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  • Complementary Incentive for Business Owners

    & Investors

    Learn more about Act 22-2012 for Investors in Puerto Rico.

  • Along with Act 20-2012 for Export Services, Puerto Rico adopted an additional incentive to stimulate economic development by offering nonresident individuals 100% tax exemptions on all interest, all dividends, and all long-term capital gains to entice nonresidents to relocate in Puerto Rico. This is a perfect complement to Act 20, offering individual incentives to business owners, entrepreneur and executives.

     

    Incentives for Individual Investors (Act 22-2012)

    • 0% tax on dividend and interest income for new Puerto Rico residents
    • 0% tax on short-and-long term capital gains for new Puerto Rico residents
    • 0% federal taxes on Puerto Rico source income
    • Incredible tax savings on your investment portfolio returns
    • Summer all year long and miles of paradise beaches

    Contact us to coordinate a free consult to learn more about the incentives.

  • Requirements

     

    A qualified individual’s income from dividends and interest are exempt from Puerto Rico income taxes during the exemption period. A qualified individual is also exempt from U.S. federal income taxes if the revenue generated is considered Puerto Rico source income under U.S. IRC §933. Also, a qualified individual’s income from long-term capitals gains is exempt from Puerto Rico income taxes during the tax exemption period after the individual becomes a resident of Puerto Rico. A qualified individual’s long-term capital gains before becoming a resident of Puerto Rico are subject to a 10% tax rate if realized within ten years of residency or 5% if realized after ten years of residency. Under U.S. law, long-term capital gains before becoming a bona fide resident of Puerto Rico that is accomplished within ten years are subject to the provisions of U.S. IRC. If the long-term capital gains are realized after ten years, the U.S. tax rate is 0%. Thus a bona fide resident would only be subject to the 5% Puerto Rico tax rate.

     

    Under the P.R. Internal Revenue Code: Nonresident individuals who become residents of Puerto Rico are considered eligible under Act 22 unless the individual was a resident of Puerto Rico at any time beginning on January 16, 1997, and ending on January 16, 2012. An individual that becomes domiciled in Puerto Rico is considered a Puerto Rican resident. An individual’s 183-day physical presence in Puerto Rico establishes a presumption of residency under the Puerto Rico Tax Code.

     

    Under the U.S. Internal Revenue Code: Under U.S. IRC §933, income derived from sources within Puerto Rico by individuals qualified as bona fide residents are exempt from federal income taxation. For an individual to considered a bona fide resident of Puerto Rico under U.S. IRC §937, an individual must be present in Puerto Rico for at least 183 days of the year. Second, the individual must not have a tax home outside of Puerto Rico during the year. A tax home is determined to be located near an individual’s principle place of business. Third, the individual must have a closer connection to Puerto Rico than the U.S. or another country. This is determined by a variety of factors including but not limited to the location of individual’s home, family, personal belongings, and voting district. The tax exemption period begins on the date an individual becomes a resident of Puerto Rico.

  • Contact Us

    Ready to invest? Contact us to learn more about growth strategies for your organization.

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