Bermuda’s contributory pension scheme requires employers to make monthly contributions to the Contributory Pensions Fund for every employee above 17 years of age for each week in which the employee works more than four hours. An employer must ensure that each qualifying employee registers with the department and obtains a social insurance number. Civil and criminal penalties may apply to employers for failure to register or pay in for each qualifying employee.
Employees contribute a matching sum via weekly payroll deduction, with several exceptions. Full time students under age 26 who are employed during holidays, weekends and summer breaks, and their employers, are entirely exempt from social insurance contributions. Employees over the age of 65 are exempt from contributing their half, although the employer must still contribute its part.
The current total contribution per employee per week is BMD 71.84. The employer portion is BMD 35.92 and the employee portion is BMD 35.92.
Expatriate and other employees who pay in to the system but fail to qualify for a pension due to insufficient contributions may apply at age 65 for a refund of the total value of the contributions made on their behalf, including both employer and employee contributions.
Bermuda imposes a payroll tax on employers at a rate determined by employer category or total annual payroll. See the Other taxes section in the Corporate summary for more information.
Value-added tax (VAT)
There is no VAT or sales tax in Bermuda.
A land tax is imposed on all developed land in Bermuda, with exceptions for government land, Bermudian pensioner’s primary homesteads, and certain charitable organisations. The tax is based on an assessed annual rental value (ARV) of each valuation unit.
The progressive scale of tax rates ranges between 0.80% and 50.00% based on the ARV of the unit. From 1 July 2019, commercial properties are taxed at a general rate of tax of 9.50%. A separate category of tourist properties are taxed at 8%. Commercial properties in a designated Economic Empowerment Zone are subject to a 7% rate.
Vacation rental tax
Effective November 2018, the proprietor of a vacation rental unit, a holder of a vacation rental (rent control) certificate, or an agent acting on behalf of either, shall pay to the Bermuda tax authorities a vacation rental fee equal to 4.5% of the rack rate charge made by the proprietor in respect of the vacation rental unit.
Customs import duties are imposed on almost all goods arriving on the island at varying rates, with a BMD 200 per passenger per landing exemption for residents. The most common rate of customs import duties is at 25% though note that other varying rates may apply.
Customs duties are waived for new residents for their personal and professional goods for a period of 90 days from the date of arrival to set up residence in Bermuda. To qualify for the exemption, the goods must have been in the possession of the new resident for a prior period of six months.
There are no excise taxes imposed in Bermuda.
There is no transfer tax imposed in Bermuda.
Bermuda imposes stamp duty on a wide variety of legal instruments, such as transfers of property, deeds, and rental agreements. Rates vary according to the type of instrument and its value; these rates are periodically updated by Parliament.
Foreign currency purchase tax
There is a foreign currency purchase tax imposed at the rate of 1.25% on foreign currency purchased by a Bermuda resident from a local bank.