A permanent establishment in Bermuda is defined as a fixed place of business through which the businesses of non-residents not otherwise incorporated or formed in Bermuda are wholly or partly carried out or executed in Bermuda as per Article 5 of the OECD Model Tax Convention and includes:

A place of management;
A branch;
An office;
A factory;
A workshop;
A mine, an oil or gas well, a quarry, or any other place of extraction of natural resources; or
A building site or construction or installation project if it lasts more than 12 months.

An agency PE is deemed to exist in Bermuda if a person established therein other than an independent agent acting in the ordinary course of its business habitually exercises the authority to negotiate or conclude contracts on behalf of the foreign enterprise. A broker, general commission agent, or any other agent of an independent status is not deemed to constitute a permanent establishment for a foreign enterprise, provided that such persons are acting in the ordinary course of their business as independent agents.

The following places of business do not constitute a permanent establishment for a foreign enterprise in Bermuda:

Using facilities only for the storage, display, or delivery of goods and merchandise owned by the enterprise;
Maintaining an inventory of goods and merchandise owned by the enterprise for storage, display, or delivery purposes;
Maintaining an inventory of goods and merchandise owned by the enterprise only for the purpose of reprocessing by another enterprise;
Maintaining a fixed place of business for the sole purpose of purchasing goods or merchandise or the gathering of information for the enterprise;
Maintaining a fixed place of business to carry out for the enterprise an activity of a preparatory or supporting nature; and
Maintaining a fixed place of business to carry out a combination of any of the above activities, provided that the overall activity of the fixed place of business is only of a preparatory or supporting/ auxiliary nature.

Additionally, if a non-resident enterprise has control over another resident enterprise, this does not necessarily result in considering the resident enterprise as a permanent establishment of the other.

However, the above places of business may constitute a permanent establishment in Bermuda if the same enterprise or a closely related enterprise carries on business activities at the same place or at another place in Bermuda and that place constitutes a permanent establishment in Bermuda, or the overall activities carried on by the two enterprises at the same place or at the two places are not of a preparatory or auxiliary character.

It is clarified that an entity that is incorporated or formed in Bermuda but is not a tax resident of Bermuda as it is being managed and controlled in a jurisdiction outside Bermuda will constitute a permanent establishment in Bermuda if it has a fixed place of business in Bermuda through which the business of the entity is wholly or partly carried on as per Article 5 of the OECD Model as described above.

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