BERMUDA Law and Practice Contributed by: E. Scott Swainson, Andrew Morgan and Erik Gotfredsen, Wakefield Quin Limited
Concessions As tourism is one of the largest contributors to Ber - muda’s gross domestic product, the government is keen to support development within this industry and has offered hotel/tourism concessions for many pro - jects. Such concessions may include a waiver of duty on construction materials, the suspension of land tax and hotel occupancy tax, and a 0% licence fee where non-Bermudian purchasers commit to put a portion of their unit into hotel inventory. Applications to develop resort properties are sympathetically received. 2.9 Condemnation, Expropriation or The government is empowered to compulsorily pur - chase land pursuant to the Acquisition of Land Act 1970. However, the exercise of such power is rare, typically only being utilised where land is required to improve road safety. Even where there is demonstra - ble public benefit, most acquisitions are consensual. Remedies Rights of compensation and appeal apply. The Bermu - da Constitution expressly protects real property rights. 2.10 Taxes Applicable to a Transaction Transfer Taxes Compulsory Purchase Compulsory Purchase Stamp duty is payable on the vast majority of transac - tions. Ad valorem duty is payable on a sliding scale on land purchases and gifts. Conveyances Stamp duty (effectively a document tax) is payable on transfers of land for valuable consideration at the following rates and typically split between the buyer and seller:
Voluntary transfers to trusts attract stamp duty at the following higher (death) rates: • where the property is the first addition to trust, the first USD50,000 attracts nil stamp duty; • 5.25% on the next USD150,000; • 10.5% on the next USD800,000; and • 15.75% thereafter. Grant of a New Lease Stamp duty is payable at a rate of 1.05% of the aggre - gate rent for the first three years and 0.5% on the aggregate rent for any additional period. Stamp duty is typically split between landlord and tenant. Mortgages Stamp duty is habitually payable by the borrower at the following rates: • 0.25% where the sum secured is USD400,000 or less; and • 0.5% where the sum secured is more than USD400,000. Exemptions There are stamp duty exemptions for Bermudian first- time home buyers (provided certain criteria are met), up to the first USD1 million of consideration. Corporate Structures Sales of shares in local land holding companies attract duty at conveyance rates but acquisitions by merger or amalgamation attract only nominal duty. 2.11 Legal Restrictions on Foreign Investors Foreign investors will generally require governmental consents to acquire or take security over Bermuda A non-Bermudian individual wishing to acquire prop - erty must obtain a licence to acquire land from the Minister responsible for Immigration. Application is via a prescribed form and requires financial and personal references. A non-refundable application fee is pay - able at submission, and an additional licence fee is payable upon grant of the licence. real estate. Individuals
• 2.1% on the first USD100,000; • 3.15% on the next USD400,000; • 4.2% on the next USD500,000; • 6.3% on the next USD500,000; and • 7.35% thereafter. Gifts
Stamp duty on transfers of land by way of gift (inter vivos) to individuals is payable at the rates noted above.
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