We have a strong practice in Act 60 for Export Services & Commerce and for Individual Investors (formerly Acts 20/22). We counsel and advise clients who are seeking to relocate to Puerto Rico to benefit from these tax incentives.
Act 60 is a law that provides tax benefits for businesses and individuals who relocate to Puerto Rico. For businesses, Act 60 offers a reduced income tax rate of 4% on net income derived from export services and commerce activities. Businesses also receive exemptions from property taxes, municipal taxes, and taxes on dividend distributions.
For individuals, Act 60 offers a 100% exemption from Puerto Rico income taxes on interest and dividend income, and on certain capital gains realized and accrued after the individual becomes a bona fide resident of Puerto Rico. Individuals must meet certain requirements to qualify for these benefits, such as making an annual donation to local nonprofit organizations and purchasing real property in Puerto Rico for use as their principal residence.
We can help you assess whether you are eligible for the tax benefits of Act 60 and guide you through the application process. Contact us today to learn more.
Here are some specific details about the tax benefits of Act 60 for Export Services & Commerce:
- Eligible businesses must have a “bona fide” office or establishment in Puerto Rico and conduct eligible services as an export service provider or an export commerce business.
- Eligible export services include
- Advertising and public relations
- Call centers
- Consulting
- Corporate headquarters
- Creative industries
- Development of computer programs
- Distribution in physical form, through the Internet, Cloud Computing or Blockchain
- Income from licensing, subscriptions or charges for services
- Education services and training
- Electronic data processing centers
- Engineering, architecture, project management
- Hospital and laboratory services, including telemedicine
- Investment banking and other financial services (including advisory and broker dealer operations)
- Marketing centers
- Professional services (law and accounting)
- Research and development
- Shared service centers
- Voice and data telecommunications
- Eligible export commerce activities include
- Assembly, bottling, and packaging of products for export
- Commercial and mercantile distribution of products manufactured in Puerto Rico
- Commissions on the sale of products to customers outside Puerto Rico
- Purchase of products for resale to customers outside Puerto Rico
- Sale of intangible products to customers outside Puerto Rico
- Storage and distribution centers
- The income tax rate for eligible businesses is 4% on net income derived from the exempt operation. Businesses with a business volume of $3 million or less are subject to a 2% income tax rate for the first five years, and 4% thereafter.
- Eligible businesses are also exempt from property taxes, municipal taxes, and taxes on dividend distributions.
- The tax exemption period is 15 years, which can be extended for 15 additional years.
Here are some specific details about the tax benefits of Act 60 for Individual Investors:
- Eligible individuals must become a bona fide resident of Puerto Rico on or before December 31, 2035.
- Eligible individuals will enjoy 100% exemption from Puerto Rico income taxes on interest and dividend income during the period of exemption.
- In certain circumstances, gains from the disposition of marketable securities, commodities, currency and digital assets based on blockchain technology acquired after the individual becomes a bona fide resident of Puerto Rico will not be subject to federal income tax if sold during the period of residency in Puerto Rico.
- The tax exemption period for individual investors will expire on December 31, 2035.
- Eligible individuals must meet the following requirements:
- Make an annual donation of a minimum of $10,000 to local nonprofit entities that are not controlled by the individual investor and are certified under the Puerto Rico Internal Revenue Code. Half of the donation must be to certain organizations that work to eradicate child poverty.
- Within two years of receipt of the grant, the individual investor must purchase real property in Puerto Rico for use as his/her principal residence. The property must be owned by the individual investor as sole owner or together with the spouse.
- File an Annual Report with the Government of Puerto Rico with a filing fee of $5,000.
If you are considering relocating to Puerto Rico, Act 60 can be a great way to lower your taxes. Talk to us, we are accountants and tax advisor to see if you qualify and help you with the application process.
I hope this article was helpful. Is there anything else I can help you with? Feel free to reach out at [email protected] or 787-473-8985.
Disclaimer: The information provided on this website is for informational purposes only and is not legal or tax advice. You should consult with a qualified attorney or tax advisor to discuss your specific situation.