Exempt Company (EC)
Company formation in Bermuda
The EC is best suited for: Insurance and reinsurance captives โ Bermuda is the world's leading captive insurance domicile, Class 3A and Class 4 commercial reinsurance vehicles, Insurance-linked securities (ILS) and catastrophe bond SPVs, International holding structures for institutional assets, Fintech and digital asset companies seeking a regulated offshore environment. Bermuda Exempt Companies pay no corporate tax, income tax, capital gains tax, or withholding tax. The Bermuda government can issue a Tax Assurance Certificate guaranteeing the company will remain exempt from any future income or profit taxes until at least 2035. There is no VAT or sales tax. Government revenue comes from annual registration fees based on assessable capital: companies with assessable capital up to $12,000 pay approximately $1,995/year, scaling upward for larger capital bases. Bermuda imposes a payroll tax on employers with Bermuda-based employees (currently up to 10.25% of remuneration). Customs duties apply to imported goods. The Economic Substance Act 2018 (as amended) requires entities conducting relevant activities (insurance, banking, fund management, holding, IP) to demonstrate adequate economic substance in Bermuda.
- Insurance and reinsurance captives โ Bermuda is the world's leading captive insurance domicile
- Class 3A and Class 4 commercial reinsurance vehicles
- Insurance-linked securities (ILS) and catastrophe bond SPVs
- International holding structures for institutional assets
- Fintech and digital asset companies seeking a regulated offshore environment
Key Facts
Step-by-Step Formation Process
Engage a Bermuda-based corporate service provider
All Bermuda companies must have a registered office and a company secretary resident in Bermuda. Engage a licensed service provider (e.g., Conyers, Appleby, Carey Olsen, or Walkers) to handle formation filings with the Registrar of Companies.
Complete due diligence and KYC requirements
Submit certified passport copies, proof of address, source-of-funds documentation, professional references, and bank references for all directors, shareholders, and beneficial owners. Bermuda's AML/CFT requirements are stringent and enforced by the Bermuda Monetary Authority (BMA).
Obtain Ministerial consent (60/40 rule or exemption)
Non-Bermudian ownership of local companies is restricted under the 60/40 rule (60% Bermudian ownership). Exempt Companies are exempt from this requirement, allowing 100% foreign ownership. Submit the application for Ministerial consent confirming exempt status.
Prepare and file the Memorandum of Association
The Memorandum of Association sets out the company name, authorised share capital, objects, registered office, and limitation of liability. File with the Registrar of Companies along with the statutory declaration and prescribed forms.
Receive Certificate of Incorporation and post-incorporation steps
Upon approval and payment of government fees, the Registrar issues a Certificate of Incorporation. The service provider delivers the certificate, Memorandum of Association, statutory registers, share certificates, and corporate seal. Adopt bye-laws at the first board meeting.
Required Documents
- Certified passport copy of each director, shareholder, and beneficial owner
- Proof of residential address (utility bill or bank statement, not older than 3 months)
- Source-of-funds and source-of-wealth documentation
- Professional reference letter (lawyer, accountant, or banker)
- Bank reference letter
- Description of proposed business activities
- Completed service provider due diligence forms
Cost Overview
Tax Treatment
Bermuda Exempt Companies pay no corporate tax, income tax, capital gains tax, or withholding tax. The Bermuda government can issue a Tax Assurance Certificate guaranteeing the company will remain exempt from any future income or profit taxes until at least 2035. There is no VAT or sales tax. Government revenue comes from annual registration fees based on assessable capital: companies with assessable capital up to $12,000 pay approximately $1,995/year, scaling upward for larger capital bases. Bermuda imposes a payroll tax on employers with Bermuda-based employees (currently up to 10.25% of remuneration). Customs duties apply to imported goods. The Economic Substance Act 2018 (as amended) requires entities conducting relevant activities (insurance, banking, fund management, holding, IP) to demonstrate adequate economic substance in Bermuda.
Pros & Cons
- 0% corporate tax, 0% income tax, 0% capital gains tax, 0% withholding tax โ with a government tax assurance certificate to 2035
- World's leading jurisdiction for insurance and reinsurance โ home to 1,300+ (re)insurance entities
- Bermuda Monetary Authority (BMA) is a globally respected regulator with Solvency II equivalence from the EU
- Strong English common law legal system with experienced commercial courts
- No exchange controls for Exempt Companies โ free movement of capital
- Significant talent pool in (re)insurance, ILS, and financial services
- Close proximity to the US East Coast (2-hour flight from New York)
- Higher cost of living and doing business compared to Caribbean offshore jurisdictions
- Payroll tax applies to employees based in Bermuda (up to 10.25%)
- No tax treaty network โ cannot access reduced withholding tax rates
- The 60/40 rule restricts foreign ownership of local (non-exempt) companies
- Banking is concentrated among a few local banks (Butterfield, HSBC Bermuda) with strict onboarding
- Economic Substance requirements apply to companies conducting relevant activities
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Get StartedThis content is educational and does not constitute legal or tax advice. Always consult a qualified professional for your specific situation. Data last verified March 2026.