Today, our quest to explore the British Overseas Territories continues. Next on the agenda is a group of islands often wrongly attributed to being in the Caribbean, when in fact they’re located quite a ways out in the Atlantic: Bermuda.
With an almost squeaky clean reputation, this jurisdiction plays a pivotal role in tax planning. The economy is today primarily dependent on international financial services and tourism.
Bermuda Companies and Entities
Bermudian companies are required to have 60% local ownership but can opt out of this by not trading with local persons or companies. A minimum of two directors is required, both of whom must be natural persons. A resident company secretary is also required, although one of the directors can and often does assume the role as secretary. There must be at least one shareholder, which can be a natural or legal person resident anywhere. There are no corporate taxes unless the company has local employees, in which case a payroll tax applies (up to 14%).
Fees in Bermuda are higher than in many other jurisdictions. The government fee alone stands at just under US$2,000 minimum per year, and more if the company has a share capital of greater than $12,000 (shares valued at minimum $1 each). Adding registered agent’s fees and other fees on top of this, it can often cost $4,000 and up per year just to maintain a Bermudian company.
Public records are available at the Bermuda Registrar of Companies.
Bermuda is not a particularly suitable location if you’re looking to hide your affairs.
Bermuda is possibly the most reputable tax haven in the world. When there is a media crusade against the likes of Apple and Google, which utilize Bermuda as a part of a greater tax-minimization structure, it is usually the companies’ names which are dragged through the mud and not so much Bermuda’s. The OECD has given Bermuda the rating Largely Compliant.
With secrecy all but removed, Bermuda has established itself as a reputable offshore financial center.
Insurance in Bermuda
A wide range of different classes of insurance or re-insurance licenses are available—enough to cater to anyone’s insurance-issuing needs. Several of the world’s largest insurance companies are present in Bermuda in one way or another.
Strict regulations are in place to prevent abuse and keep the jurisdiction’s reputation clean.
Banking in Bermuda
Foreign banks were for a long time entirely excluded from Bermuda, which means that the banks that are active in Bermuda have real links to the local economy, ranging from everyday finances to tourism to financial services. This is unique among most if not all other small tax havens, whose banking sectors are enormously inflated by having several hundred times more in foreign capital deposits than from the local economy.
Below is a list of all banks licensed in Bermuda:
- Bermuda Commercial Bank
- Butterfield Bank (the biggest bank in Bermudian market share)
- Clarien Bank
- HSBC (formerly Bank of Bermuda until 2004)
Banking is of a generally high quality. Minimum deposits vary from none to millions, depending on the type of services required.
Digital Diversification in Bermuda
Living in Bermuda
Life in Bermuda can be very comfortable and luxurious, being one of the highest-income territories in the world. Unlike most tax havens, Bermuda has a strong domestic economy, and the international financial services sector is well integrated into everyday life. Hurricanes can be a problem though.
There is no income tax, capital gains tax, or sales tax. A Social Security insurance is charged for those working in Bermuda; 64 Bermudan dollars (US$64) per week, half paid by the employer and half paid by the employee.
A work permit is required, and getting a job is almost impossible outside of senior legal and financial service professions. The local workforce is highly skilled, and competition is fierce for what few jobs exist. Starting a business based in Bermuda is equally difficult.
In conclusion, Bermuda is one of the most interesting tax havens, although its costs put it out of reach for small operations.
Editor’s Note: In addition to Bermuda, there are other attractive jurisdictions that are cause for optimism. However, things can change quickly. New options emerge, while others disappear. This is why it’s so important to have the most up-to-date and accurate information possible. That’s where International Man comes in. Be sure to get the free IM Communiqué to keep up with the latest on the best international diversification options to maximize your personal freedom and financial opportunity.
The information in this article is based on Streber’s personal experiences and has not been independently verified. As always, do your own due diligence.
Streber works as a consultant and director for a wide range of companies and has broad experience in offshore banking, offshore incorporation (formation and maintenance of offshore companies), taxation, privacy, ecommerce, merchant accounts, online payments, and all other things the privacy-minded entrepreneur might find interesting. You can read Streber’s blog here.