Dividend and Investment Tax in Bermuda

Are dividends and investment income taxed in Bermuda?

Bermuda does not impose any tax on dividends, interest, capital gains, or investment income received by individuals or by entities that fall outside the large-multinational threshold. The Government of Bermuda confirms that individuals pay no personal income tax; the principal direct tax on employment is a payroll tax levied on employers and employees on remuneration only. [1] PwC's Worldwide Tax Summaries, reviewed February 2026, confirms that Bermuda "does not impose withholding taxes on any payments, including those related to profits, income, dividends, or capital gains." [2] Dividends received from a Bermuda company are therefore paid gross to shareholders regardless of their country of residence. For most investors and funds domiciled in Bermuda, zero tax leakage at the entity and distribution level is the operative reality.

Investors who are tax-resident outside Bermuda should note that Bermuda's zero rate does not cancel home-country tax liability. Most countries tax their residents on worldwide income; income sourced in or distributed from Bermuda will generally be reportable and taxable in the investor's country of residence or citizenship. A qualified tax professional in the investor's home jurisdiction should be consulted before drawing conclusions about net tax exposure.

Is there a withholding tax on dividends or interest paid out of Bermuda?

No. Bermuda operates a zero-withholding regime. There is no withholding tax on dividends, interest, royalties, or any other category of investment payment made from a Bermuda entity to a recipient anywhere in the world. [2] This applies to distributions from Bermuda-registered companies (including exempted companies formed under the Companies Act 1981), interest on deposits at Bermuda banks, and returns from investment funds regulated under the Investment Funds Act 2006. The zero-withholding position is unchanged under the Corporate Income Tax Act 2023 (CITA 2023) that introduced a 15% corporate rate for large multinationals; that Act expressly leaves the withholding framework intact. [2] This makes Bermuda a structurally efficient distribution point for cross-border investment vehicles.

What is the 15% corporate income tax and who does it affect?

The Corporate Income Tax Act 2023 (signed into law 27 December 2023) introduces a 15% corporate income tax applicable to Bermuda constituent entities that are members of multinational enterprise (MNE) groups with consolidated annual revenue of EUR 750 million or more in at least two of the four preceding fiscal years. [3] The tax is effective for fiscal years beginning on or after 1 January 2025 and is administered by the Corporate Income Tax Agency (CITA). The legislation aligns Bermuda with the OECD Pillar Two global minimum tax initiative, fulfilling commitments made to more than 140 participating nations. [3]

Businesses outside this revenue threshold are unaffected. Small and medium-sized companies, local Bermuda businesses, captive insurers that are not part of a qualifying MNE group, and individual investors all continue to operate under the longstanding zero-corporate-tax environment. [3] The CITA 2023 did not introduce personal income tax, dividend withholding, or capital-gains tax. Taxable income under the regime is calculated on a modified book-income basis similar to the OECD GloBE model rules, with adjustments including an Economic Transition Adjustment (ETA) for certain qualifying entities. [4]

Does Bermuda participate in CRS and FATCA reporting?

Yes. Despite imposing no tax on investment income, Bermuda participates in two major international information-exchange frameworks. First, Bermuda adopted the OECD Common Reporting Standard (CRS) with effect from 1 January 2016; Bermuda-based reporting financial institutions (RFIs) -- custodial institutions, depository institutions, investment entities, and specified insurance companies -- must identify account holders' tax residency and file annual CRS reports with CITA on accounts held by non-residents. [5] Annual CRS reports are due by 31 May each year, with a CRS Compliance Form due by 30 September. [5]

Second, Bermuda has a Model 2 Intergovernmental Agreement (IGA) with the United States under FATCA. Under a Model 2 IGA, Bermudian foreign financial institutions report account information for US persons directly to the IRS rather than through the Bermuda government portal. [6] This distinguishes Bermuda from many Caribbean peers that operate under Model 1 IGAs. Both frameworks mean that account data on foreign investors held in Bermuda financial institutions is routinely shared with the relevant foreign tax authorities, including the IRS, even though Bermuda itself taxes none of that income.

Why is Bermuda a leading domicile for investment funds and insurance vehicles?

Bermuda's attraction for investment funds and (re)insurance groups rests on several structural features. At the entity level, no corporate income tax applies below the EUR 750M MNE threshold, so accumulated investment returns compound without local tax leakage. At the distribution level, zero withholding means that dividends and interest flow to investors gross, preserving full flexibility for treaty-based or home-country credits. The Investment Funds Act 2006 provides a regulatory framework -- covering Class A Exempt Funds, Class B Exempt Funds, Standard Funds, and Closed-End Funds -- that institutions in over 100 countries recognise as credible. The Insurance Act 1978 supports one of the world's largest captive-insurance and reinsurance markets, with more than 600 registered captives writing approximately USD 30 billion in gross written premiums annually. [7]

For large MNE-group insurers now within scope of CITA 2023, the 15% rate represents a significant change from the historical zero-rate environment, though many captives are too small to meet the EUR 750M group-revenue threshold and remain unaffected. The Bermuda Monetary Authority (BMA) supervises both funds and (re)insurance entities; regulatory standing with the BMA underpins Bermuda's equivalence recognition in the EU (Solvency II) and other major markets.

For further context on Bermuda's overall tax environment and the types of taxes that do apply, the Bermuda country overview provides a structured starting point. Investors and fund managers evaluating domicile decisions across the Caribbean and Atlantic regions can also compare Bermuda against peer jurisdictions at /global/jurisdictions/country/bm. Because individual tax outcomes depend heavily on home-country rules, applicable tax treaties, and entity structure, any investment or domicile decision warrants review by a qualified tax professional.