Bermuda EOR and payroll guide 2026: payroll tax tiers, social insurance and exempted company compliance

Employer and employee contributions in 2026

Bermuda payroll has three statutory layers, and only one of them is a percentage that scales with every dollar of salary.

• Payroll tax is charged on total remuneration, up to an annual cap of USD 1,000,000 per employee. The employer rate depends on annual payroll size and business category, from 4.0% at the low end up to 9.75%. Exempted international businesses (the reinsurers, captives, fund managers and holding companies that make up most foreign employers on the island) pay the 9.75% employer rate. Our calculator offers 6.0% as the standard medium band and 9.75% for exempted companies.
• Social insurance under the Contributory Pensions Act is a flat weekly amount, not a percentage. The 2026 calculator figure is BMD 39.25 a week from the employer and BMD 39.25 from the employee, charged for each Monday in the month, so a month has four or five weeks of contributions.
• Occupational pension under the National Pension Scheme (Occupational Pensions) Act is 5.0% employer and 5.0% employee into an approved plan.

Employers may withhold part of payroll tax from the employee under tiered rates set by the Office of the Tax Commissioner. The calculator models the employee portion on annual remuneration up to BMD 1,000,000 at the 2026 bands: 0.5% on the first BMD 48,000, 1.75% on BMD 48,001–96,000, 7.75% on BMD 96,001–235,000, 10.25% on BMD 235,001–500,000 and 12.5% on BMD 500,001–1,000,000, so its net pay figure is after that withholding.

Payroll tax versus income tax

Bermuda levies no personal income tax, no capital gains tax and no withholding tax on dividends. Payroll tax is the main labor tax, and it works differently from a PAYE system: the liability sits on the employer, which may recover part of it from the employee through payroll deductions within the limits the law allows. For budgeting, treat the employer rate as cost.

The cap matters at senior level. Remuneration above USD 1,000,000 a year per employee is not subject to payroll tax, so the effective rate on a very large package falls. Remuneration includes cash salary, bonuses and most benefits in kind; housing and certain allowances have specific rules, so confirm treatment of expat packages with the Office of the Tax Commissioner before setting the package structure.

Worked example: BMD 10,000 a month at an exempted reinsurer

An exempted international reinsurer hires an underwriting analyst at BMD 10,000 a month (BMD 120,000 a year). The month has four Mondays.

Averaged over a year, social insurance is 39.25 x 52 / 12 = BMD 170.08 a month per side. The employee portion of payroll tax, where you withhold it, reduces the BMD 9,343.00 further; take the current band from the Office of the Tax Commissioner.

Remittance, authorities and work permits

Three bodies collect Bermuda payroll obligations. Payroll tax is filed and paid to the Office of the Tax Commissioner on a periodic return; the filing frequency and due date are set by the Commissioner, so confirm the schedule for your entity when you register. Social insurance is paid to the Department of Social Insurance, and pension contributions go to the approved plan administrator under the occupational pensions regime. Late payment of social insurance and pension contributions carries penalties and can be pursued against the employer.

Work permits are issued by the Department of Immigration. The core rule is Bermudians first: for most roles the employer must advertise locally, consider Bermudian, spouse-of-Bermudian and permanent resident applicants, and show why none was suitable. Practical points:

• Permit fees and processing times are set by the Department of Immigration and vary by permit category and length; use its current schedule.
• Some senior and specialist categories have streamlined routes; confirm eligibility before assuming the advertising step is waived.
• The permit is held by the employing entity. An EOR with its own Bermuda company can sponsor; one using a local partner means the partner is the sponsor of record. Ask which.

The financial services hiring playbook for Cayman and Bermuda covers permit sequencing for executive hires.

Termination and notice basics

The Employment Act 2000 sets Bermuda minimum standards: written statements of employment, minimum notice linked to the pay interval, severance for employees with qualifying service who are dismissed for redundancy, and protection against unfair dismissal. The number of weeks of severance per year of service and the cap are set in the Act; confirm current figures with the Department of Workforce Development before calculating an exit.

• Summary dismissal is limited to serious misconduct; most dismissals need a warning process.
• Redundancy pay is in addition to notice or pay in lieu.
• Permit holders lose their basis to stay when employment ends. Notify the Department of Immigration as the permit conditions require, and budget any repatriation commitment.
• Payroll tax applies to termination payments classed as remuneration; confirm the treatment of severance with the Commissioner rather than assuming an exemption.

For notice and severance rules across the region, see the Caribbean termination and redundancy playbook.

Banking and FX realities

The Bermuda dollar trades at par with the US dollar, and USD is accepted throughout the island. For a US-funded employer, the FX conversion is 1:1 and any spread above zero is pure margin. Two points still matter:

• Foreign currency purchase tax. Bermuda charges a tax on the purchase of foreign currency by residents, which affects employees sending money abroad and entities converting BMD out. Confirm the current rate and exemptions with your bank.
• Banking concentration. Bermuda has a small number of retail banks, and opening a corporate account for a new exempted company requires enhanced due diligence. Budget weeks, not days.

Ask any EOR whether it funds Bermuda payroll in USD or BMD and whether it applies a conversion rate. At par, an invoice showing a 2.5% conversion margin on BMD 120,000 a year is BMD 3,000 per employee for converting a currency that does not move.

EOR vs own entity vs payroll bureau: cost benchmarks

Most foreign employers in Bermuda are themselves exempted companies with their own entity, licence and bank account, so a payroll bureau is the default. EOR makes sense for a first hire before incorporation, or a non-financial company with one or two staff. Benchmarks for a four-person team:

One question decides a lot of the EOR cost: which payroll tax rate is charged. An EOR employing your staff through its own non-exempted entity may pay a different band from the 9.75% your exempted company would pay. Ask for the rate in writing. Compare fees with the EOR fee audit and the entity vs EOR breakeven. The Safeguard Global and Pebl audit, the Papaya Global review and the Rippling review cover enterprise options; read Rippling vs Pebl and EOR vs PEO vs bureau for the trade-offs. Model your own salary in the Bermuda employer cost calculator.