BERMUDA Law and Practice Contributed by: Erik Gotfredsen, Jemima Fearnside and Larina Kenny, Wakefield Quin Limited
Bermuda’s Corporate Income Tax Act 2023, which implements the OECD Pillar Two Global Anti-Base Erosion Rules, introduces a corporate income tax (CIT) for financial years beginning on or after 1 Janu- ary 2025. The tax applies to the revenues of Bermuda businesses that are part of Multinational Enterprise Groups with annual revenues exceeding EUR750 mil- lion in at least two of the four fiscal years immediately preceding the relevant fiscal year, unless an exemp- tion applies. The amount chargeable is 15% of the net taxable income less applicable tax credits. Stamp duty rarely applies to documents that are executed by Bermuda companies engaged in inter- national business. However, legal mortgages on real property situated in Bermuda do attract stamp duty at different rates, depending on the amount of the sum secured. With limited exceptions, stamp duty is pay- able on most documents executed by local Bermuda companies. A fee (up to BMD1000) will be payable for registering a charge at the Registrar of Companies, depending on the value secured. There is also a BMD100 fee for registering a satisfaction of a charge at the Registrar of Companies. A fee of between BMD100 and BMD1,300 is payable to the Land Title Registry Office on the first registration of real property. Thereafter, a fee of between BMD50 and BMD400 is levied to register a charge against a registered title. 4.3 Foreign Lenders or Non-Money Centre Bank Lenders Foreign lenders can be confident regarding the tax position of lending to a Bermuda entity on “known principles” as Bermuda has 41 Tax Information Exchange Agreements in place in addition to more than 125 multilateral taxation treaty partners. Bermuda’s Corporate Income Tax Act 2023 imple- ments the OECD Pillar Two rules with the introduction of CIT (see 4.2 Other Taxes, Duties, Charges or Tax Considerations ). In addition, Bermuda remains com- mitted to ensuring the effectiveness and efficiency of the mutual agreement procedure on the interpretation and application of taxation treaties and has signed on
to the OECD’s Convention on Mutual Administrative Assistance in Tax Matters, which now includes over 130 signatory partner countries.
5. Guarantees and Security 5.1 Assets and Forms of Security
Both tangible and intangible assets of a company are available to secure lending obligations. Common col- lateral includes real property, securities, receivables, cash deposits, contractual rights (including under policies of insurance), inventory and mortgages over Bermuda-registered ships and aircraft. Registrable security (to ensure priority ranking over subsequent security interests created over the same assets) typically takes the form of a charge. Registra- tion of a charge is effected by submitting an applica- tion to the Registrar of Companies with a signed elec- tronic copy of the charge instrument, and payment of the relevant filing fee, with registration in many cases confirmed on a same-day basis. There are no perfection requirements in Bermuda, although an equitable assignment (such as an assign- ment of receivables, contract rights, or bank account balances) may be upgraded to a legal assignment by notice to the relevant counterparty. Real Property Security over real property in Bermuda is typically granted by way of either a legal mortgage, where title is transferred to the mortgagee, or an equitable mort- gage, where a charge is established without title being transferred to the mortgagee. When the Land Title Registration Act 2011 (2011 Act) came into effect in 2018, the grant of both a legal mortgage and an equitable mortgage came to trigger compulsory first registration of title to the real prop- erty forming the subject matter of both the mortgage or charge. The relevant mortgage or charge, as well as the balance of the title documents relating to the property in question, must be lodged at the Land Title Registry Office (LTRO). Upon first registration, a mortgagee’s priority position is now established on the property register. Priority is based on the date that
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