Economy and Banking Sector of Bermuda

Bermuda is a British overseas territory situated in the North Atlantic Ocean.

The economy of Bermuda is traditionally based on tourism and light manufacturing. In the recent years however, international business has been rapidly increasing its share, making Bermuda a highly successful offshore financial center.

Currently there are 4 banks operating in Bermuda: Bermuda Commercial Bank Limited, Capital G Bank Limited, HSBC Bank Bermuda Limited, The Bank of Butterfield & Son Limited.

Location North Atlantic Ocean
Population (2010)64 237
EU Status not part of the EU (OCT)
Dependent Territory Of United Kingdom (British Overseas Territory)
Economy
National Currency BMD (Bermudian dollar)
Credit Ratings (as of Sep 2016)
    FitchA+ high credit quality, outlook stable
    Moody'sA2 upper medium grade, outlook stable
    S&PA+ upper medium grade
Taxation
Withholding Tax 0.0 - 0.0%
Double Taxation Agreements 4 signed agreements
Information Exchange 
    Exchange on Request 38 signed agreements
    Automatic Exchange starts in September 2017
FATCA IGA in effect since 19 December 2013, Model 2
Banking Sector
Deposit Guarantee Scheme 
    Maximum Protected Amount 25 000 USD
Country Ceiling for Deposits 
    Local Currency (Bermudian dollar)Aa3 high grade
    Foreign CurrencyA2 upper medium grade
Banking Supervision Bermuda Monetary Authority
Banking Sector Structure 
    Number of Banks4
    Consolidated Assets (2015) 24 100.00 mln USD ↑ (+4.33%)
 List of Banks in Bermuda

EU Status

Bermuda is one of the OCTs (Overseas Countries and Territories) of the European Union. This means that although its nationals are in principle EU citizens, Bermuda is not part of the EU or directly subject to EU law.

Top

Bermudian Economy

National Currency

Since 1970, the official currency of Bermuda is Bermudian dollar (BMD), it is pegged to the United States dollar at a one-to-one ratio: 1 USD = 1 BMD.

Top

Taxation in Bermuda

Withholding Tax

Withholding taxes are imposed at source of income and are often applied to dividends, interest, royalties, rent and similar payments. The rates of withholding tax are often reduced by double taxation agreements.

Withholding tax rates applied on payments of interest and dividends in Bermuda are shown in Table 1.

Dividends Interest
Natural person, resident 0.00.0
Natural person, non-resident 0.00.0
Table 1. Withholding tax rates in Bermuda.
Top

Double Taxation Agreements

Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation.

Bermuda signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Bahrain
 Seychelles (Jul 2013)
 United States

There are also several agreements between Bermuda and other jurisdictions which were signed but haven't yet come into force (for agreements signed after after 01 January 2013 of signing the agreement is given in brackets):

 Qatar
Top

Information Exchange

There are 3 ways for jusrisdictions to exchange information on tax matters:

  • spontaneously;
  • on request;
  • automatically.

Spontaneous exchange of information is provision of information that is forseeably relevant to another party without a request being previously sent.

Tax Information Exchange Agreements (TIEAs) enable exchange of information on request relating to a specific tax investigation, either criminal or civil.

Bermuda signed TIEAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Argentina
 Aruba
 Australia
 Canada
 China
 Denmark
 Faroe Islands
 Finland
 France
 Germany
 Greenland
 Guernsey (Apr 2014)
 Iceland
 India
 Ireland
 Japan
 Malaysia
 Malta
 Mexico
 Netherlands
 New Zealand
 Norway
 Portugal
 Singapore
 South Africa
 Sweden
 United Kingdom
 United States

There are also several agreements between Bermuda and other jurisdictions which was signed but haven't yet come into force (for agreements signed after 01 January 2013 of signing the agreement is given in brackets):

 Belgium (Apr 2013)
 Brazil
 Curacao
 Czech Republic
 Indonesia
 Italy
 Korea, Republic of
 Poland (Nov 2013)
 Sint Maarten (Dutch part)
 Turkey

Automatic information exchange allows jurisdictions to exchange information automatically, without having a specific tax investigation.

Bermuda signed the automatic information exchange agreement on 29 October 2014 and committed to start the automatic information exchange in September 2017.

Further Information:
Automatic Exchange of Information on Financial Accounts
Countries Which Will Not Automatically Exchange Account Information

Top

FATCA

Foreign Account Tax Compliance Act (FATCA) which became law in the United States in March 2010, focuses on reporting made by foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest. The FATCA-reporting is facilitated by Intergovernmental Agreements (IGAs).

Bermuda has FATCA agreement with the U.S. in effect since 19 December 2013 (Intergovernmental Agreement Model 2).

Further Information:
FATCA and European countries

Top

Bermudian Banking Sector

Deposit Guarantee Scheme

Deposit Guarantee Schemes compensate certain deposits held by depositors of a bank that becomes unable to meet its obligations.

From a depositor's point of view it is important to know:

  • if the depositor is eligible within the terms of the deposit guarantee scheme;
  • if the depositor's bank is a participant in the deposit guarantee scheme;
  • if the depositor's type of deposit is covered by the deposit guarantee scheme.

All these details about deposit guarantee scheme in Bermuda are summarised in Table 2.

Scheme Participantsall credit institutions operating in Bermuda (including branches of foreign banks), branches of Bermudian banks abroad
Eligible Depositorsnatural persons, small businesses
Maximum Protected Amount25 000 USD
Paid In CurrencyUSD

Table 2. Deposit guarantee scheme in Bermuda.

Further Information:
Deposit Guarantee Schemes in European Territories

Top

Country Ceiling for Deposits

Moody's country ceilings for deposits specify the highest rating that can be assigned to local- or foreign- currency denominated deposit obligations of a bank or other deposit taking institution domiciled within that country.

Local currency (Bermudian dollar) deposit ceiling for Bermuda is set to Aa3 (high grade), foreign currency deposit ceiling is A2 (upper medium grade).

Top

Banking Sector Structure

Currently there are 4 credit institutions operating in Bermuda.

Top

Share on Google+