Bermuda Exempted Company: Formation, Tax, and Substance

A Bermuda exempted company is a corporate entity formed under the Companies Act 1981 that lets non-Bermudians own and control the business outright, in exchange for keeping its activity outside the local Bermuda market. It is the standard vehicle behind the island’s reinsurance sector, international holding structures, and cross-border finance work. Annual government fees start at $2,095 and rise with assessable capital, and every exempted company now sits inside a compliance framework that covers economic substance, beneficial ownership disclosure, and, for the largest groups, a new corporate income tax.¹

What “Exempted” Means

A regular Bermuda company must satisfy the 60/40 rule: Bermudians must beneficially own at least 60 percent of the securities, hold at least 60 percent of the voting rights, and make up at least 60 percent of the board.² An exempted company is released from all three limits and can be 100 percent foreign-owned.¹

The trade-off sits in Section 129 of the Act. An exempted company cannot carry on business in Bermuda’s domestic market unless the Minister grants a specific license, and licenses are issued only where the Minister determines the activity serves Bermuda’s best interests.¹ These entities work as vehicles for international activity: reinsurance, fund management, shipping, holding structures, and similar cross-border business.

Land ownership is similarly constrained. An exempted company that wants to buy property in Bermuda must obtain the Minister of Finance’s consent, and even when consent is granted the property is generally limited to commercial use or employee accommodation.

Local Presence You Have to Keep

Every Bermuda company must maintain a registered office on the island. Section 62 of the Companies Act requires it to be a physical address rather than a post office box, and it is where legal notices are received and statutory records like the share register are kept.³

Section 130 adds a personal-presence rule for exempted companies. At least one of the following must be ordinarily resident in Bermuda: a director, a secretary, or a resident representative.³ Most companies fill this seat by appointing a licensed corporate service provider as resident representative or secretary.

The board can be as small as one director. If that sole director is not resident in Bermuda, the company still has to appoint a resident secretary or resident representative to satisfy Section 130. All officers and directors are registered with the Registrar of Companies.

How to Form One

Formation runs through a licensed corporate service provider. The Corporate Service Provider Business Act 2012 regulates anyone acting as a company formation agent for profit, and the Bermuda Monetary Authority supervises compliance with its Code of Practice.⁴ A foreign founder cannot file directly with the Registrar; the service provider prepares the paperwork, submits it, and typically stays on for ongoing compliance.

Core Documents

The two constitutional documents are the Memorandum of Association and the Bye-laws. The Memorandum sets the company’s name, its objects, and its authorized share capital. The Bye-laws cover internal governance: director appointment and removal, meeting procedures, shareholder voting, and dividends. Templates are available from the Registrar of Companies.

The applicant also provides identification and residential address information for all proposed directors, officers, and significant beneficial owners. Under the Beneficial Ownership Act 2025, a beneficial owner is any individual who directly or indirectly owns or controls 25 percent or more of the shares, voting rights, or partnership interests.⁵ The company has to verify those individuals against independent source documents.

Share Capital

There is no statutory minimum share capital for a standard exempted company. The exception is an insurance company writing business for its own account, which must have authorized and issued share capital of at least $120,000, fully paid in cash or marketable securities before it is registered as an insurer.⁶

Assessable capital still matters for a different reason: it drives the annual government fee tier, even if only nominal share capital is issued.

BMA Vetting, Filing, and Fees

Before the Registrar will accept the application, the BMA vets the proposed beneficial owners against anti-money laundering and counter-terrorism financing standards, looking at ownership structure, source of funds, and the background of the principals. Once approval is granted, the full document set is filed electronically with the Registrar of Companies.

Government fees at incorporation are tiered by assessable capital:⁷

$0 to $12,000: $2,095
$12,001 to $120,000: $4,275
$120,001 to $1,200,000: $6,590
$1,200,001 to $12,000,000: $8,780
$12,000,001 to $100,000,000: $10,980
$100,000,001 to $500,000,000: $19,605
$500,000,001 or more: $32,676

The Registrar issues a Certificate of Incorporation once the filing is processed. From BMA approval through certificate typically runs three to five business days.

Tax Position

Bermuda has historically imposed no tax on corporate profits, income, capital gains, or dividends for exempted companies. The Exempted Undertakings Tax Protection Act 1966 lets an exempted company obtain a Tax Assurance Certificate stating that no income tax, capital gains tax, or estate duty will apply to the entity or its operations through March 31, 2035.⁸

The 15 Percent Corporate Income Tax

The Corporate Income Tax Act 2023 introduced a 15 percent corporate income tax effective January 2025. It applies only to Bermuda entities that are part of multinational enterprise groups with consolidated annual revenue of €750 million or more in at least two of the four preceding fiscal years, aligning Bermuda with the OECD’s Pillar Two global minimum tax framework.⁹

A Tax Assurance Certificate issued before January 1, 2024, does not protect a company from the new tax; the CIT Act overrides the older assurance, and certificates issued after that date expressly exclude CIT coverage.⁸ For exempted companies below the €750 million group threshold, nothing has changed: Bermuda remains a zero-income-tax jurisdiction.

Stamp Duty

Exempted companies benefit from broad stamp duty carve-outs. No stamp duty applies to instruments transferring land situated outside Bermuda, or to shares issued by entities incorporated outside Bermuda (except shares recorded on a Bermuda register). Shares in an exempted company listed on an appointed stock exchange are also exempt from stamp duty on transfer, provided no party is a Bermuda resident for exchange control purposes.¹⁰

Economic Substance Obligations

The Economic Substance Act 2018 requires any exempted company carrying on a “relevant activity” to show genuine economic presence in Bermuda. The relevant activities are banking, insurance, fund management, financing and leasing, headquarters, shipping, distribution and service centre, intellectual property, and holding entity.¹¹

Companies engaged in any of those activities must be directed and managed from Bermuda: local board meetings with directors physically present for strategic decisions, adequate employees and premises, and operating spend proportionate to the activity. A company can be in scope even if it earns no revenue from the activity during a given period.¹¹

Every exempted company files an annual Economic Substance Declaration with the Registrar, reporting local expenditure, employee headcount, and the location of its operations.¹¹ Non-compliance carries escalating financial penalties, daily default fines, and, after a third notice, the possibility of a court order winding the company up or striking it from the register.¹²

Annual Compliance

The most time-sensitive obligation is the annual government fee, due by January 31 each year together with a declaration of principal business and assessable capital. The fee follows the same tiered schedule used at incorporation, and late payment attracts a $300 penalty.⁷

The Companies Act requires an annual general meeting of shareholders each calendar year, though members can waive it by resolution. Even when the AGM is waived, audited financial statements must be made available to members within 12 months of the financial year-end unless all directors and members agree to waive that too. Any shareholder can force a meeting for a given year by written notice before September 30.

The share register is kept in Bermuda, although a branch register may be maintained elsewhere. Members of the public can inspect the register for a fee, and copies must be provided within 14 days of a request. Failure to keep proper books, file annual returns, or pay fees on time can lead to the Registrar striking the company off.

Beneficial Ownership and Privacy

Under the Beneficial Ownership Act 2025, any individual who directly or indirectly owns or controls 25 percent or more of the shares, voting rights, or partnership interests must be identified as a beneficial owner. If nobody meets the threshold, the company identifies its senior managing officer instead.⁵ Companies whose shares are listed on an appointed stock exchange, and their direct subsidiaries, are exempt.

The information feeds a central register held by the Registrar, but that register is not open to the public. Access is restricted to specific authorities, including the Bermuda Police Service, the Financial Intelligence Agency, the Bermuda Monetary Authority, and the Corporate Income Tax Agency. The Act overrides Bermuda’s public access to information law for beneficial ownership data, so it cannot be obtained through a freedom-of-information request.⁵

Other corporate records are more accessible. The Registrar of Companies runs an online portal where a paid account can look up a company’s registered office address, memorandum of association, date of incorporation, mortgage charges, and previous names.¹³ The register of directors and officers does not appear to be publicly available through that portal.

Moving an Existing Foreign Company In

A company already incorporated somewhere else can transfer its domicile to Bermuda through continuance, under Section 132C of the Companies Act. The foreign jurisdiction has to be on the Registrar’s list of appointed jurisdictions, or the company must apply to the Minister of Finance for special approval supported by a foreign counsel opinion confirming that migration is lawful.

The process starts with an application to the BMA, which reviews the proposed business, beneficial ownership, and financial statements prepared within 12 months of the proposed continuance date. Insurance companies must also secure approval for their insurance business before being licensed. Once the BMA consents, the company files a memorandum of continuance, a certificate of good standing from the original jurisdiction, foreign counsel opinion, financial statements, and the government fee with the Registrar.

After the Certificate of Continuance is issued, the company adopts Bermuda-compliant bye-laws, appoints a resident secretary or representative, and establishes a registered office on the island. It also forwards the certificate to the authorities in its former jurisdiction. From that point the entity is treated as a Bermuda exempted company, subject to the same economic substance, beneficial ownership, and annual compliance obligations as any company formed locally.

1
Government of Bermuda. Exempted Companies
2
Bermuda Monetary Authority. Local Companies
3
ILO NATLEX Database. Companies Act 1981
4
Bermuda Monetary Authority. Code of Practice – Corporate Service Provider Business Act 2012
5
Bermuda Laws. Beneficial Ownership Act 2025
6
Bermuda Monetary Authority. Exempted Companies
7
Government of Bermuda. Companies Annual Fees and Returns
8
Bermuda Laws. Exempted Undertakings Tax Protection Act 1966
9
Government of Bermuda. Corporate Income Tax Act 2023
10
Bermuda Laws. Stamp Duties Act 1976
11
Government of Bermuda. Economic Substance Requirements for Bermuda Guidance Notes
12
Bermuda Parliament. Economic Substance Amendment Act 2026
13
Government of Bermuda. Registrar of Companies