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- BERMUDA
FORMS OF OFFSHORE OPERATION
- BERMUDA TAX TREATMENT OF OFFSHORE
OPERATIONS
- BERMUDA TAXATION OF FOREIGN
EMPLOYEES OF OFFSHORE OPERATIONS
- BERMUDA EXCHANGE CONTROL
- BERMUDA OFFSHORE ACTIVITIES
- BERMUDA EMPLOYMENT AND
RESIDENCE
The
term 'offshore' is not used in Bermudian legislation
or in describing company forms. Non-residence
is the key criterion for obtaining exemption from
the statutory requirement for 60% local ownership.
Since there are no corporate taxes other than
employee-related taxes, which apply to all companies,
there is no separate 'offshore' sector as such.
Bermuda
Forms of Offshore Operation
Offshore operations may take
place within the following forms:
Bermuda Tax Treatment of Offshore
Operations
In Bermuda there is no income or
corporation tax, no capital gains tax, no VAT
or sales tax, and no withholding tax. Companies
and partnerships pay annual fees to the Government
depending on their nature and capitalisation.
There are also some employee-related taxes which
apply to all employers, payroll tax and social
and health insurance contributions. These payments
are described in Domestic
Corporate Taxes.
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Bermuda
Taxation of Foreign Employees of Offshore Operations
This
section refers to the taxation of foreign employees
in Bermuda. See Domestic
Personal Taxes for the general principles
of individual taxation in Bermuda, which also
apply to the resident employees of non-resident
entities. There is in fact no distinction between
the employees of resident or non-resident operations.
Most types of compensation and benefit paid to
employees are subject to the payroll tax, which
is the only significant tax for individuals; there
are no special privileges or exemptions for expatriate
workers.
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Bermuda
Exchange Controls
Bermuda has exchange controls which
apply to residents in respect of the Bermudian
dollar. The forms of company listed above are
considered to be non-resident, and there are no
controls on their freedom to make transfers and
carry out transactions in all other currencies.
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Bermuda
Offshore Activities
Generally, the forms of company
and partnership described above which are those
used for offshore operations are allowed to trade
freely from Bermuda with external partners, but
must limit their dealings on the island to other
exempt entities, to dealing in securities, (for
mutual funds) to selling shares, and to managing
the affairs of other exempt or non-resident entities.
It is possible to obtain a license from the Minister
of Finance to carry out other types of business
activity on the island, if he considers it is
in the interests of Bermuda. In view of the Government's
support for e-commerce, these licenses are readily
issued for Internet providers and infrastructure
companies.
Exempt
entities are not allowed to buy freehold property
on the island, but may lease office accommodation
for their own use. An exempt entity can hold a
mortgage on a Bermudian property (usually to assist
an executive in purchashing accommodation) but
needs the consent of the Minister of Finance if
the amount is greater than BMD50,000.
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Bermuda
Employment and Residence
In
common with some other crowded and attractive
offshore jurisdictions, Bermuda limits immigration
through tough controls on work permits and housing.
The
Bermuda Immigration and Protection Act 1956 requires
that a non-Bermudian, not being married to a Bermudian,
must obtain a work permit, and this will only
be granted if there is no suitably qualified Bermudian.
Positions must first be advertised locally before
a permit is applied for, although this requirement
is often waived for senior positions. Work permits
are normally granted for one year (longer in the
case of senior posts). Permits are not normally
given to people with more than two children. Effective
1st April 2010, work permits costs range from
USD700 for a one-year permit to USD5,000 for a
five-year permit. The soon-to-be-introduced ten-year
permit will cost USD20,000. The ten-year permit
was announced during a speech to the Bermuda Chamber
of Commerce by Minister for Economy, Trade and
Industry, Kim Wilson in late April, 2011 and is
expected to be available in a few months.
Foreigners
are more or less unable to buy land or property,
other than houses with a high Annual Rental Value
(ARV). The Bermuda Immigration and Protection
(Minimum Annual Rental Values) Regulations 2007
set the minimum ARV at USD153,000. Foreigners
may also hold or acquire designated condominium
units with an ARV of USD32,400.
In
2007, new legislation attempted to tighten up
and clarify restrictions on the ownership of land
and property by 'restricted persons,' in other
words non-permanent residents of Bermuda and exempted
corporations.
Rentals
and leases of property from Bermudians have been
possible, with permission from the Minister of
Labour and Home Affairs, normally given only if
the owner is leaving the island (with the idea
of preventing speculative property development).
Exempt companies have been able to finance and
lease newly-constructed houses subject to certain
conditions.
Purchase
of properties by non-Bermudians requires a license
from the Minister, and payment of a fee of 25%
(at the time of writing) of the value of the property.
In
June 2007, the Bermuda Immigration and Protection
Amendment Act 2007 and seven related Regulations
come into force. The commencement of this Act
and the Regulations represents the first complete
overhaul and modernization of Part VI of the Bermuda
Immigration and Protection Act 1956 since the
Act came into effect.
It
marks the culmination of the legislative process
through which this Part was amended to bring into
law what was the Government’s land policy
and, in particular, to address the problem of
“fronting”, by which means non-Bermudians
have gained control over land in Bermuda either
while avoiding the licensing regime or in defiance
of the Government’s land-holding policy.
Additionally, the Regulations ensconce in law
certain administrative rules supporting Part VI
of the 1956 Act.
NB:
This is a very abbreviated summary of the complex
rules governing property purchase or rental in
Bermuda.
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