Located just 700 miles off the coast of North Carolina, Bermuda’s proximity to the United States, and it’s overall welcoming attitude toward foreign investment, makes it a strong market for international investors.
The country’s economy relies heavily on outside investment. According to the U.S. Department of Statistics, Bermuda’s top five sectors for investment are international business, financial intermediation, real estate (including rental activities), business activities, and education / health / social work.
Bermuda is an especially big player in the international business insurance and reinsurance markets. The country is the world’s third-largest reinsurance center, lagging behind only the powerhouses of New York City and London.
The island nation is also popular when it comes to insurance-linked securities, and to a lesser extent, financial services. Despite its subtropical climate, tourism makes up only a small amount of foreign exchange.
Starting a business here can be difficult, as the country’s current legislation tries to maintain a majority of businesses remain under Bermudian rule.
Why doing business in Bermuda makes sense
Bermuda is a welcoming partner for foreign investment and the country’s government is continually developing products to make it easier and less risky for outside investors.
You’ll find it relatively straightforward to incorporate a company here. If you don’t, organizations like The Bermuda Business Development Agency (BDA), an independent, public-private partnership, are here to help.
The BDA helps businesses establish operations in Bermuda by connecting them with local partners and government representatives and simplifying the overall process.
Bermuda is an offshore financial center. New businesses can take advantage of a local staff of skilled English-speaking professionals, as well as a stable currency and strong network of flights linking it to the mainland USA.
An Overseas Territory of the United Kingdom, Bermuda’s high ethical standards are based in UK law, as is the country’s legal system. The island has a highly regarded financial regulatory system, despite the accusations of an October 2000 KPMG report that accused Bermuda’s legislative framework of being non-compliant with international standards.
For the past 300-plus years, a UK-appointed Governor has overseen the country’s external affairs, internal security, and defense systems. Bermuda’s constitution established the Judiciary as a separate and independent branch of government.
To further boost its transparency, the country was an early adopter of OECD’s Common Reporting Standard.
Challenges for doing business in Bermuda
The biggest obstacle for many foreign investors is the country’s 60/40 rule, which helps guarantee the majority of companies are under Bermudian ownership.
Most international businesses are exempt from this rule. These may be 100% owned and run by non-Bermudians, but their business dealings with the local economy are extremely limited. The restrictions were lessened slightly for some businesses in July 2012.
Starting a business can also be a difficult process. The Bermuda government requires a business plan, licenses, and work permits. To make things easier, it’s recommended investors work with Bermuda-based legal and accounting teams to help them navigate the process.
Other challenges include a high cost of living, high import duties, and limited land space.
Conclusion
The challenges of operating in a new country are often daunting—regulations are constantly evolving and no business landscape remains static. Without a solid grasp of the issues at hand, businesses are exposed to tax penalties and even the prospect of civil or criminal litigation. If you are considering entering the Bermuda market, it's critical to have an experienced partner with a global footprint.
Learn more
CT can help you get set up, provide a single point of contact and provide you with customized solutions for all your needs. From incorporation to dissolution, major mergers and acquisitions, registered agent services and all the day-to-day compliance needs in between, we’ll make sure you have the right support tailored for your global needs.
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To learn more about how we can help you better manage your global compliance needs, contact CT Corporation today.