It is legally viable but operationally and fiscally complex. A Bermuda IP HoldCo triggers the full Economic Substance test under the Economic Substance Act 2018, requiring genuine R&D direction, licensing strategy decisions, and nexus expenditure in Bermuda. For US tax residents, it also creates GILTI exposure under IRC §951A, potential Subpart F income inclusion, and transfer pricing scrutiny by the IRS. A combined economic substance review, GILTI modeling, and transfer pricing analysis is essential before establishing or maintaining such a structure.

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