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How to Navigate Remote Work from Bermuda: Taxes, Permits, and Lifestyle

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Introduction

When I first began researching remote work from Bermuda, I found very little information online to support such a move. It was challenging to piece together the necessary details, but having now achieved this and been settled for a year, I hope this post can help anyone considering a similar transition.

Whether you’re a software engineer, a digital marketer, or another type of remote consultant, understanding Bermuda’s unique law and tax implications is kinda important for a smooth transition.

Below, I’ll break down the areas I explored to get myself set up.

My Journey

So, I’m a guy from Scotland 🏴󠁧󠁢󠁳󠁣󠁴󠁿!

I’ve been working remotely in tech, as a software engineer for the past 10+ years now.

To be crystal clear, I did not seek employment opportunities in Bermuda, it was my wife who applied for a role and accepted a job offer in the Medical industry and part of her package was able to bring me along, as a sponsored dependant.

Before my wife accepted her new role, I spoke with my employer, who initially agreed to support the move.

After this, I followed the UK government’s advice for those looking to leave the country on a permanent basis, which involved submitting a P85 to HMRC, this took a long time to resolve.

In the year I’ve now lived in Bermuda, I have transitioned through three states

  1. Before moving, I was a UK citizen and a resident and still a full-time employee on the PAYE system
  2. After our move, still a UK citizen but now a UK non-resident and now a Bermudian resident, whilst still on the UK PAYE system.
  3. Finally settled as a resident in Bermuda as a Sole Proprietor.

Initially, I planned to stay on my UK employer’s payroll while living in Bermuda

  • About 5/6 months after moving, HMRC finally processed my P85 which resulted in a NT Tax code.
  • This change made my UK employer uneasy about general liability towards me including of tax, NI and right to work
  • After a lot of back and forth, ultimately they made to decision that I must become self-employed to continue my role within the company.

This is where

  1. I explored the options for bermuda-based employment models.
  2. Learned about the permit conditions when working remotely from Bermuda.
  3. Learned about tax obligations for the nature of my work as a foreign contractor.
  4. Learned about the relationship between UK National Insurance -> Bermudas Social Security.
  5. Opened a Business bank account with HSBC providing granular details of my contract.
  6. Started my new contract with my UK employer via Deel.

You

Your situation may differ depending on factors like

  • the nature of your work
  • employment status
  • employment model
  • marital status
  • permit type.

The following sections aim to provide some insights for your own consideration

For tailored advice, please consult professional advisors and official resources like I did!

Permits

First off, it’s important to understand the distinction between working remotely IN Bermuda versus working remotely FROM Bermuda, as Bermuda enforces strict regulations to protect local employment.

  • Working Remotely IN Bermuda
    • This means providing trade, services, or skills to the local economy or Bermudian-based companies.
    • This requires a standard work permit sponsored by an employer with a presence on the island.
  • Working Remotely FROM Bermuda
    • This means providing services exclusively to foreign clients or employers with no local presence.
    • No standard work permit is required, but you must hold a valid residency permit such as a Sponsored Dependant or Digital Nomad Visa.

For Remote Workers

For remote workers, the two most accessible options are:

  1. Sponsored Dependants

    “The Department of Immigration recently advised Appleby that an individual with the right to reside, who wishes to work remotely for an employer established off island may do so without a Global Work Permit provided that the employer does not have a local branch, affiliate or subsidiary on the island. As such, a sponsored dependant, whose employer satisfies this criterion, can work remotely for an employer outside Bermuda without the need to consider any application for a Global Work Permit.” - Appleby

    • This is a common option for those whose spouse has secured employment in Bermuda.
    • Be sure to read this entire Appleby article in detail as it greatly helped me out!

  2. Digital Nomad Visa

    • Designed for single individuals who are self-employed or work for a foreign employer.
    • Bermuda’s Work from Bermuda program allows remote workers to live and work on the island for up to a year, with an option to renew.
    • This option does not allow you to seek local employment in Bermuda.

Other Options

For those looking to work directly with Bermudian-based employers or seeking long-term residency, Bermuda offers other permit types, such as:

For detailed information on these permit types, visit the Bermuda Government Work Permit page.

Tax

Bermuda’s tax landscape is undoubtedly very attractive for any professional due to its minimal tax burdens:

However, there are a few additional tax obligations to consider:

Payroll Tax

Payroll tax applies to local employers and employees. Employers deduct a portion (~6%) from salaries, while self-employed individuals must register and pay payroll tax on their earnings.

“Payroll tax is payable by employers on the total remuneration paid to employees, which includes wages, benefits, and other forms of compensation.” — Bermuda Government

Payroll tax rates vary based on income levels and business type. Learn more about payroll tax here.

Foreign Contractors

“Foreign contractors and subcontractors in Bermuda must also pay Payroll Tax.” _ — Bermuda Government

However, if you work remotely for a foreign employer with no Bermudian presence, you may not be subject to payroll tax. When I reached out to the Office of the Tax Commissioner to request a tax account and provided details about my employment, I received the following response:

“Are you providing services to Bermudians/Bermudian-based companies on behalf of your employer?”

After confirming that my employer was UK-based with no local presence and that I provided no services to Bermudian businesses or individuals, I was informed:

“With that, I can confirm that you are not subject to payroll tax, and do not need to register for an account at this time.”

I highly recommend contacting the Office of the Tax Commissioner with detailed information about the nature of your employment.

If you are self-employed and work with Bermudian-based clients, payroll tax registration is required.

Social Insurance

All workers, including self-employed individuals, must contribute to Bermuda’s social insurance scheme, which funds benefits like retirement. Contributions are shared between employers and employees or fully covered by sole proprietors.

UK Citizens & National Insurance

The UK and Bermuda have a social security agreement, allowing UK citizens working in Bermuda to continue paying UK National Insurance (NI) contributions instead of Bermuda’s social insurance. This helps maintain eligibility for UK benefits, including the State Pension.

  • Apply for an NI Certificate: UK citizens can request a certificate from HMRC to confirm they remain liable for UK NI payments.
  • Voluntary NI Contributions: If you’re not eligible for continued NI payments, you can make voluntary contributions to avoid gaps in your UK NI record. Learn more.

Again be sure to consult with HMRC or a tax advisor to ensure you’re meeting the right obligations based on your employment status.

Health Insurance

One unavoidable cost of living in Bermuda is health insurance. Unlike some countries where healthcare is provided as a public service, Bermuda requires residents to have private health insurance.

  • The standard health insurance plan (HIP) costs $459 per month.
  • Coverage includes basic medical services, but additional coverage for specialists or emergency care may require a more expensive plan.
  • Employers typically provide coverage for employees, but if you are self-employed or a sponsored dependant, you must arrange your own.

For more details, visit the [Bermuda Government Health Insurance page](https://www.gov.bm/department/health-insurance).

Home Country Tax Obligations

Your tax obligations depend on your home country’s rules for foreign income.

UK Citizens

  • Non-Resident Status: You can register as a non-resident with HMRC by submitting a P85 form to become exempt from UK income tax.
  • UK Tax on Foreign Income: Once classified as non-resident, you only pay tax on UK-based income, not foreign earnings.

US Citizens

  • Worldwide Taxation: The US taxes citizens on global income, even if they live abroad. You must file annual US tax returns.
  • Renouncing Citizenship: To avoid US taxes, you must renounce your citizenship, which involves exit taxes and legal complexities. More info.

Key Considerations

  • Double Taxation Agreements: Some countries have agreements to prevent being taxed twice. Check if your home country has one with Bermuda.
  • Consult a Tax Advisor: Tax laws vary—seek professional advice for your own safety

Employment Models

So now we know about tax implications and the right to work, the last thing to consider is your employment model and this will likely be influenced by the level of support your foreign employer can grant you, I found 3 available options

Remain Employed in Your Home Country

PAYE if your employees work abroad, including applying for exemption in the other country. - HMRC

For professionals from countries like the UK, this is often the simplest option. You remain on your employer’s payroll while working remotely from Bermuda.

  • UK Citizens: Notify HMRC by submitting a P85 form.
  • You wage continues to be paid into a UK bank and you continue to pay National insurance
  • Processing Times: HMRC can take several months to process non-resident status, so apply early.
  • HMRC will Inform your employer of this change

Limited Company in Bermuda

Setting up a limited company in Bermuda as a non-Bermudian is highly restrictive and expensive, favoring Bermudian ownership. After consulting with Appleby, a Bermuda-based legal firm, it became clear for me at least, that this was not a practical option

Key Challenges

  • Significant Costs:

    “The legal fees associated with applying for a license could range from a minimum of US$30,000-$40,000, exclusive of disbursements.” — Appleby

  • Bermudian Ownership Requirement:

    “If you were to set up a company in Bermuda, it would fall into the category of a local company. This means you would need a Bermudian to own 60% of the business.” — Appleby

  • Permit & License Restrictions:

    “Overseas companies (including exempted companies) are generally prohibited from ‘carrying on business’ in within Bermuda unless they have a permit/license to do so.” — Appleby

  • Legal Assessment Costs:

    If an exemption is possible, a separate legal assessment would be required, costing an additional US$6,000 - $8,000. — Appleby

Viability for Remote Workers

Given these barriers, Appleby strongly recommended staying employed by an overseas company instead of incorporating in Bermuda:

“From a Bermuda legal perspective, it is preferable for you to remain as a sponsored dependent and work remotely for your UK employer, as that does not breach any legal/regulatory requirements.”

Sole Proprietorship

Establishing a sole proprietorship in Bermuda is a fairly straightforward process. This business structure is ideal for individuals who wish to operate independently.

Registration Steps:

Depending on the nature of your business activities, additional registrations or permits may or may not be required.

It’s advisable to consult with local authorities or legal advisors to ensure all necessary steps are completed.

We could provide isolated advice on this point and our fees for providing this will be approximately US$2,500 to US$4,500 exclusive of disbursements (if any) and we would require a retainer. — Appleby

Employer Relations

  1. Clear Communication: Discuss your remote work plans with your employer early to ensure they understand Bermuda’s tax and legal environment.
  2. Explaining the Tax Structure: Employers unfamiliar with Bermuda’s tax setup may have concerns. Be prepared to provide documentation, such as confirmation from tax authorities, to validate compliance.
  3. Flexible Arrangements: Some employers may prefer contractor agreements over direct employment. Make sure these arrangements are documented properly with clear expectations around billing and deliverables.

Connectivity: A Quick Note

Bermuda offers surprisingly fast and reliable internet packages, making it a generally stable location for remote work.

Heres my own speed; this costs about $150 a month from One Communication

image

The only caveat is that occasional outages can occur, particularly during hurricanes!

Final Thoughts

I hope this information helps you out a little, it’s been a long year getting settled as a remote worker here.

Living and working in Bermuda has its pros and cons:

  • The minimal tax is countered by the incredibly high cost of living.
  • The small size of the island is balanced by the fact that New York is just a two-hour flight away.
  • The beaches are stunning, and the colour of the water is in a league of its own.
  • The roads, however, are another story—there are crashes and accidents every other day, so you’ve got to stay alert.

We love it so far, sometimes we miss the convenience of home comforts, especially as vegans!

This probably isn’t our forever home but we aim to make the most of it in the 3-5 years that we potentially stay here

Resources

Work Permits and Visas

Tax and Compliance

Business and Incorporation

Transportation