Tax Incentives

Act 60 revoked

Navigating Act 60 Revocation Risks in Puerto Rico

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Act 60 (now Act 60-2019) provides attractive tax incentives for businesses and individuals relocating to Puerto Rico, but maintaining compliance is crucial. Revocation of these benefits can have significant financial implications. Below, we outline the primary reasons for revocation, based on official guidelines from the Department of Economic Development and Commerce (DDEC) and related regulations. 1. Non-Compliance with Decree Terms, Laws, or Regulations Any violation of the specific conditions outlined in your incentive decree, or failure to adhere to Puerto Rican tax laws, environmental regulations, or other applicable statutes, can result in immediate revocation. This includes operational changes that deviate from approved activities without prior authorization. 2. Failure to Maintain Compliance Non Compliance, jeopardize ongoing eligibility. Allowing it to lapse due to unmet requirements, such as annual filings or audits, directly triggers revocation proceedings. 3. Unauthorized Transfer of Business, Stock, or Assets Selling, transferring, or restructuring ownership, shares, or key assets without explicit approval from the DDEC or relevant authorities can void the decree. This safeguard ensures continuity and prevents abuse of incentives through unauthorized changes in control. 4. Failure to Commence Operations Within Specified Period Your decree typically requires starting eligible export services, manufacturing, or other qualified activities within a set timeframe, often 6-12 months. Delays beyond this period, without an approved extension, lead to automatic revocation. 5. Tax Liability Non-Compliance Failing to fulfill tax obligations, including timely payment of any non-exempt taxes, accurate reporting, or resolving audits satisfactorily, can prompt revocation. This encompasses both Puerto Rican and potential U.S. federal tax compliance issues. 6. Failure to Submit Annual Reports Annual reports to the DDEC, detailing operations, employment, and financials, must be filed by specified deadlines (usually July 15). Missing these submissions, or providing incomplete/inaccurate information, is a common cause for decree termination. 7. Sector-Specific Failures Certain decrees have tailored requirements: for example, export services must maintain job creation quotas; physicians under resident incentives must practice full-time in Puerto Rico; farmers need to sustain eligible agricultural activities. Falling short, such as reducing workforce below thresholds or ceasing qualified operations, results in revocation. To mitigate these risks, businesses should implement robust compliance monitoring, consult experts regularly, and stay updated on regulatory changes. Proactive adherence preserves the valuable tax benefits of Act 60. Contact Us For assistance with your compliance or to schedule a consultation, feel free to reach out to us: We’re here to help you navigate this procedure of moving down here and ensure you remain compliant while maximizing your benefits! Disclaimer:The information provided is for informational purposes only and should not be considered legal or tax advice.

self audit

Best Practices for Self-Auditing Tax Compliance When Moving from the USA to Puerto Rico

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Relocating from a U.S. state to Puerto Rico to take advantage of tax incentives, such as those under Act 60, requires careful planning to ensure compliance with IRS requirements for bona fide residency. To qualify as a bona fide resident of Puerto Rico, you must satisfy three tests: the Presence Test, Tax Home Test, and Closer Connection Test. Conducting a self-audit before an IRS or state residency audit can help you confirm compliance and avoid costly penalties. Below is a checklist of best practices to guide your self-audit process, tailored to these tests. Why Self-Audit? A self-audit helps you: Checklist for Self-Auditing Compliance 1. Presence Test: Verify Physical Presence in Puerto Rico The Presence Test requires you to spend sufficient time in Puerto Rico to establish residency. You can meet this test in several ways, such as spending at least 183 days in Puerto Rico during the tax year or averaging 183 days over three years with a minimum of 60 days per year. Best Practices: 2. Tax Home Test: Establish Puerto Rico as Your Principal Place of Business The Tax Home Test requires that your regular or principal place of business be in Puerto Rico during the tax year, with no tax home outside Puerto Rico. Your tax home is generally where you conduct your income-producing activities. Best Practices: 3. Closer Connection Test: Demonstrate Stronger Ties to Puerto Rico The Closer Connection Test requires that you have a stronger connection to Puerto Rico than to the U.S. or any foreign country during the tax year. This is a facts-and-circumstances test based on your personal, financial, and social ties. Best Practices: 4. General Compliance and Documentation Beyond the three tests, additional steps ensure overall compliance and audit readiness. Best Practices: 5. Common Pitfalls to Avoid Final Recommendations By following this checklist, you can confidently establish and maintain bona fide residency in Puerto Rico, maximize tax benefits, and be well-prepared for any IRS or state audit.  📞 Contact Us For assistance with your compliance or to schedule a consultation, feel free to reach out to us: We’re here to help you navigate this procedure of moving down here and ensure you remain compliant while maximizing your benefits! Disclaimer:The information provided is for informational purposes only and should not be considered legal or tax advice.

1099 vs w2

Should You Be a 1099 Contractor or W-2 Employee Under Puerto Rico’s Act 60? A Comprehensive Guide

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If you’re considering a move to Puerto Rico to take advantage of the tax incentives under Act 60, one of the most common questions you’ll face is: Should I structure my work as a 1099 independent contractor or stick with W-2 employment? This decision can significantly impact how you leverage Act 60’s benefits, as well as how you meet the compliance requirements to qualify as a bona fide resident. Below, we’ll explore the implications of each option, factoring in the key residency tests—Presence Test, Tax Home Test, and Closer Connection Test—and how they align with Act 60’s framework. Understanding Act 60 Benefits Act 60, officially the Puerto Rico Incentives Code, consolidates previous laws like Act 20 (export services) and Act 22 (individual investors) into a streamlined package designed to attract businesses and high-net-worth individuals to the island. For individuals under Chapter 2 (Individual Resident Investor), benefits include a 100% exemption from Puerto Rico income taxes on interest, dividends, and certain capital gains accrued after establishing residency, provided you secure a tax exemption decree. For businesses under Chapter 3 (Export Services), perks include a 4% corporate income tax rate, exemptions on dividends, property taxes, and municipal taxes for qualifying export services performed from Puerto Rico for clients outside the island. Additionally, under Section 933 of the U.S. Internal Revenue Code, U.S. citizens who become bona fide residents of Puerto Rico can exclude Puerto Rico-sourced income from U.S. federal income tax—assuming residency requirements are met. 1099 Contractor vs. W-2 Employee: Breaking It Down As a 1099 Contractor As a W-2 Employee Residency Tests and Compliance Requirements To unlock Act 60’s federal and local tax benefits, you must establish bona fide residency in Puerto Rico under IRS rules (Section 937). This involves passing three key tests: Practical Steps for Success Final Thoughts Choosing between 1099 contractor and W-2 employee status under Act 60 depends on your priorities—flexibility and tax optimization versus simplicity and stability. Contractors can unlock greater tax savings by building a Puerto Rico-based business, while employees benefit from ease but may face limitations on local tax exemptions. Whatever path you take, understanding the residency tests and aligning your work structure with Act 60’s requirements is key to making the most of this unique opportunity. Disclaimer: This blog post is for informational purposes only and does not constitute financial or legal advice. Consult a qualified professional before making tax or employment decisions.

Tax protection

Act 22 Compliance Checklist: Stay on Track and Protect Your Tax Benefits

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Puerto Rico’s Act 22 (now part of Act 60) provides significant tax benefits to Resident Individual Investors. However, these benefits come with strict compliance requirements. Failing to meet these obligations can result in revocation of benefits and financial penalties. Below is a checklist to help ensure you stay in compliance and continue enjoying the benefits of your decree. ✅ Act 22 / Act 60 Compliance Checklist 🗓️ Yearly Compliance Tasks Task Due Date Notes Completed Submit Annual Report to OITE & PR Treasury 30 days after tax filing deadline Required for compliance. Missing this can cause revocation. ☐ Make $5,000 Charitable Contribution to a Puerto Rico Nonprofit Before filing annual report Must be Puerto Rico-based and not controlled by you. Keep receipt as proof. ☐ Maintain Bona Fide Puerto Rico Residency Ongoing (183+ days/year) Track travel days to ensure 183+ days in Puerto Rico yearly. ☐ Report All Required Financial Information Accurately Ongoing Misreporting can result in revocation & penalties. ☐ 📝 One-Time / As-Needed Compliance Tasks Task Due Date Notes Completed File IRS Form 8898 (if previously a U.S. resident) First year only, by U.S. tax deadline Confirms move to Puerto Rico. Missing this may trigger U.S. tax issues. ☐ Notify OITE if Residency Changes Within 30 days of moving If you leave PR, you lose tax benefits. Must send written notice. ☐ Ensure Grant Acceptance is Notarized & Filed 90 days after receiving the decree Failure to do this will make the grant retroactively null & void. ☐ Review Grant Terms & Act 22 Compliance Rules Annually Stay updated on any legal changes affecting your benefits. ☐ ⛔ Red Flags That May Lead to Revocation 📌 Best Practices ✔ Set calendar reminders for key deadlines. 📅✔ Keep records of donations, filings & travel days for audits. 🗂️✔ Consult and reach out to us yearly for updates. 🏛️✔ Double-check that all filings are accurate before submission. ✅ ⚠️ Important Caveat Each Act 22 decree is a separate contract with the government, meaning that specific terms and obligations may vary. Please review your individual decree to ensure full compliance. If you would like us to review your case or prepare a customized compliance plan for you, don’t hesitate to reach out to our office 📞 Contact Us For assistance with Act 22 compliance or to schedule a consultation, feel free to reach out to us: We’re here to help you navigate Act 22 and ensure you remain compliant while maximizing your benefits!

Credito por Trabajo en Puerto Rico

¿Tienes Derecho al Crédito por Trabajo en Puerto Rico? Usa Nuestra Calculadora y Descúbrelo

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El Crédito por Trabajo es un incentivo diseñado para ayudar a los trabajadores de ingresos bajos y moderados en Puerto Rico. Este beneficio podría representar un alivio económico importante para muchas familias, pero no todos saben si cualifican o cuánto podrían recibir. Para facilitarte el proceso, hemos creado una calculadora gratuita donde puedes ingresar tu información básica y obtener una estimación de cuánto podrías recibir. 📥 Accesa la calculadora aquí: Calculadora de Crédito por Trabajo 2025 Ingresa tu información a continuación para calcular tu estimado de Crédito por Trabajo: Ingreso Bruto Anual ($): Número de Dependientes: 0123 o más Estado Civil: SolteroCasado (radicando en conjunto) Calcular Crédito Crédito Estimado: $0 Escríbenos por WhatsApp 🔹 ¿Cómo funciona?Solo necesitas ingresar tres datos clave:   ¿Quiénes pueden cualificar? Para recibir el Crédito por Trabajo, debes cumplir ciertos requisitos, como: ✅ Haber trabajado y generado ingresos✅ Ser residente de Puerto Rico durante todo el año contributivo✅ Tener un número de Seguro Social válido✅ No exceder los límites de ingresos establecidos según el número de dependientes Los detalles específicos sobre los límites y fórmulas de cálculo están basados en las guías del Departamento de Hacienda de Puerto Rico. Importante: Disclaimer 💡 Esta calculadora es una herramienta informativa y no sustituye asesoría fiscal profesional.Los resultados que obtengas son solo una estimación y no garantizan la cantidad final de crédito que podrías recibir. Para confirmar tu elegibilidad y monto exacto, te recomendamos consultar con un especialista en contribuciones o verificar con el Departamento de Hacienda de Puerto Rico. No pierdas la oportunidad de verificar si puedes recibir este incentivo. Utiliza la calculadora, ingresa tus datos y descubre si tienes derecho a este beneficio.  ¡Comparte con familiares y amigos que también puedan beneficiarse!  

Act 60 - Youtube

Does My YouTube Channel’s Source of Income Qualify for Act 60 Export of Services?

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If you’re a YouTube creator wondering whether your ad revenue can qualify under Puerto Rico’s Act 60 for Export of Services, here’s what you need to know: Understanding Act 60 Act 60 in Puerto Rico was designed to attract businesses by offering significant tax incentives, particularly for those providing services to clients outside of Puerto Rico. The key here is that the income must be from “export services,” meaning services provided to non-residents or entities not located in Puerto Rico. YouTube Ad Revenue as an Export Service Your YouTube channel’s ad revenue could potentially qualify under Act 60 if: How to Qualify Here’s how you might go about qualifying: Why It Qualifies The rationale behind this qualification is: Final Thoughts While your YouTube channel’s ad revenue can indeed qualify for Act 60 benefits, navigating the application and ensuring ongoing compliance requires careful planning and possibly the assistance of a tax advisor familiar with Puerto Rican incentives like us at Bonn LLC. This can be a lucrative strategy if managed correctly, significantly reducing your tax burden and potentially enhancing your income from YouTube activities. For those considering this opportunity, it’s crucial to be thoroughly informed and prepared to comply with all stipulations to fully benefit from Act 60. Should you require additional guidance or have specific inquiries, seeking tailored professional advice is highly recommended. For further assistance or more information, please feel free to contact us at [email protected] or 787-473-8985. Disclaimer: The information provided herein is for informational purposes only and should not be construed as legal or tax advice.

Puerto Rico Sunset

Latest Benefits of Act 60 for Investors in Puerto Rico: What You Need to Know

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Are you considering leveraging the lucrative tax incentives offered under Puerto Rico’s Act 60? If so, you’re on the path to potentially significant tax savings, but navigating this terrain requires careful planning and thorough understanding. Here’s a comprehensive guide based on the latest drafts from our office: 1. Real Property Investment:    – Primary Residence: Act 60 mandates investors to purchase real property in Puerto Rico as a primary residence within two years of grant approval. This investment can be made individually, with a spouse, or via an entity solely controlled by you or you and your spouse. 2. Understanding Tax Exemptions:    – Start Date: Your tax exemptions on interest, dividends, and certain capital gains kick in from January 1st of the year you submit your application. Remember, these exemptions do not apply retroactively to previous years. 3. Strategic Capital Gains Taxation:    – 5% Fixed Rate: If you’ve held assets like stocks or cryptocurrencies before moving, sell them after 10 years of Puerto Rican residency but before 2036, and you’ll benefit from a mere 5% tax on gains.    – 100% Exemption: Gains on assets acquired post-residency are completely tax-free if realized before January 1, 2036, offering a substantial incentive for new investments. 4. Compliance is Key:    – Non-Compliance: Not adhering to the stipulations of Act 60 can not only lead to penalties but also the revocation of your grant. This could mean retroactive tax liabilities from the date of breach or conviction for serious offenses. 5. Ethical Obligations:    – Anticorruption Compliance: Adherence to Puerto Rico’s Anticorruption Code is non-negotiable. Ethical misconduct or legal convictions can dismantle your tax benefits retroactively. 6. Annual Commitments:    – Reporting: Ensure you file your annual report by November 15 each year. Missing this could jeopardize your grant.    – Charitable Contributions: Starting from the second year, an annual donation of $10,000 to certified Puerto Rican nonprofits is required, with at least half supporting child poverty eradication. Implications for Investors: – Global Ethical Conduct: Your actions worldwide could impact your Act 60 benefits. Maintain global standards of legality and morality. – Social Investment: Your financial commitments under Act 60 directly contribute to community welfare, particularly in combating child poverty. – Tax Planning: Craft a timeline for investment, residency, and asset realization to make the most of these tax advantages. Act 60 presents a unique opportunity for investors looking to optimize their tax situation while contributing positively to Puerto Rico’s economy. However, the key to benefiting from Act 60 lies in meticulous compliance, strategic financial planning, and an understanding that these benefits come with social responsibilities. For those ready to embark on this journey, ensure you’re well-informed and prepared to meet all requirements to enjoy the full spectrum of advantages that Act 60 offers. Should you need further guidance or have specific questions, professional advice tailored to your circumstances is indispensable. For further assistance or information, please contact us at [email protected] or 787-473-8985. Disclaimer:The information provided is for informational purposes only and should not be considered legal or tax advice. Consult with a qualified attorney or tax advisor to discuss your specific situation.

Navigating Compensation Regulations for Entities in Puerto Rico: A Brief Guide

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In the vibrant business landscape of Puerto Rico, entities, encompassing corporations and partnerships, operate within a framework of specific tax regulations that shape various aspects of their financial structure. One crucial facet that business owners and stakeholders need to navigate is the concept of “reasonable compensation” for members and shareholders. Understanding Reasonable Compensation While there isn’t a rigid requirement mandating a specific salary for members and shareholders, the compensation structure should adhere to the principle of reasonableness. In essence, the compensation paid should be commensurate with the services provided to the business. This ensures a fair and transparent approach to financial dealings within the entity. Key Considerations: Best Practices: To navigate these regulations effectively, businesses are advised to: In a landscape where tax regulations are subject to change, staying informed and proactive is key. By adhering to the principles of reasonable compensation, businesses can not only navigate the complexities of taxation but also foster transparency and sound financial practices. It’s important to note that tax laws are subject to changes and revisions, and the information regarding this law may have evolved since its period of effectiveness. Therefore, it is essential to consult with an updated tax advisor in Puerto Rico for accurate guidance on how this law may affect your tax situation. 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. References: https://hacienda.pr.gov/publicaciones/determinacion-administrativa-num-15-22

Tax-Free Income – Law to Incentivize Property Acquisition

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Puerto Rico Law 132 of 2010, also known as the “Law to Incentivize Property Acquisition and Promote the Construction Industry in Puerto Rico,” was enacted with the purpose of stimulating investment in property acquisition and promoting the development of the construction industry on the island. Here are its key points: It’s important to note that tax laws are subject to changes and revisions, and the information regarding this law may have evolved since its period of effectiveness. Therefore, it is essential to consult with an updated tax advisor in Puerto Rico for accurate guidance on how this law may affect your tax situation. 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.