Tax Treaty Relief in Bermuda

Does Bermuda have double-tax treaties?

Bermuda has never concluded a comprehensive income-tax double-taxation agreement (DTA) with any jurisdiction. The reason is structural: Bermuda does not levy a general personal income tax or a broadly applicable corporate income tax on residents, so there is no domestic income-tax base to relieve through a bilateral DTA. Where a DTA allocates taxing rights between two countries, there is nothing for Bermuda to allocate. As a consequence, Bermuda persons receiving dividends, interest, or royalties from foreign sources receive no DTA-based reduction of the withholding tax (WHT) imposed by the source country. The burden of any foreign WHT falls entirely on the recipient without the offset mechanism a DTA would normally provide. [1, 2]

One limited exception exists: the 1986 US-Bermuda Tax Convention. This agreement is frequently mischaracterised as a standard income-tax treaty, but its scope is narrow and sector-specific, as explained below.

What is the US-Bermuda Tax Convention and what does it cover?

The Convention Relating to the Taxation of Insurance Enterprises and Mutual Assistance in Tax Matters, signed on 11 July 1986 and in force from 1 January 1988, is the only bilateral taxation convention Bermuda has concluded. Its operative scope is deliberately restricted to insurance enterprises. Under the convention, qualifying Bermuda insurance companies are exempt from US federal income tax on their Bermudian-source insurance or reinsurance income, provided they have not created a US permanent establishment (PE) and at least 50% of the entity's beneficial ownership is held by Bermuda residents or US persons. The relief does not extend to general business profits, employment income, dividends, interest, or royalties outside the insurance context. [3]

Two further limitations matter in practice. First, the convention explicitly does not prevent the United States from imposing its federal excise tax (FET) on insurance or reinsurance premiums remitted to foreign insurers -- a meaningful cost for Bermuda reinsurers writing US-originating risk. Second, the convention predates modern DTA anti-avoidance standards; it incorporates a mutual administrative assistance article for information exchange but does not include a principal-purpose test (PPT) or limitation-on-benefits (LOB) provision aligned with current OECD BEPS standards. Bermuda has not signed the OECD Multilateral Instrument (MLI), so no post-BEPS modifications have been layered onto this convention. [3, 4]

What TIEAs and multilateral transparency frameworks has Bermuda joined?

Because comprehensive DTAs were inapplicable, Bermuda built its international tax-cooperation framework through Tax Information Exchange Agreements (TIEAs). As of the Government of Bermuda's January 2022 update -- the most recent official compilation -- Bermuda had concluded 41 bilateral TIEAs. Partner jurisdictions include: Argentina, Aruba, Australia, Austria, Belgium, Brazil, Canada, China, Czech Republic, Denmark, Faroe Islands, Finland, France, Germany, Greenland, Iceland, India, Indonesia, Ireland, Italy, Japan, Korea, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Qatar, Singapore, South Africa, Spain, Sweden, United Kingdom, and United States, among others. [5]

The following table summarises the key mechanisms in Bermuda's international information-exchange architecture:

TIEAs are fundamentally different from DTAs. They create obligations to share information on request but do not reduce source-country WHT rates, eliminate double taxation, or provide the residence-vs-source allocation framework that a DTA delivers. A Bermuda investor receiving German dividends, for instance, faces German WHT at the domestic rate (typically 25% plus solidarity surcharge) with no treaty reduction, because Germany and Bermuda have a TIEA, not a DTA. [1, 2]

On CRS, Bermuda financial institutions report financial account data annually for non-resident account holders. Under Bermuda's FATCA Model 2 IGA -- unlike the Model 1 IGA used by the Cayman Islands, BVI, and the Bahamas -- Bermuda financial institutions report directly to the US Internal Revenue Service rather than routing reports through the Bermuda government. [2]

How does Bermuda's new 15% corporate income tax interact with the global treaty framework?

The Bermuda Corporate Income Tax Act 2023 (CITA 2023) came into effect for fiscal years beginning on or after 1 January 2025. It imposes a 15% corporate income tax on Bermuda constituent entities that belong to multinational enterprise (MNE) groups with consolidated annual revenues of EUR 750 million or more in at least two of the preceding four fiscal years. Entities below that threshold -- and all individuals -- remain outside the scope of the CIT. [6]

Bermuda's CIT uses a GloBE-aligned book-income base with adjustments, including credits for creditable foreign taxes and an Economic Transition Adjustment (ETA). This alignment is significant: the Bermuda CIT is expected to function as a covered tax for purposes of other jurisdictions' Pillar Two Income Inclusion Rule (IIR) and Undertaxed Profits Rule (UTPR) calculations, meaning that Bermuda-based MNE entities paying the 15% CIT should generally not be subject to top-up tax in a parent jurisdiction. However, as of mid-2026, Bermuda's CIT has not been granted formal Qualified Domestic Minimum Top-up Tax (QDMTT) status on the OECD's Central Record of Legislation with Transitional Qualified Status. Bermuda has consulted on draft legislation that would add an IIR and a formal QDMTT layer effective for fiscal years beginning on or after 31 December 2025; that process was still in progress as of the most recent public updates. [6, 7]

The CIT does not alter Bermuda's zero-withholding-tax policy. Bermuda imposes no WHT on dividends, interest, royalties, or any other outbound payment -- a position unchanged by CITA 2023 and confirmed by PwC Worldwide Tax Summaries 2025. [2]

What treaty relief is available to Bermuda persons on foreign-source income?

For individual Bermuda residents, no Bermuda income tax exists on personal income, so foreign tax relief in the traditional DTA sense -- a credit or exemption to prevent double taxation of the same income in both the residence and source state -- is structurally not available. A Bermuda-resident individual receiving dividends from a US-listed company, for example, faces US dividend WHT at the applicable rate (typically 30% for non-US persons, or 15% under US-source rules for certain non-US ETF structures). There is no DTA mechanism to reduce that rate from Bermuda's side. The only avenue for relief is if the investor holds the position through an entity that itself qualifies under a DTA between the source country and a third jurisdiction. [1, 2]

For in-scope MNE entities under CITA 2023, foreign taxes paid can reduce Bermuda CIT liability through the foreign tax credit mechanism built into the Act. This provides a form of unilateral relief against double taxation for large-group entities, though it is not the same as bilateral DTA relief and its operation in specific cross-border fact patterns should be assessed with reference to the CITA 2023 technical provisions.

For practitioners and individuals navigating Bermuda's cross-border position, the Bermuda country overview provides jurisdiction context. Given the absence of comprehensive DTA coverage, structuring decisions involving Bermuda entities or Bermuda-resident individuals exposed to foreign WHT should be reviewed with a qualified tax professional experienced in international tax.

Is Bermuda on any international tax transparency watchlists?

Bermuda has maintained a strong compliance posture within international transparency frameworks. It was the first jurisdiction to reach the G20/OECD whitelist threshold after the April 2009 London G20 Summit by signing 12 TIEAs. Bermuda passes the OECD Global Forum peer-review process and meets all terms of reference in the OECD's country-by-country reporting peer reviews, as confirmed in the 2025 compilation. Bermuda is a committed adopter of CARF with a target first-exchange date of 2027. [5, 7]

Bermuda is listed as a non-cooperative jurisdiction by the EU Code of Conduct Group due to the historical absence of a corporate income tax, though the enactment of CITA 2023 is expected to influence that assessment once the CIT regime has been evaluated against EU listing criteria. Individuals and entities with Bermuda connections should confirm current EU and OECD listing status with a qualified tax professional before taking material cross-border positions, as status can change between publication cycles.

For jurisdiction-specific filing preparation, practitioners listed on TaxPros Rated can be compared at /global/jurisdictions/country/bm. Any cross-border position involving Bermuda-source or Bermuda-resident income should be reviewed by a qualified tax professional familiar with both the source jurisdiction's WHT rules and Bermuda's evolving corporate tax regime.