Bermuda Company Formation: A Complete Guide

A complete guide to Bermuda company formation: entity types, tax position, economic substance, banking access, compliance, and who Bermuda suits best.

Bermuda occupies a particular place in the world of international structuring. It is not a budget incorporation jurisdiction, and it was never meant to be. For more than a century it has served the global insurance, reinsurance and capital markets industries, and that heritage shapes everything about how a company there is formed, regulated and perceived.

When a board chooses Bermuda, it is usually choosing reputation over price. The island sits on the OECD and EU lists of cooperative jurisdictions, has a sophisticated regulator in the Bermuda Monetary Authority, and is taken seriously by institutional counterparties, listing venues and lenders in a way that lighter-touch offshore centres are not.

This guide sets out how Bermuda companies are formed and operated as at 2026: the main entity types, the evolving tax position, economic substance, banking access, ongoing compliance, and the profile of business that genuinely belongs there.

Entity types and how they are formed

The workhorse vehicle is the exempted company, incorporated under the Companies Act 1981. "Exempted" means the company is exempt from the rule that requires majority Bermudian ownership, so it can be wholly foreign-owned while carrying on business outside Bermuda. This is the structure used by the vast majority of international groups, insurers and listed holding companies.

Bermuda also offers the exempted limited partnership, widely used for investment funds and joint ventures, and the segregated accounts company, which legally ring-fences assets and liabilities between separate cells. The latter is a mainstay of the captive insurance and structured finance markets.

Incorporation is not a same-day commodity process. Bermuda applies a vetting step: the beneficial owners are disclosed to the authorities, and a consent regime applies before shares are issued. In practice this means name reservation, a beneficial ownership declaration, adoption of a memorandum of association and bye-laws, and appointment of directors and a registered office. Reputable formations are deliberately diligence-led rather than instant, and you should plan timelines accordingly.

The tax position

Bermuda has historically had no corporate income tax, no capital gains tax and no withholding tax, and this remains the baseline position for most companies. Revenue is raised instead through payroll tax, customs duties, annual government fees and similar levies rather than a tax on profits.

The important development is the introduction of a corporate income tax aimed at large multinational groups, designed to align Bermuda with the OECD Pillar Two global minimum tax framework. Broadly, this applies only to in-scope multinational enterprise groups above the relevant global revenue threshold; the great majority of standalone companies and smaller groups fall outside it and continue under the traditional no-tax regime.

Two points matter here. First, the rules are detailed and still bedding in, so any in-scope group should take current advice rather than rely on general statements. Second, a Bermuda company does not escape tax in the jurisdictions where its owners and operations actually sit. Residence, controlled foreign company rules and place-of-management tests in the home country will frequently bring profits back into charge somewhere. Bermuda is a neutral platform, not a way to make tax disappear.

Economic substance

Like other major offshore centres, Bermuda enacted economic substance legislation in response to OECD and EU pressure. Companies carrying on a "relevant activity" — categories such as banking, insurance, fund management, financing and leasing, headquarters, shipping, distribution and service centres, holding company business and intellectual property — must demonstrate that they are genuinely managed and operated on the island.

In practice this means having an adequate level of qualified employees, incurring adequate operating expenditure in Bermuda, and being directed and managed there, all proportionate to the activity. Pure holding companies face a lighter test; IP-holding companies face the most demanding one.

Substance is reported annually, and failure to meet it can lead to penalties and exchange of information with other tax authorities. The practical lesson is that a Bermuda company should reflect where decisions are really taken. If the substance is artificial, it creates risk rather than protection.

Banking access

Opening a bank account is consistently the most underestimated part of any offshore plan, and Bermuda is no exception. The local banking market is small and concentrated, and the established banks apply rigorous onboarding, particularly for companies with no genuine connection to the island.

Most international groups using Bermuda hold their operating accounts with banks elsewhere — in the relevant onshore financial centre — while the Bermuda company sits as a holding or insurance vehicle. This is entirely normal and acceptable, provided the banking relationship matches the company's real activity and the source of funds is well documented.

Expect to provide full beneficial ownership information, a clear explanation of the business, audited or management accounts, and evidence of the commercial rationale for using Bermuda. Strong, transparent documentation is what unlocks banking; vagueness is what stalls it.

Ongoing compliance

A Bermuda company must maintain a registered office on the island, keep proper accounting records, file an annual declaration and pay annual government fees, and keep its statutory registers current, including a beneficial ownership register accessible to the authorities.

Directors carry real duties under the Companies Act, and the Bermuda Monetary Authority oversees regulated activities such as insurance, fund administration and investment business closely. Listed and regulated entities face additional reporting. None of this is onerous for a properly advised company, but it is not a "file and forget" jurisdiction; the compliance calendar should be actively managed.

Who Bermuda suits

Bermuda is best suited to substantial, reputation-sensitive structures. It is the natural home for captive and commercial insurers and reinsurers, for investment funds and their managers, for groups heading toward a stock-exchange listing, and for multinational holding companies that value being domiciled in a jurisdiction regulators and counterparties respect.

It suits clients who are willing to invest in substance, governance and quality advice, and who view the higher cost base as the price of credibility. It is rarely the right choice for a small trading business chasing the cheapest possible incorporation; for that profile, other jurisdictions are more proportionate.

How HPT helps

We help clients decide whether Bermuda is genuinely the right jurisdiction before any incorporation begins, then manage the full process — beneficial ownership disclosure, formation, registered office, director and substance arrangements, banking introductions and ongoing compliance — alongside coordinated tax advice in the jurisdictions that actually matter to you.

If you are weighing Bermuda against other options, talk to us and we will give you a candid, structure-first assessment.