in Bermuda?

See the answers to questions 1.1 and 1.2 above.


4.1 What liabilities are there to direct taxes on the remittance of assets or funds into Bermuda?

See the answer to question 1.2 above.

4.2 What taxes are there on the importation of assets into Bermuda, including excise taxes?

The standard 25% duty rate and the special rates (including zerorates (0%); higher rates (33.5%, 75%, 150%)) will be paid for goods imported by personal taxpayers; while the duty rates specified in the First Schedule to the 2012 Customs Tariff will be paid for business goods. For residents, personal goods amounting to the value of $200 is duty free.

4.3 Are there any particular tax issues in relation to the purchase of residential properties?

A non-Bermudian must obtain a licence to own Bermuda real estate pursuant to the Bermuda Immigration and Protection Act 1956 ('the Bermuda Immigration and Protection Act'). A non-Bermudian must, therefore, obtain a licence to hold real estate in Bermuda before he can:

  • Purchase Bermuda real estate.
  • Inherit Bermuda real estate left to him by will or on intestacy.

There are also different fees depending on whether the real estate being purchased is a house or condominium. Currently the licence fees are 25% of the purchase price of a house and 18% of the purchase price of a condominium. However there is a standard licence fee for properties transferred by way of gift or inheritance. Stamp duty is chargeable on the purchase and conveyance of Bermuda real estate at the following rates:

First $100,000


Next $400,000


Next $500,000


Next $500,000


Over $1,500,000


Certain properties in Bermuda can be purchased by non- Bermudians, provided they are over a particular annual rental value. A licence to purchase and own the property is still required for a non-Bermudian, whether the property is to be purchased directly or through a trust.


5.1 What are the relevant private international law (conflict of law) rules on succession and wills, including tests of essential validity and formal validity in Bermuda?

Bermuda has a common law legal system and there are no restrictions on the transfer of movable assets on death. With respect to immovable assets, including real property and shares in local Bermudian companies, there are restrictions regarding foreign ownership of such property, although the proceeds of sale are freely transferable.

There are no fixed or statutory rights of inheritance under Bermuda law. A person is generally free to dispose of their assets as they wish by writing a will. However, they should have regard to any possible claims that could be made under the Succession Act 1974 ('the Succession Act'). The Succession Act specifically provides that, with regard to the real estate and personal inheritance of persons dying after 31 August 1974, there shall be abolished the following:

'(a) all existing modes, rules and canons of descent, and of devolution by special occupancy or otherwise, of real estate, or of personal inheritance, whether operating by the general law or by custom or otherwise howsoever; and

(b) tenancy by the curtesy and every other estate and interest of a husband in real estate as to which his wife dies testate or intestate, whether arising under the general law or by custom or otherwise; and

(c) dower and every other estate and interest of a wife in real estate as to which her husband dies testate or intestate, whether arising under the general law or by custom or otherwise; and

(d) escheat to the Crown for want of heirs.'

The Bermuda Immigration and Protection Act provides that ownership of land in Bermuda by non-Bermudians is subject to licensing. The Bermuda Immigration and Protection Amendment Act 2007 fortifies the legislation to prevent circumvention of the licensing system through the use of trusts or schemes. These amendments also impact the inheritance of land in Bermuda by non-Bermudians.

The Succession Act determines the order of succession to real and personal property upon an intestacy or partial intestacy where the deceased died on, or after, 1 September 1974. The legislation deals only with property which is capable of being left by will and property over which the deceased could exercise a general power of appointment. It does not apply to property which is transferred 'automatically' by operation of law or contract, for example life insurance proceeds or jointly-held property.

The Succession Act does not recognise the rights of a 'common law' or same sex spouse, and does not distinguish between those spouses who live together as husband and wife, and those who do not.

Pursuant to the Children Amendment Act 2002, legitimate, adopted and illegitimate children are treated the same for the purposes of intestate succession. The Succession Act also extends the entitlement to a child en ventre sa mère (conceived but not born at the time of the intestate's death).

The right to benefit from an intestacy depends on the relationship with the deceased. Generally an estate is shared by relatives in the highest category to the exclusion of relatives in a lower category.

The intestate's spouse has a preferred claim over all other categories of beneficiaries, being absolutely entitled to the 'personal chattels', but may have to share the residuary estate with the deceased's issue, parents, siblings of the whole blood and the children of such siblings.

The formalities for making a will are that the testator must both:

  • Have the requisite mental capacity to make a will.
  • Be aged 18 years or older or married under that age.

Bermuda follows the common law when defining capacity. Essentially, the testator must both:

  • Appreciate the nature of his act and the extent of his property.
  • Be able to identify the persons he should consider when disposing of his property.

All other wills or other testamentary dispositions must be in writing and signed by the testator in the presence of two independent witnesses, who must:

  • Be 18 years or older.
  • Be competent.
  • Sign the will in the presence of the testator (but not necessarily in the presence of another witness).

An executor can act as a witness without affecting the validity of the will. However, if the witness or the witness's spouse is also a beneficiary under the will, the gift to the witness or their spouse is void, but the balance of the will remains valid.

Holograph wills are valid if written entirely in the handwriting of the testator and signed by the testator at the end of the document.

There are no formalities for drafting a will that disposes of the personal estate (as opposed to real estate) of a member of the armed forces while in actual naval, military or airforce service, or a mariner or seaman at sea by a privileged will.

Pursuant to the Wills Act 1988, a will must be treated as properly executed in Bermuda if it has been executed in accordance with the laws of the jurisdiction where either:

  • It was executed.
  • At the time of its execution or of the testator's death, the testator was either:
    • domiciled or had his habitual residence; or
    • a national of that jurisdiction.

Wills must be treated as properly executed in the following circumstances:

  • If it is executed on board a vessel or aircraft and it conforms to the laws of the territory of registration or close connection of the vessel or aircraft.
  • To the extent that the will disposes of immovable property, if its execution complies with the laws where the property is situated.
  • So far as a will exercises a power of appointment, if the execution of the will conforms to the law governing the essential validity of the power of appointment.

The interpretation of a will must not be altered due to any change in the testator's domicile after the execution of the will.

5.2 Are there particular rules that apply to real estate held in Bermuda or elsewhere?

See the answer to question 4.3 above.


6.1 Are trusts recognised in Bermuda?

Trusts are recognised in Bermuda. The general principles of trust law are derived from English common law and equity and therefore have historically evolved from English trust law. These principles are supported by local legislation which is also mostly drawn from English statute.

The Trustee Act 1975 (as amended) and the Trusts (Special Provisions) Act 1989 (as amended) ('the Trusts (Special Provisions) Act') are the principal statutes governing trusts in Bermuda.

6.2 If trusts are recognised in Bermuda, how are they taxed in Bermuda?

Bermuda does not impose income, capital gains or capital transfer, inheritance, or any other tax on Bermuda trusts.

Stamp duty is levied on certain trust documents involving Bermuda property under the Stamp Duties Act. Specific exemptions exist for exempted companies, local trustees, and transactions that do not involve Bermuda property. There is a nominal amount of stamp duty payable on certain trust documents where the trust fund consists of non-Bermuda property.

6.3 If trusts are recognised, how are trusts affected by succession and forced heirship rules in Bermuda?

Under Bermuda succession law, no person can be compelled to take ownership of a share in an estate. The treatment of movable assets in a Bermuda trust is in accordance with the terms of the trust deed and the settlor/grantor's wishes rather than the succession laws of the settlor/grantor's country.

There are no fixed or statutory rights of inheritance under Bermuda law. Therefore there is no forced heirship regime. A key statute is the Trusts (Special Provisions) Act which makes it clear that a trust validly created under the laws of Bermuda can only be set aside in accordance with the laws of Bermuda, regardless of the laws or judgments of other jurisdictions, including those related to 'heirship rights' and 'personal relationships'.

The Conveyancing Amendment Act 1994 amended the Conveyancing Act 1983 to clarify the circumstances under which creditors can seek to set aside a transfer of assets to a trust in Bermuda.

6.4 Are foundations recognised in Bermuda?

Not as yet, although foundations legislation is being considered and companies limited by guarantee are widely used in Bermuda.

6.5 If foundations are recognised, how are they taxed in Bermuda?

This is not applicable in Bermuda.

6.6 If foundations are recognised, how are foundations affected by succession and forced heirship rules in Bermuda?

This is not applicable in Bermuda.


7.1 What restrictions or qualifications does Bermuda impose for entry into the country?

Entry into Bermuda as a visitor is by landing visa for a ninety (90) days' stay. Extensions to this period are possible but nothing greater than a further ninety (90) days and probably less. A business visitor may enter Bermuda for nine (9) days or twenty-one (21) days depending on whether the business visitor is 'related' to a local or exempted Bermuda company.

A worker entering Bermuda must be in possession of a valid work permit issued by the Bermuda Immigration Authorities. Work Permits vary in duration and form. A temporary permit is valid for three (3) months. A periodic permit is usually valid for one (1) year and enables the holder to come and go up to a cumulative six (6) months in twelve (12). Full 1, 2, 3, 4, 5 & 6 year work permits enable the holder to work and reside in Bermuda.

Term Limits apply to the duration of the work permits/renewal of work permits which is usually six (6) years. An extension of three (3) years is available (making a nine (9) year term limit) or an exemption - in which case term limits will not apply. Permission to reside on an annual basis may be granted but the holder cannot work but can reside in Bermuda. These permissions are renewable annually and the holder must satisfy financial conditions (eg., sufficient funds to maintain self, etc.).

A Resident Permit may be granted but the holder has to be at least fifty (50) years old, retired globally and must satisfy financial conditions. A residence permit is available to those who buy property in Bermuda and allows the holder to enter and re-enter only.

Certain visa restrictions apply to certain nationals who will require a transit visa before entry.

7.2 Does Bermuda have any investor and other special categories for entry?

None other than the annual permission to reside and resident permit as above.

7.3 What are the requirements in Bermuda in order to qualify for nationality?

A non-Bermudian cannot obtain nationality other than by marrying a Bermudian and remaining married and living together as man and wife for ten (10) years and applying for Bermuda status.

7.4 Are there any taxation implications in obtaining nationality in Bermuda?

There are no such taxation implications.


8.1 What is the test for a corporation to be taxable in Bermuda?

Bermuda companies can be either local companies (those that carry on a local business within Bermuda) or exempted companies (those that carry on business outside of Bermuda). Typically a foreign investor would be interested in the formation of an exempted company which is so called as they are exempted from the provisions of Bermuda law in relation to 60% Bermudian ownership and control with which local companies must comply.

The benefits of a Bermuda exempted company are numerous. As stated previously, there are no taxes on profits, income or dividends, nor is there any capital gains tax, estate tax or death duty with respect to Bermuda exempted companies. There is, however, a government fee of $1,995 per annum. Profits can be accumulated and it is not obligatory to pay dividends. Exempted companies may be designated as non-resident for Bermuda exchange control, meaning that they are then free to deal in any currency, other than Bermuda Dollars. There is no minimum share capital. Shares must be of a stated par value, and bearer shares are not permitted. There are no restrictions on the nationality of the shareholders of an exempted company. The minimum number of directors is one individual or a company can act as a director, provided the company's bye-laws allow for the same.

8.2 How are branches of foreign corporations taxed in Bermuda?

See the answer to question 8.1 above.


9.1 Has Bermuda entered into income tax and capital gains tax treaties and, if so, what is their impact?

In 1986, the USA and the UK on behalf of Bermuda entered a tax convention covering the relief from excise taxes of certain insurance enterprises in the USA, the deductibility of certain convention expenses for those from the USA, and agreed an Article relating to mutual assistance in tax matters. Under the treaty, insurance profits are not taxable in the other country unless the profits of the enterprise are attributable to a permanent establishment in the other country. Bermuda is still a foreign sales corporation designated territory for US tax purposes.

The mutual assistance involves two areas: (a) assistance in the prevention of tax fraud and the evasion of taxes by US taxpayers; and (b) developing appropriate conditions, methods and techniques for providing assistance, which are contained in the USA-Bermuda Tax Convention Act 1986 ('the USA-Bermuda Tax Convention'). The USA-Bermuda Tax Convention establishes the way in which Bermuda will meet its commitments and the method by which the USA may apply for information. A Competent Authority Agreement has also been entered into by the USA and Bermuda Governments dealing with the actual mechanics of requests for information. This agreement is not a public document.

Also, the USA-Bermuda Tax Convention contains a special exception to the exchange of information rules. The exception applies to information protected by banker/customer confidentiality laws (in civil matters) and attorney/client privilege (in civil and criminal matters). The request for information must relate to tax fraud or evasion of taxes, and the USA, in making a request for information, must show that the request is relevant to the tax liability of a US taxpayer.

Bermuda has had an Agreement on Exchange of Information on Tax Matters with the US with effect from 2 December 1988.

In June 2000, Bermuda made a commitment to work with OECD countries to improve transparency and exchange of information in tax matters. Since that time, Bermuda has played an active role in the OECD Global Forum on Taxation, most notably by participating in the working group that developed the Model Agreement on Exchange of Information on Tax Matters. On 10 November 2005 Bermuda signed a Tax Information Exchange Agreement ('TIEA') with Australia. The scope and object of this agreement was to promote the exchange of information involved with the assessment and enforcement of domestic tax claims, collection and recovery of such taxes and in the prosecution of arising tax matters. On 4 December 2007, a new TIEA between the UK and Bermuda was signed and took effect on 4 December 2008.

The International Cooperation (Tax Information Exchange Agreements) Act 2005 gives the Bermuda Government the power to instigate agreements with the OECD and European Union Member States on an individual country-to-country basis. On 8 June 2009, a TIEA was signed with the Netherlands which meant Bermuda had signed 12 TIEAs resulting in the island being re-designated from being a 'Grey List' to a 'White List' jurisdiction. Bermuda's elevation to the OECD 'White List' category was a significant development; it demonstrated Bermuda's commitment to upholding the international tax standards set by the OECD and the G20 group.

To date, the Bermuda Government has negotiated 33 TIEAs and 3 Double Taxation Agreements ('DTA') with the following:

  1. Argentina;
  2. Aruba;
  3. Australia;
  4. Bahrain (DTA);
  5. Canada;
  6. Curacao;
  7. Czech Republic;
  8. Denmark;
  9. Faroe Islands;
  10. Finland;
  11. French Republic;
  12. Germany;
  13. Greenland;
  14. Iceland;
  15. India;
  16. Indonesia;
  17. Ireland;
  18. Italy;
  19. Japan;
  20. Malaysia;
  21. Malta;
  22. Mexico;
  23. Netherlands;
  24. New Zealand;
  25. Norway;
  26. People's Republic of China;
  27. Portugal;
  28. Qatar (DTA);
  29. Republic of Korea;
  30. St Maarten;
  31. South Africa;
  32. Sweden;
  33. Turkey;
  34. United Kingdom;
  35. United States of America; and
  36. United States of America (DTA).

9.2 Do the income tax and capital gains tax treaties generally follow the OECD or another model?

Many follow the OECD model. See the answer to question 9.1 above.

9.3 Has Bermuda entered into estate and gift tax treaties and, if so, what is their impact?

This is not applicable to Bermuda.

9.4 Do the estate or gift tax treaties generally follow the OECD or another model?

This is not applicable to Bermuda.

Originally published by Global Legal Group Ltd, London

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.