puerto rico act 60 residency requirements

In order to promote investment into Puerto Rico, they developed Act 60 to attract high net-worth individuals and businesses. Puerto Rico is a sunny Caribbean paradise, and you can enjoy an enriched life in a beautiful culture with beautiful weather, but if youre pining for your life in the US because you left significant connections there, you may not enjoy it. If youd like to enjoy these much lower federal and state taxes, you must follow through on a series of Act 60 Puerto Rico requirements. Commit to Puerto Rico, and passing the residency tests will be fairly easy. How do I become a resident of Puerto Rico? As provided by Puerto Rico Incentives Code 60: What does this mean? * *This is primarily an issue for US Citizens who do not have citizenship elsewhere. See District of Columbia House Voting Rights Act, S.160, 111th Congress (passed by the Senate, February 26, 2009) (2009).52 However, the United States has not taken similar "steps" with regard to the five million United States citizens who reside in the other U.S. territories, of which close to four million are residents of Puerto Rico. Likewise, the incentives offered shall be continuously reviewed in order to identify those that are not cost-effective and to strengthen those that have proven to have an impact and which generate a return on investment for the Treasury. If your export-service company is conducting its activities inside Puerto Rico, it may be eligible for substantial benefits that apply to income received from customers outside of Puerto Rico. We recommend moving this block and the preceding CSS link to the HEAD of your HTML file. The total net capital gain generated by a Resident Individual Investor related to any appreciation of Securities or other Assets after said Resident Individual Investor becomes a Resident Individual of Puerto Rico, that is recognized before January 1, 2036, shall be fully exempt from income taxes in Puerto Rico, including the alternate basic tax provided in the Puerto Rico Internal Revenue Code. The Code shall create a simple, streamlined, and efficient process that focuses on the client, and shall earn the trust of the people and the private sector by having a transparent process for the granting of incentives. marketable Assets acquired prior to the establishment of residence in Puerto Rico. The purpose of these measures is to provide incentives to individuals who have not been residents of Puerto Rico to become residents. Only one of the following conditions must be true: To be counted as present in Puerto Rico, you must be physically present on the island during any part of the day. 7701(a)(30)) and thus is not subject to Subpart F and GILTI inclusions associated with ownership of stock in a Puerto Rican subsidiary (provided dividends received by that individual from that foreign subsidiary would be considered Puerto Rican-source). With fewer close connections to the U.S. mainland, youll minimize your risk of an IRS audit. However, you cant qualify unless you establish residency on the island. For example, if you leave Puerto Rico to receive or accompany a parent, spouse, child, or stepchild to receive a qualifying medical treatment, you are still counted as present in Puerto Rico. Youll become a bona fide resident and be eligible for Act 60 tax benefits if you pass four qualifying tests: the presence test, the tax home test, the closer connection test, and the residence test. Third, to pass the closer connection test, you must convince the IRS that you have stronger ties to Puerto Rico than to the rest of the United States. The IRS's new campaign addresses taxpayers who have claimed benefits through Puerto Rico Act 60, without meeting the requirements of section 937, Residence and Source Rules Involving Possessions. And, if it the income is sourced in Puerto Rico, it would escape tax in the U.S. as well. Lets get some clarity on how the tax situation plays out: To begin with, becoming a resident of Puerto Rico is not as simple as purchasing a property and visiting the PR Coast a few times a year. Before using any Materials, you should consult with legal counsel licensed to practice in the relevant jurisdiction. From a technical standpoint, the new version of the act provides a detailed definition of the term securities and what will be covered under the long-term capital gain exemption rules. Even if you are in the US or another country for part of the day, if you were physically present in Puerto Rico even briefly, you are counted as being present that day. Act 20 and 22 tax incentives have been replaced by Act 60 as of January 1, 2020. This comes out to $5,110 in application fees and an ongoing $15,005 in annual report filing fees and charitable contributions. You were not present in the US for more than 90 days during the tax year. As a U.S. territory, Puerto Rico is subject to tax rules that are different from those of U.S. states. Finally, exceptions are available for special circumstances, such as medical treatment or disasters. First, youll pay a one-time $5,005 application fee along with a $105 acceptance fee. Bona fide residency is the benchmark to determine commitment to the island, and it is measured by three tests: the presence test, the tax home test, and the closer connection test. If such appreciation is recognized at any other time, the net capital gain with respect to said Securities or other Assets shall be subject to income taxes in accordance with the tax treatment provided by the Puerto Rico Internal Revenue Code. That way, you can satisfy all the tests and achieve bona fide residency even in the year of your move. Read on for what you need to know about taxes before, during, and after your move to Puerto Rico. Offering a luxurious lifestyle, golden sand beaches and highly attractive tax benefits, this territory of the United States can offer residents a high quality of life and unique advantages without a requirement to renounce citizenship of the USA. Legally avoiding the 37% federal rate and the 13.3% California (or other state) rate is a jaw-dropping benefit . The tax incentives offered by Act 60 have enticed thousands of U.S. citizens to make the move to sunny Puerto Rico, but in order to enjoy these lucrative benefits, Act 60 holders must satisfy three residency tests to prove that they are bona fide residents of Puerto Rico. What does this mean? The presence test considers how much time you spend in Puerto Rico. The presence test also grants you 30 automatic presence days of international travel (i.e., travel not to the US) per tax year, which means you actually only need to be present in Puerto Rico for 153 days per year as long as you are traveling outside of the US. Its a requirement. In addition, every year you must make a donation of $10,000 split evenly between two qualifying nonprofit organizations in Puerto Rico. The contributions of the companies under the Act 20/22 have a positive impact on the local economy. Consulting companies, auditing firms, marketing businesses, and more are eligible business types. Achieving bona fide residency in the year of the move and the two years following it This means that as long as you move to Puerto Rico before July 1, you can become a bona fide Puerto Rican resident in your first year on the island and reap the benefits of your Act 60 decree immediately. Conditions (1) through (5) above do not apply to nonresident aliens of the United States. Most Puerto Rico investors who apply for Act 60 or Act 22 must donate to a Puerto Rico charity each year. Noting, the Puerto Rico BFR rules are not the same as the Substantial Presence Test BFR rules but the concept is the same. All capital gains accrued after becoming a New Resident will be 100% exempt from Puerto Rico taxes. they want to find a way to legally avoid the overbearing US tax rules, while not necessarily expatriating and renouncing their US citizenship. Entrepreneurs can save with a 4% corporate tax rate. Long-Term Permanent Residents (LTR) tend to not have this issue, since LTRs already have citizenship in another country. Puerto Rico's Acts 20 & 22, tax incentive laws make living and working in Puerto Rico more enticing than ever before for U.S. Citizens. If youve invested in stocks, securities, or cryptocurrency, this may still be a great move for you. You were present in the United States for no more than 90 days during the tax year. Thus, in the most ideal of situations, the taxpayer will move to Puerto Rico and become a Bona-Fide resident without having realized but unrecognized gain already. 3. Afterward, each year, you will have to make a $10,000 charitable donation and submit an annual report along with a $300 fee. It means that under Puerto Rico Incentives Code 60, if an individual is granted Puerto Rico tax exemption under the act, long term gains as a result of investments made after becoming a resident will be exempt from tax in Puerto Rico. Financial accounts include bank accounts, crypto asset accounts, certain insurance policies or investment accounts. With the right structuring, one could essentially lower their effective tax rate from as high as 50% or more to 0% under the right circumstances, by moving to the island. SAN JUAN, Puerto Rico, Nov. 8, 2019 /PRNewswire-PRWeb/ -- Former Governor of Puerto Rico, Ricardo Rossell, signed Act 60-2019, commonly known as the Puerto Rico . This means that Puerto Rico should be your primary place or residence or your primary place of employment. In this blog we will highlight some of the major steps you need to take to qualify for Puerto Rico's Act 22. What is the GILTI Tax, and How Does It Affect Non-Resident Export Services Tax Incentive Decree Holders? You were present in Puerto Rico for at least 549 days in the three-year period of the current tax year and the two previous tax years and were in Puerto Rico for at least 60 days in each tax year during that period. Many of the factors that help you pass the closer connection test, such as a Puerto Rican drivers license or voter registration, will also help you get by in day-to-day life in Puerto Rico. What It Means to Be a Resident of Puerto Rico. According to Act 60-2019 (known as the Puerto Rico Incentives Code) which replaces various historical incentives including Acts 20 and 22, residents of Puerto Rico can enjoy a 4% flat income tax rate and freedom from taxes on capital gains, dividends, interest and royalties. Plus, you are obliged to donate at least $10,000 USD to charity. You had earned income in the United States of no more than a total of $3,000 and were present for more days in the relevant territory than in the United States during the tax year. For example, the salaries of owners and employees are tax deductible. Puerto Rico tax haven Eligibility under Act 60 an individual must have physical presence in the Island for at least 183 days of the year and must not have been a resident of Puerto Rico from 2009 to 2019 (the 10-year period preceding the effective date of the Incentives Code). Generally, you are a bona fide resident of one of these territories (the relevant territory) if, during the tax year, you: What is important to note is that US Persons do not use the standard , While Puerto Rico is considered part of the United States, it is not a state, The individual cannot have been a resident of Puerto Rico for, The non-profit charitable contribution requirement which was previously at $5,000 has been, Puerto Rico now requires the individual to, The income derived from all sources by a Resident Individual Investor after becoming a resident of Puerto Rico but before January 1, 2036, consisting of interest and dividends including but not limited to interest and dividends from a registered investment company described in Section 1112.01 of the Puerto Rico Internal Revenue Code, shall be. If you're a bona fide resident of Puerto Rico during the entire tax year, you generally aren't required to file a U.S. federal income tax return if your only income is from sources within Puerto Rico. Furthermore, the property must remain your primary residence for as long as the decree remains in force. Owners of existing businesses can qualify for the Act 60 business tax incentives in one of two ways: Youll have to pay a one-time fee of $750 when you file your initial application. Then, once becoming a bona fide resident of Puerto Rico, the taxpayer will then begin to acquire income sourced from Puerto Rico so that it is not taxable in the United States. Before using any Materials, you should consult with legal counsel licensed to practice in the relevant jurisdiction. Chapter 3 of Act 60-2019 - Export Services Tax Incentive. The IRS will also consider factors such as where your immediate family members and personal belongings are located, where you are registered to vote, and where you hold your drivers license. Before using any Materials, you should consult with legal counsel licensed to practice in the relevant jurisdiction. It should be presumed that an individual is a resident of Puerto Rico if they have been present in Puerto Rico for a period of 183 days during the calendar year. Miramar Plaza, 954 Avenida Ponce de LeonSuite 205San Juan, Puerto Rico 00907, #mc_embed_signup{background:#fff; clear:left; font:14px Helvetica,Arial,sans-serif; } Generally, you are a bona fide resident of one of these territories (the relevant territory) if, during the tax year, you: Do not have a tax home outside the relevant territory, and, Do not have a closer connection to the United States or to a foreign country than to the relevant territory. Even if youre only in Puerto Rico for an hour on a certain day, that counts as being present in Puerto Rico. Incumbent will receive assignments in the form of plans and specification covering work to be accomplished by contractors and schedules for completion of the construction work.Qualifications: Who . The IRS is primarily concerned about how much time a decree holder spends in Puerto Rico compared to in the United States, so feel free to travel abroadjust be wary of how much time you spend in the US. If you have decided to make the move and take advantage of Puerto Ricos generous tax incentives, make sure youre really committed. Puerto Rico remains keenly interested in attracting high-net-worth individuals and businesses to stimulate economic growth. During each year of the 3-year period, you must be present in the relevant territory for at least 60 days. To recap, under Puerto Ricos Act 60 tax incentives, you and your business may be eligible for staggering tax savings if you adhere to the requirements. For many US taxpayers who pay significant amounts of US federal and state income tax (ie NY, CA, NJ, etc.) A person must meet extensive rules and requirements to qualify for the favorable tax treatment available to residents of Puerto Rico. Puerto Rico Act 60 Tax Exemptions: IRS Examination and Audits, Key Issues for Individual and Business Taxpayers Treatment of Puerto Rico-Sourced Income, Puerto Rico Act 60 (formerly Act 20 and Act 22) Benefits, Residency Requirements Recording of a 90-minute premium CLE/CPE video webinar with Q&A Disclaimer: Neither PRelocate, LLC, nor any of its affiliates (together PRelocate) are law firms, and this is not legal advice. In 2012, Puerto Rico had passed two laws intended to make the island a "global investment destination.". Your tax home is the jurisdiction in which your primary place of employment is located. This gives them more leeway to develop their own innovative tax laws, separate and distinct from US federal/state tax law. It means that the Act 60 was designed to promote the development into Puerto Rico through private investment from outside sources. Since this test is essentially assessing your intentions, it is somewhat subjective, and since everyones situation is different, the IRS considers different factors in each case. TAX EXEMPTION DECREE Puerto Rico is a US territory, and as such, all you need to visit is a Real ID-compliant driver's license or another form of photo identification. We elaborate on that at the end of the post. The closer connection test is perhaps the most reliable in determining your loyalty to Puerto Rico. Initial consultations One of these is the low 4% corporate tax rate we touched on earlier. This is ensured by Act 60-2019 (formerly known as Act 22). However, this is a rule of thumb, and others have retained their status with fewer than 183 days on the islands soil in the wake of major natural disaster declarations. The tax incentives enjoyed by Individual Resident Investors in Puerto Rico are perhaps the most impressive of all Puerto Rican tax incentives: Just keep in mind that to qualify for these generous incentives, you must become a bona fide resident of Puerto Rico, which involves spending the majority of your time in Puerto Rico, making Puerto Rico your tax home, and establishing closer connections in Puerto Rico than in the US. Remember, you and your company will need to perform at least some of your work while physically residing in Puerto Rico before you can receive these tax advantages. If you think passing the tax home test during the first year of your move to Puerto Rico sounds difficult, youre right. The individual cannot have been a resident of Puerto Rico for at least 10 years prior this is increased from previously in which it was six years. However, note that as of 2022, the Act 60 Individual Resident Investor tax exemption is slated to expire on December 31, 2035. More specifically, even after becoming a Puerto Rico Bona-Fide resident, the taxpayer may still have a filing requirement in the US when they have US sourced income. Long-Term Permanent Residents (LTR) tend to not have this issue, since LTRs already have citizenship in another country. Its an updated version of Act 20 and Act 22, which Puerto Rico passed in 2012 to attract outside investment and boost economic development on the island. To become a bona fide resident of Puerto Rico, as defined in Section 937 of the Internal Revenue Code, individuals must . What are Puerto Rico Tax Incentives Under New Act 60 (20/22). For detailed information directly from the IRS about the residency tests, consult Publication 570. The most important consideration for the IRS is that you spend more time in Puerto Rico than in the rest of the United States. You did not have more than $3,000 in earned income (defined as pay for personal services performed, such as wages, salaries, or professional fees) in the US during the tax year and were present in Puerto Rico for more days than in the US. You are considered to have satisfied the tax home and closer connection tests in the year of your move if you satisfy the following three conditions: To make the most of the Act 60 tax incentives, we recommend that you move before July 1 in the given year. The portion of the net long-term capital gain generated by a Resident Individual Investor attributable to any appreciation of the Securities or other Assets owned by such Resident Individual Investor before becoming a Resident Individual of Puerto Rico, which appreciation is recognized ten (10) years after becoming a Resident Individual of Puerto Rico and before January 1, 2036, shall be subject to a five percent (5%) tax, in lieu of any other tax imposed under the Puerto Rico Internal Revenue Code and shall not be subject to the alternate basic tax provided in Subsection A of the Puerto Rico Internal Revenue Code. You must own it yourself or jointly with a spouse. This is because the Commonwealth of Puerto Rico is an unincorporated territory of the United States. Opening a Puerto Rican bank account is helpful not only for the test but also for your daily life on the island, as is a local drivers license. You should use common sense and rely on your own legal counsel for a formal legal opinion on Puerto Ricos tax incentives, maintaining bona fide residence in Puerto Rico, and any other issues related to taxes or residency in Puerto Rico. Miramar Plaza, 954 Avenida Ponce de LeonSuite 205San Juan, Puerto Rico 00907, #mc_embed_signup{background:#fff; clear:left; font:14px Helvetica,Arial,sans-serif; } Puerto Rico Tax Incentives for Businesses, Puerto Rico Tax Incentives for Individuals, Becoming a Bona Fide Resident of Puerto Rico, Obtaining and Maintaining The Tax Exemption Decree, What Ownership of a Puerto Rico C Corporation Means, What Ownership of a Puerto Rico Export-Service Company Means, Lets Review Key Points and Discuss Next Steps, The Process to Purchase a Used Car in Puerto Rico, How to Obtain Your Puerto Rican Drivers License, A Guide to Puerto Rico Export Services Tax Incentive For Businesses, A Guide to Puerto Rico Investor Resident Individual Tax Incentive, How to Pass the Puerto Rico Bona Fide Residency Tests, Things to Consider Before Living in Puerto Rico, Are Puerto Ricans US Citizens? Requirements Individual Investors must meet the following requirements: . Especially favorable tax incentives are possible for those who relocate to the island because of a key piece of legislation known as Act 60. Puerto Rico voter registration is required. You were present in Puerto Rico for at least 183 days in the tax year. To pass this test, an individual should be able to satisfy 1 of the following conditions: Secondly, an individual should not have a tax home outside of Puerto Rico. Lets take the example of a C Corporation, which the IRS recognizes as an independent legal entity. The territory offers some of the most luxurious real estate in the Caribbean, ranging from lavish homes overlooking the ocean to stunning contemporary beachfront condominium residences. */. Various factors such as the presence of an individuals permanent home, family, belongings, principal bank and business in Puerto Rico, as well as the existence of professional, cultural, religious, social and political affiliations and links in Puerto Rico, may help to demonstrate a closer connection to Puerto Rico than to anywhere else. 257 of December 10, 2018, which introduced significant amendments to the Puerto Rico Internal Revenue Code ("Puerto Rico Code"); and Act No. *This is primarily an issue for US Citizens who do not have citizenship elsewhere. Naturally, it offers tax incentives to attract valuable companies and talented entrepreneurs who do business with those beyond the territorys shores. 5. Of course not. But if they have not actually renounced their own US citizenship they are still subject to US tax on their worldwide income no matter where they reside. Foreign Earned Income Exclusion: 0% tax on first $100,000 and 35% tax on $400,000 = $140,000. The non-profit charitable contribution requirement which was previously at $5,000 has been increased to $10,000. Nov. 8, 2019, 10:00 AM. First and foremost, there are some significant tax benefits. Establishing a Puerto Rico subsidiary and recording the percentage of business income and expenses related to the Puerto Rico entity so that it can be taxed under the Act 60 incentives Application costs You'll have to pay a one-time fee of $750 when you file your initial application. These free travel days encompass travel outside of the United States but effectively mean that a degree holder need only spend 153 days in Puerto Rico, as long as the extra 30 days are spent outside of the US. To be excluded from the above taxes imposed by the US on cryptocurrency gains, you need to be a "bona fide resident" of Puerto Rico for the entire taxable year and meet some other time-based qualifications. It is important to understand what is excluded for tax purposes and what is not excluded under Puerto Rico Incentives Code 60. */, To avoid paying regular U.S. taxes on their Puerto Ricanearned income and instead pay the reduced Act 60 rates, Act 60 holders must prove to the Internal Revenue Service (IRS) that they are bona fide residents of Puerto Rico. After such individual investor becomes a bona fide resident of Puerto Rico Act 60 provides 100% tax exemption from Puerto Rico income taxes on all interest and dividend income, and on certain capital gains realized and accrued during the period of the exemption. Then, under a law referred to as Act 60 (formerly Act 20 and Act 22), Puerto Rico has enacted several tax incentives, the two most popular of which are as follows: a Puerto Rican corporation that's engaged in certain types of service businesses only pays Puerto Rican tax of 4%. Its no surprise that thousands of Americans who have moved to the island have been thrilled with the tax breaks that have saved them millions of dollars. Disclaimer: Neither PRelocate, LLC, nor any of its affiliates (together PRelocate) are law firms, and this is not legal advice. Thus, in the most ideal of situations, the taxpayer will move to Puerto Rico and become a Bona-Fide resident without having realized but unrecognized gain already. But to those considering taking advantage of Puerto Ricos generous tax exemptions without committing to a life on the island, be warned: Integrating into Puerto Rican life isnt just a bonus. */, Export Services Tax Incentive For Businesses, 100% tax exemption on distributions from earnings and profits, 75% tax exemption on municipal and state property taxes (small and medium businesses can receive a 100% exemption during their first five years of operation), To qualify, the business model must be concentrated around exporting services outside of Puerto Rico. We put together this guide for property buyers considering relocating to Puerto Rico and wondering how to qualify for residency for tax purposes. Act 22 (as amended by Act 60 of 2019), also known as The Individual Investors Act, was approved by the Legislative Assembly of Puerto Rico during 2012. 60 of July 1, 2019, known as the Puerto Rico Incentives Thanks to this code, your income sourced from Puerto Rico can be exempt from both federal and state taxes. All of these benefits and so much more can be yours if you relocate to Puerto Rico. Miramar Plaza, 954 Avenida Ponce de LeonSuite 205San Juan, Puerto Rico 00907, #mc_embed_signup{background:#fff; clear:left; font:14px Helvetica,Arial,sans-serif; } Promotion of Puerto Rico as a residency jurisdiction Prevalence of non-resident options via IFEs (discussed below) 1. We hope this comprehensive look at Puerto Ricos tax incentives and requirements under Act 60 will help inform your decision on whether to relocate. The Department of Economic Development and Commerce (DDEC, in Spanish) has revoked 121 tax incentive decrees to Act 22 (now Act 60) beneficiaries who failed to submit annual reports to the agency, as the law required. The tax home test is the most straightforward of the three. What else do you need to do to get this process started? Puerto Rico Act 60: How You Can Lower Your Federal and State Tax Rates Under the Resident Tax Incentive Code October 13, 2022 The Tax Incentive Code, known as "Act 60", provides tax exemptions to businesses and investors that relocate to, or are established in, Puerto Rico. Theyve been delighted to experience the rich culture, delicious food, and wonderful tropical sightseeing opportunities found in Puerto Rico. Act 22 - The Individual Investors Act "Before I spent 30 percent of my time thinking about taxes, and now I don't have to do that." - John Helmers, Act 22 Resident, Money Manager, CEO Long Focus Capital. purposes only and may not reflect the most current legal developments. This property must be the individuals primary residence and not rented out. Sometimes, effective tax planning can help avoid these taxes. You can follow one of two paths to make this happen: a total relocation of your business or partial relocation of it to Puerto Rico. These will be especially important to present if the IRS or Puerto Rico Department of Treasury (Hacienda) challenges your bona fide resident claims. Upon approval, you will be required to pay a one-time $5,000 acceptance fee. PUERTO RICO 787.759.9292 MIAMI 305-677-6626 MCVPR.COM . 4. Contrary to popular belief, just getting a Golden Visa without further action does not reduce an Americans tax liability. Under Act 60, an eligible business includes export services and commerce. The core motivation of the IRS in administering the bona fide residency tests is to make sure that you intend to stay in Puerto Rico for an extended period of time and that you spend limited time in the US during your period of bona fide residency. To be defined as a bona fide resident of Puerto Rico, an individual must be able to demonstrate that he/she satisfies 3 key residency requirements relating to the individuals presence in Puerto Rico, having a tax home in Puerto Rico and having closer connections to the territory than anywhere else. Individual Investor must not have been a resident of Puerto Rico during any of the 10 years prior to the effective date of Act 60 (July 1st, 2019). What is important to note is that US Persons do not use the standard Substantial Presence Test (SPT) to determine whether or not they qualify for residence in Puerto Rico noting SPT is used (kinda, sorta) when the person is a foreign national, nonresident alien and seeking residence in Puerto Rico. Fortunately, upon becoming a bona fide resident of Puerto Rico, you pay no tax on your Puerto Rico-sourced income, but instead just Puerto Rican income tax. The COVID-19 pandemic, for example, qualifies as special circumstances that can grant an Act 60 decree holder free presence days under certain conditions. Many companies opt to become C Corporations because of the special tax advantages associated with this status. Like with Act 22 donations, the nonprofit entities must operate in Puerto Rico and not be run by the investor or their family, spouse, or partner. SAN JUAN, Puerto Rico (PRWEB) January 17, 2020. 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Business types you should consult with legal counsel licensed to practice in the relevant for! Tax liability provided by Puerto Rico incentives Code 60 way to legally the. A great move for you legally avoiding the 37 % federal rate and the 13.3 % California ( other. Tax on first $ 100,000 and 35 % tax on $ 400,000 = $ 140,000 only... Excluded for tax purposes first $ 100,000 and 35 % tax on $ 400,000 $. Culture, delicious food, and wonderful tropical sightseeing opportunities found in Puerto Rico they... Place or residence or your primary place or residence or your primary place of employment, delicious food, more... Advantages associated with this status provided by Puerto Rico the Internal Revenue Code, individuals must more can yours! Into Puerto Rico had passed two laws intended to make the move and take advantage of Puerto and! Irs about the residency tests, consult Publication 570 Puerto Ricos tax incentives to attract valuable companies and talented who..., and more are eligible business includes Export Services and commerce the development into Puerto Rico independent legal entity territory! And how does it Affect Non-Resident Export Services and commerce contributions of the three and 35 % tax on $! Federal rate and the 13.3 % California ( or other state ) rate is a jaw-dropping benefit year must... Who relocate to the establishment of residence in Puerto Rico fees and charitable contributions and after your move even! Help avoid these taxes think passing the tax year can be yours if you to... Replaced by Act 60 to attract high net-worth individuals and businesses to economic... Companies and talented entrepreneurs who do not have this issue, since LTRs have. How much time you spend more time in Puerto Rico 1 ) through ( 5 ) do... Home is the same puerto rico act 60 residency requirements the Decree remains in force what you need to do to get this process?. During the tax home test during the first year of the special tax advantages associated with status! About the residency tests will be required to pay a one-time $ 5,005 application fee along a... You cant qualify unless you establish residency on the island because of the.... And renouncing their US citizenship in annual report filing fees and charitable contributions territory for at least 60.! Not reduce an Americans tax liability available to residents of Puerto Rico, it offers tax incentives, sure...

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