Self-Employed Tax in Bermuda

Do self-employed people pay income tax in Bermuda?

No. Bermuda does not impose a personal income tax on individuals or on self-employed earnings. The island has no general income tax, no capital gains tax, no inheritance tax, and no value-added tax. This has been the case since Bermuda's modern fiscal framework was established, and it remains unchanged in 2026. The Office of the Tax Commissioner confirms the absence of a personal income tax on the Government of Bermuda's official types-of-taxes page [1]. A self-employed resident therefore owes no income tax on profits drawn from a sole trade, consultancy, or small business.

For context on Bermuda's broader fiscal position, the Bermuda country overview describes how the jurisdiction funds public services through consumption-based and employment-based levies rather than earnings taxes.

What payroll tax does a self-employed person pay?

Payroll Tax is Bermuda's primary revenue instrument and it applies directly to self-employed individuals. Under the Payroll Tax Act 1995, a self-employed person is treated simultaneously as both the employer and the employee. The taxable base is deemed remuneration: the total amount drawn from the business for personal use during the quarter. This is capped at BMD 1,000,000 per person per year.

For the period 1 April 2026 to 31 March 2027, the employee portion uses a five-band progressive marginal structure [2]:

The employer portion rate is set by the annual payroll band of the business. A self-employed sole trader with total annual deemed remuneration under BMD 200,000 pays 0.5% on that remuneration as the employer portion. Businesses with annual payroll between BMD 500,000 and BMD 1,000,000 pay 7.0%, and those above BMD 1,000,000 pay 9.5%. Certain categories such as new start-ups (first four quarters) and self-employed caregivers qualify for a 0% employer rate [2].

Dividends received are partially deductible: up to BMD 20,000 per person per year may be excluded from deemed remuneration effective 1 April 2026 [2].

Payroll Tax returns and payments are due quarterly: 15 January, 15 April, 15 July, and 15 October. Self-employed persons with annual remuneration exceeding BMD 200,000 must file electronically at etax.gov.bm [3].

What social insurance contributions apply?

All working persons in Bermuda, including the self-employed, must contribute to the Contributory Pension Fund (CPF) administered by the Department of Social Insurance. The obligation arises for anyone working more than four hours per week.

For 2025-2026 the total weekly contribution is BMD 75.30 per person [4]. An employed worker splits this with the employer -- each pays BMD 37.65 per week. A self-employed person has no separate employer and therefore pays the full BMD 75.30 per week. Contributions are assessed weekly and billing is monthly. Persons aged 65 and over are exempt from the employee portion, though an employer portion continues to apply for covered employees.

How does a self-employed person register?

A self-employed person must register with the Office of the Tax Commissioner within seven days of the end of the first tax period in which business commences. Failure to register is a criminal offense under the Payroll Tax Act [3].

Registration requires submission of a Tax Registration Form to the Office of the Tax Commissioner at F.B. Perry Building, 1st Floor, 40 Church Street, Hamilton HM 12 (telephone 441-297-7754; payroll tax line 441-444-1781; email [email protected]). Supporting documents include a passport or driver's licence, a recent utility bill confirming address, and any partnership agreement if applicable [3]. The Electronic Tax System at etax.gov.bm is the filing portal for ongoing quarterly returns.

What other levies affect self-employed persons?

Beyond Payroll Tax and social insurance, self-employed persons in Bermuda are subject to customs duty on goods imported for business or personal use. HM Customs Bermuda applies a standard rate of 25% on most goods, assessed on the cost-insurance-freight (CIF) value. Rates vary by product category: clothing is 6.5%, food items such as fruit, vegetables, and tea carry 5%, and pharmaceutical products are duty-free. Automobiles face a rate of 75% on the first BMD 10,000 of value and 150% above that threshold [1][4]. For a sole trader importing equipment or supplies, customs duty forms a meaningful component of operating costs.

A foreign currency purchase tax of 1.25% applies when purchasing foreign currency through local banks [4]. Stamp duty applies to property transactions and certain commercial agreements.

Self-employed persons who suspect they may have obligations in another jurisdiction -- for example, a Bermuda-based contractor with clients in the United States or United Kingdom -- should consult a qualified tax professional to assess whether a tax treaty or foreign filing requirement applies.

How does self-employment compare with employment in Bermuda?

The practical distinction lies in who bears the employer Payroll Tax and the full social insurance contribution. An employed worker has the employee portion of Payroll Tax withheld by the employer and pays only BMD 37.65 of the weekly social insurance bill. The employer covers the rest. A self-employed person calculates and remits both portions without a counterparty to share the load. The employee progressive tax bands are identical -- the self-employed person is not taxed at a different rate schedule -- but the gross obligation at filing time is higher because the employer half is also the self-employed person's obligation. The practical result is that the combined Payroll Tax plus social insurance cost of self-employment should be factored into pricing and cash-flow planning from the outset.