Tax Benefits | Act 60

Individual Investors Incentive

Formerly Called Act 22

Puerto Rico’s Act 60 Individual Investor Tax Decree Is One Of The Most Competitive Tax Advantages Around, For Individuals.

Note that this incentive was previously known as Act 22.
Decree holders enjoy a total exemption from Puerto Rico income taxes on all passive income earned or accrued after becoming residents of Puerto Rico. Individual Investor grantees who are also US citizens would also pay no IRS tax on this same passive income.
By creating this incentive under Act 60, Puerto Rico seeks to attract new residents who will bring wealth to the island by purchasing real estate, goods, and services, and by making use of the island’s banking system.

Individual Investors Incentive provides tax exemptions to eligible individual investors with their primary tax home and residence in Puerto Rico. Act 22 grantees who are also US citizens would also pay no IRS tax on passive income accrued after becoming residents of Puerto Rico.  Includes crypto-currency!

Benefits include:

  • 100% tax exemption from Puerto Rico income taxes on dividends
  • 100% tax exemption from Puerto Rico tax on interest income
  • 100% tax exemption from Puerto Rico on long-term capital gains
  • 100% tax exemption from Puerto Rico on short-term capital gains

How to Qualify
To enjoy these unprecedented benefits, you must apply for an Individual Investor tax decree and establish bonafide residency in Puerto Rico within one year of applying.
To maintain this incentive in good standing, you must:

  • Maintain your bona fide Puerto Rico residency.
  • Contribute at least $10,000 per year to qualifying Puerto Rico charities.
  • Purchase a residential property in Puerto Rico within two years of your application date.
  • File an annual report to the Puerto Rico government.  Currently, the fee to be submitted with this annual report is $5,000

Export Goods and Services

Formerly Called Act 20

The Export Goods and Services Incentive was originally created to bring international business to Puerto Rico.

Corporate income is eligible for goods sold or services performed from Puerto Rico for clients located outside of Puerto Rico.

Benefits include:

  • 4% Corporate Tax Rate (2% in some circumstances)
  • 0% tax on owner profit distributions/dividends
  • 75% exemption from property taxes
  • 100% exemption on municipal taxes during the first 5 years
  • 15-year grant, with a possible 15-year extension
  • And more…

 This incentive is specifically designed for service and trade businesses that can perform their work from within Puerto Rico for clients outside of Puerto Rico.  Such businesses can apply for a tax exemption decree (grant) under Act 60. Once accepted, the grant is for a term of 15 years, and is renewable for an additional 15 years, as long as it maintains compliance with the law and the rules of the program.

How to Qualify

To take advantage of these incentives, you must meet the following conditions:

  • You must be an owner or member of a Puerto Rico business entity that has been granted a tax exemption decree and is in compliance with all of its legal obligations, including employment of employees who are Puerto Rico residents (the number of employees is determined by revenue volume, starting with 1 employee required at $3MM).
  • The income for which you desire to receive the tax exemptions must be Puerto Rico sourced and effectively connected to Puerto Rico as “Non-U.S. Source Income”.
  • You must be a “bona fide resident” of Puerto Rico if and when you wish to receive the tax benefits personally.
  • File an annual report with the Puerto Rico government.

Puerto Rico Act 60 incentive programs gives investors and business owners access to world-class tax benefits. Business owners can reduce their total corporate tax to 2 or 4% and their tax on personal distributions to 0%, and investors can enjoy capital gains! Tax breaks can begin in as little as 2 weeks. Our friends from Puerto Rico Advantage can guide you through the whole process from forming the most effective tax savings strategy, to obtaining the tax incentives, to becoming establishes in Puerto Rico. Call (800) 755-5770, visit www.PRAdvantage.comor click this link to schedule a free consultation.

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