Bermuda Company Formation: Offshore Structure for Insurance, Reinsurance and Funds

Bermuda è una British Overseas Territory nell'Atlantico occidentale con 64.000 abitanti, sistema legale common law e valuta ancorata 1:1 al dollaro USA. Dal 1949 il bermuda corporate registry ha registrato oltre 15.000 exempted companies, concentrate in insurance (40% del PIL), reinsurance, investment funds, shipping e SPACs. La bermuda business registration è regolata dal Companies Act 1981 (e successive modifiche 2016, 2020) e supervisionata dal Registrar of Companies presso Registry General. Il company registry bermuda distingue tra local companies (commercio domestico con bermudiani, capitale min. 60% locale per 60/40 rule), exempted companies (no commercio locale, zero tax, 99% dei veicoli offshore) e permit companies (attività locale con esenzione temporanea 60/40).

La giurisdizione mantiene bermuda registered companies whitelist parziale UE (Annex II Code of Conduct, non Annex I blacklist) e MoU fiscale con USA (FATCA Model 2, TIEA dal 1988). Il bermuda companies register pubblico espone nome, registered office, share capital autorizzato e directors, ma beneficial ownership è riservato a Registrar e scambiato con competent authorities via AEOI/CRS. L'Economic Substance Act 2018 impone a holding, IP, financing, shipping e fund management attività CIGA (core income-generating activities) svolte localmente con personale qualificato, ufficio fisico e spese proporzionate; penalties fino a $100.000 e strike-off per non-compliance. Bermuda Monetary Authority (BMA) supervisiona insurance, banking e fondi con standard Solvency II-equivalente riconosciuto da EIOPA fino 2025. Rating Moody's A2, Fitch A+. Nessun CFC regime domestico ma founder devono valutare implicazioni UK CFC (5% passive income gateway), US Subpart F (eccezione per RPII - Related Person Insurance Income), EU ATAD (Controlled Foreign Company rules art. 7–8).

Exempted Company (Ltd. or Limited): standard vehicle for bermuda offshore company formation. Minimum authorised capital $12,000 (issued may be $1), at least one director (may be corporate, but Economic Substance requires at least one Bermuda-resident for active holdings), unlimited shareholders, no shareholder residency requirement. Prohibited from domestic trade except ancillary services. Annual government fee: $1,995 (cap. ≤$12K) up to $35,360 (cap. >$500M). Audit mandatory if revenue >$500K or upon request of shareholders >10%. Private share register at registered office, no public filing of accounts.

Exempted Limited Partnership (ELP): for private equity and hedge funds. Two classes: general partner (Bermuda exempted company, unlimited liability) and limited partners (passive, limited liability). No corporate tax, no public filing of accounts. BMA registration if fund vehicle. Setup $2,000, annual fee $1,315.

Segregated Accounts Company (SAC): for multi-celled captive insurance. Each segregated account is ring-fenced from liabilities of other cells. BMA Class 3A license (min. $1M statutory capital per active cell). Setup $8,000, annual fee $4,780 + $1,780 per cell. Ideal for rent-a-captive arrangements.

Special Purpose Insurer (SPI): for ILS (insurance-linked securities), cat bonds. Fully collateralised, no traditional balance sheet risk. BMA registration $5,000, annual fee $7,500. Directors min. 2 Bermuda-resident.

Limited Liability Company (LLC): introduced 2016, flow-through tax treatment (similar to Delaware LLC for US founders). Min. 1 member, governance flexibility. Government fee $1,995/year. Less used than exempted company due to absence of treaty network.

For bermuda company registration in insurance, BMA license required (Class 1–4, Long Term, Collateralised, SPI): capital requirements $120K–$100M, fit & proper directors/officers, three-year business plan, approved actuary/auditor. Timeline 12–16 weeks post-submission.

Bermuda applica zero corporate income tax su redditi societari, capital gains, dividends e interest fino al 31/12/2024. Da 1/1/2025, il Corporate Income Tax Act 2023 introduce CIT 15% su in-scope entities di gruppi multinazionali con consolidated revenue ≥€750M (OECD Pillar Two, GloBE rules), con top-up tax mechanism. Exempted companies sotto soglia MNE restano a 0% indefinitamente; Bermuda ha rilasciato Tax Assurance Certificates fino al 2035 per investment funds e captives non in-scope.

Nessuna withholding tax su dividends, interest, royalties pagati a non-residenti. Nessuna capital gains tax. Nessuna VAT/GST. Unica imposizione indiretta: payroll tax 10,25% (employer 7,75%, employee 2,5%) su salari, e customs duty 6,5%–33,5% su beni importati (esente per re-export). Land tax e hotel occupancy tax per real estate.

Treaty network: Bermuda ha un solo DTA (USA, 1986, limitato a insurance/shipping income) e nessun comprehensive tax treaty. Scambio informazioni via 34 TIEAs (UK, Canada, Australia, nordici) e OECD Multilateral Convention (ratificata 2017, CRS + BEPS Actions). Per founder USA, Bermuda exempted company è controlled foreign corporation (IRC §957): passive income (Subpart F) è incluso immediatamente nel reddito US shareholder salvo eccezione Related Person Insurance Income (RPII) per captives che assicurano rischi del gruppo USA. GILTI 10,5%–13,125% si applica a tested income post-2017 TCJA. FATCA Model 2 IGA obbliga reporting diretto di US accounts a IRS.

Per UK-resident founders, Bermuda exempted company è CFC se UK persons controllano >50%: CFC charge scatta se non passa exemptions (low profits <£50K, low profit margin <10%, escluse distribution profits). Gateway Chapter 5 (passive income) cattura dividends/interest >5% del totale. Chapter 8 TIOPA impone full attribution se non passa motive test.

Per founder UE post-ATAD, art. 7 CFC rules applicano se (i) effective tax rate <50% dello Stato membro e (ii) >1/3 redditi sono passive (interest, IP, dividends). Bermuda 0% tax + passive income mix triggera inclusione nel reddito controllante con credit per tax teorica. Economic Substance Act è pre-requisito per AEOI: failure to file ritorno economico o pass CIGA test genera automatic exchange con home jurisdiction e può portare a strike-off.

Opening a company in Bermuda involves formation and recurring costs that reflect the nature of a premium jurisdiction. Exempt companies pay an annual Government Fee based on authorised capital (which does not require subscription): up to 12,000 shares $1,995, up to 500,000 shares $4,290, over 500,000 shares $5,225. From January 2025, multinational groups with consolidated revenue >€750M fall under the OECD Pillar Two regime, subject to Corporate Income Tax at 15% (Bermuda Corporate Income Tax Act 2023); other entities continue to enjoy a 0% regime. Fiduciary services are subject to a separate Annual Government Fee. The prices below reflect standard practice for exempt companies; more complex structures (segregated-cell, LLC, LP) may differ materially.

The formation of a Bermuda exempt company requires 7–10 business days from complete documentation. The process is governed by the Companies Act 1981 and requires approval from the Registrar of Companies. Share classes, transfer restrictions, and director powers must be defined in the Memorandum and Bye-Laws. The law requires a minimum of one director and a local registered office; no minimum paid-up capital is required. The Economic Substance Act 2018 requires declaration of relevant activity within six months of incorporation.

The Economic Substance Act 2018 (amended 2021, 2023) requires exempt companies conducting a relevant activity to demonstrate adequate local substance: holding company, intellectual property business, financing and leasing, fund management, headquarters, shipping, distribution and service centre, banking, insurance. Compliance requires (i) Core Income-Generating Activities conducted in Bermuda, (ii) presence of adequate full-time employees or outsourcing to local provider, (iii) adequate expenditure in relation to revenue, (iv) physical office on the island. Pure equity holdings (passive participations, no trading) enjoy reduced requirements: board meetings in Bermuda, resident director or local decision-making outsourcing, accounting records kept on-island. The annual declaration (ES Declaration) must be filed within six months of financial year-end; omission or non-compliance results in penalties up to $100,000 and automatic exchange of information to OECD. From 2025, groups >€750M must also file the CbC Report and calculate the 15% Corporate Income Tax (Pillar Two): the law provides tax credit for taxes already paid in other jurisdictions (qualified domestic minimum top-up tax). Implications for US persons: Bermuda is a 0% jurisdiction so PFIC and CFC rules (Subpart F, GILTI) apply fully; US controllers must evaluate check-the-box election for tax transparency and mitigate tax deferral anti-avoidance. UK-resident founders must demonstrate that the company is not UK tax-resident (central management and control off-shore) to avoid worldwide taxation; UK CFC rules capture undistributed profits if no exemption applies (low-profits, low-profit-margin). The absence of TIEA or DTA with many OECD countries may limit treaty use, making Bermuda suitable for holding or IP structures provided they are accompanied by operational substance in intermediate jurisdictions (Ireland, Luxembourg, Singapore) to mitigate WHT.

Opening a bank account for a Bermuda company requires structured planning. The main local banks—HSBC Bermuda, Butterfield Bank and Clarien Bank—offer corporate services for exempted companies, funds and captive insurance; KYC documentation includes articles of association, certificate of incorporation, register of beneficial owners, detailed business plan (particularly for insurance and reinsurance), two professional bank references for each director/shareholder and proof of economic substance (office, personnel, board minutes). Opening times range from 4 to 10 weeks; Bermuda banks apply stringent checks on source of funds, nature of insurance/fund business and FATCA/CRS compliance.

For groups with multi-jurisdictional operations, established practice is to open a Bermuda bank account for the captive or fund and integrate it with complementary offshore accounts: Singapore (DBS, UOB) for asset management, Switzerland (private banks) for fund treasury, Luxembourg for parallel UCITS structures, or European EMIs (Wise Business, Currencycloud) for ordinary service provider payments. Bermuda banks require variable minimum deposits—from USD 25,000 for operating exempted companies up to USD 250,000–500,000 for captive insurance—and apply monthly management fees (USD 150–400).

A common alternative for SPACs and pre-operational funds is the combination of a trust account with a local firm (Appleby, Conyers Dill & Pearman) for the subscription period and a definitive bank account post-closing. Physical presence of at least one director in Bermuda for on-site opening significantly facilitates the process; some service providers offer integrated "incorporation + banking introduction" packages with combined fees between USD 8,000 and USD 15,000.

Bermuda is the jurisdiction of choice for captive insurance companies (over 700 registered captives), high-end reinsurance carriers, alternative investment funds (hedge, private equity, cat bonds) and SPACs destined for listing on NYSE or NASDAQ. The Solvency II-equivalent regulatory framework of the Bermuda Monetary Authority (BMA), the robust but flexible economic substance regime for insurance/fund managers and the absence of taxes on income/dividends/capital gains (for entities below the Pillar Two threshold of €750m) make the island competitive for sophisticated insurance and asset management structures.

The jurisdiction is particularly suitable for: (i) multinational groups (automotive, pharma, energy) forming captive insurance to manage risks not insurable in the traditional market; (ii) alternative fund managers seeking a regulated but streamlined domicile (Class B fund license in 4–6 weeks); (iii) SPVs for securitisations and ILS reinsurance transactions (insurance-linked securities); (iv) US SPAC sponsors leveraging Section 883 exemption to avoid US taxation on shipping/aviation income.

The Hamilton financial centre offers a complete ecosystem of specialised service providers (administrators, Big Four auditors, law firms with insurance/reinsurance expertise, actuaries), local stock exchange for closed-end fund listings and limited but strategic tax treaties (USA, UK for shipping). Bermuda is recognised by the UK FSA, SEC and European authorities (AIFMD) as an equivalent or cooperative jurisdiction.

Bermuda is not suitable for B2C e-commerce, software-as-a-service or standard international trade activities: the jurisdiction is designed for insurance, reinsurance and funds, not for commercial operations or digital business. The absence of double taxation treaties with most jurisdictions (except USA and UK for shipping) makes use of a Bermuda company problematic for holding royalties, interest or dividends flowing out of high-tax countries.

The economic substance thresholds for insurance/fund management—physical office, qualified local personnel, board meetings in Bermuda—entail annual operating costs starting from USD 80,000–150,000; those seeking a low-cost "shell company" find more economical alternatives (BVI, Seychelles). From 2025, MNE groups with consolidated revenues ≥€750m are subject to 15% corporate income tax (CITA 2023): for these taxpayers Bermuda loses its historic tax advantage.

Furthermore, the jurisdiction requires two directors resident in Bermuda (or one resident + one non-resident with BMA approval for insurance companies), which implies high professional nominee director costs. Finally, US persons (US citizens/tax residents) must report the Bermuda company as a Controlled Foreign Corporation (Subpart F, GILTI), making the structure tax-neutral or penalising compared to US entities.

The most significant change is the entry into force of the Bermuda Corporate Income Tax Act 2023 (CITA 2023), which introduces a 15% corporate income tax for multinational groups (MNE) with consolidated revenues equal to or exceeding €750 million in at least two of the four preceding financial years. The legislation applies to financial years beginning from 1 January 2025 and implements the OECD Pillar Two framework (GloBE). For Bermuda companies in scope—typically large captive insurers, international reinsurers or SPVs of global groups—taxable income is calculated on book income with adjustments compliant with GloBE Rules; tax credits, an Economic Transition Adjustment and the ability to carry forward tax losses from the previous five years are provided.

Groups with limited international presence (operating in six or fewer jurisdictions) benefit from a five-year exemption from the first year of applicability. Historic Tax Assurance Certificates (valid until 31 March 2035 for exempted companies) remain operative only for entities below threshold: those exceeding €750m consolidated revenue are subject to CIT regardless of certification.

In parallel, the Bermuda Monetary Authority has strengthened economic substance requirements for insurance managers and fund administrators: from 2026 a local compliance officer (resident compliance officer) is mandatory along with annual submission of a detailed economic substance report within six months of financial year-end. Bermuda remains on the EU white list and maintains Solvency II-equivalent status for reinsurance; the Corporate Income Tax Agency (CITA) publishes quarterly guidance and has set instalment payment dates for 2026 (April, July, October, January).