Puerto rico for the period in which they reside outside our jurisdiction. Enacted in 2012, pr act 22 allows investors and traders with bona fide residence in pr to exclude 100% of all shortterm and longterm capital gains from the sale of personal. The period during which an individual could not have been a resident of puerto. Puerto ricos act 20 the promotion of export services act and act 22 the act to promote the relocation of individual investors to puerto rico. A nonpuerto rico grantor trust, whose beneficiaries and grantors are the taxpayers, is the sole stockholder of corporation f. The law came into effect on january 1, 2020 and altered previous legislation. View the benefits of allowing us to manage your puerto rican tax incentives. Pr and its residents, provide extraordinary income tax.
Puerto rico business law notes act 20 and act 22 experts. The torres cpa group works diligently to ensure you understand all of the laws regarding your puerto rico taxes. Act 22 of 2012 also known as the act to promote the relocation of investors to puerto rico spanish. The government of puerto rico enacted in 2012 act 22, known as an act to promote the relocation of individual investors to prime up the economic development of puerto rico by offering nonresident individuals 100% tax exemption on all interest, all dividends and all longterm capital gains. As a small firm with large firm capabilities and resources, our attorneys, real estate brokers, and exceptional support staff strive to provide a relaxed, caring, client. To establish the act to promote the export of services, in order to provide the adequate environment and opportunities to develop puerto rico as an international service center, encourage local. In the case of act 2322014, the amendments to act 20 were made to add certain additional eligible activities. Puerto rico act 22 the individual investors act puerto. Puerto rico business law notes act 22 pr residents must be sure that their wills are considered valid in pr, otherwise their estates will be intestate i. Puerto rico incentives code act 602019 signed into law. Puerto ricos act 20 and act 22 key tax benefits insights dla. Summary of tax benefits under puerto rico act 22 and act 20.
Act 22, the individual investors act, was designed to primarily attract high net worth investors to puerto rico by providing complete tax exceptions on dividends, interest and capital gains, so. Heres why you should be careful with the 2017 version of puerto rico s act 20 tax holiday. Puerto rico act 22, the individual investors act, provides bona fide residents of puerto rico 100% tax exemption on capital gains, interest, and dividends. Act 22 incentivizes individuals to move to puerto rico. Recent amendments to act 202012 and act 22 2012 on december 19 and 22, 2014, acts 232 and 241 were approved to amend act 202012 and act 22 2012, respectively.
The act provides tax exemptions to eligible individuals residing in puerto rico. Act 20 act 22 act 27 act 73 puerto rico tax incentives. To qualify for puerto rico s act 20 and 22 tax holidays, you must be a resident of puerto rico and spend a minimum of 183 days a year on the island. Moving the entire company, including employees, to puerto rico and ceasing all operations in the united states. Puerto rico has made an offer that cant be matched by any foreign country. The government of puerto rico introduced act 22 the individual investors act, along with act 20 the export services act, which applies to businesses on january 17, 2012.
However, the main focus in terms of the public policy of act 732008, and of previous acts regarding industrial tax incentives, is the. Wages limitation to officerowners rendering services to an eligiblee xport services on october, 2015, the secretary of the treasury the secretary issued administrative determination 15 22 ad 15 22 which provides guidance on the imputation of wages to stockholders or partners that receive income for services. 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. In january 17, 2012, puerto rico passed legislation making it a tax haven for u.
Act 20 22 facebook group my act 20 22 video series. Irw concierge services is a boutique firm located in san juan, puerto rico dedicated to assist individuals under act 20 and act 22 grants in all of their needs when relocating their business and families to puerto rico. They pay only puerto rico tax on these profits and capital gains. As you read through this article on puerto rico s act 20 and 22, please note the following. Be careful with the 2017 version of puerto ricos act 20. The governor of puerto rico recently signed into law act no. We help you determine if you qualify for act 20, 22, 27 or 73 to ensure your maximize your businesss tax return. Rico to be eligible for tax benefits under act 22 was changed. Act 20 and act 22 real estate tax incentives to us. Taxpayer reporting exempt income under a special agreement for the creation of young businesses issued by the puerto rico trade and export company under act 52014, as.
Driving of a motor vehicle under the influence of alcohol, drugs, or controlled substances. The main catch to these programs is the bona fide residence requirement. To qualify for puerto rico s act 20 and 22 tax holidays, you must be a resident of puerto rico and spend a. 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. In the case of longterm capital gains, individuals covered under this legislation shall be exempt from puerto rico income taxes on recognized. Our premier attorney has experience in both public and private sectors specializing in tax and tax incentives. Puerto rico act 22 the individual investors act puerto rico. This post describes changes to puerto rico s act 20 and 22 that were signed into law on july 11, 2017. Tax update additional flexibility to the act to promote the relocation of individual investors to puerto rico act 2412014 amends the act to promote the relocation of individual investors to puerto rico act 22 2012 to ease requirements for eligibility as a resident individual investor. They export their services to investors outside of pr and can qualify for act 20 tax incentives for export service businesses. Act 22, or the individual investors act, targets high net worth investors with the promise of 0% tax on interest, dividends and capital gains obtained while residing in puerto rico as a bona fide resident. Act 20 of 2012, act 22 of 2012, puerto rico tax incentives. You must relocate your center of life to the island and spend at. Puerto ricos act 20 and 22 just made offshore tax havens.
For an article describing the modifications to puerto rico s act 20 tax holiday, see. In the midst of a complicated fiscal situation, puerto rico continues to attract investors and companies through two extant tax incentive. In the midst of a complicated fiscal situation, puerto rico continues to attract investors and companies through two extant tax incentive packages. In its initial stage, the system will allow businesses and individuals to create and manage applications including uploading and storing corporate documents under act 202012, act 22 2012, act 732008, and act 832010. And puerto rico is free to charge whatever tax rate they want, which is why act 20 and act 22 are possible. All you need to know about puerto rico s act 22, the act to promote the relocation of investors to puerto rico. Congress takes aim at puerto ricos role as tax haven for the. Act to promote the transfer of investors to puerto rico.
The act may have profound implications for the continued economic recovery of puerto rico. Taxpayer d is married to taxpayer e taxpayer d and taxpayer e are collectively referred to as the taxpayers. The island says the act 20 and act 22 tax incentives are intended to lure. The limits set below and in the manner authorized further on shall be the maximum legal.
Available to new residents who have not lived in puerto rico over the 6 years preceding the effective date of act 22 january 16th, 2006 to january 16th, 2012. The act 20 tax incentive is a 4% flat tax rate on export service net income. Act 22, combined with us internal revenue code usirc provisions dealing with puerto rico. Tax incentives to promote export services in puerto rico on january 17, 2012, puerto rico enacted act no. The owner receives act 22 100% exclusion on prsource dividends received from the pr export service entity. Act 22, known as individual investor act, became more costly to comply with. Puerto rico has the lowest tax rate and is now the best deal out there. All you need to know about puerto rico s act 22, the act to. An individual that becomes domiciled in puerto rico establishes a presumption of residency as a puerto. Act 22 individual investors puerto rico tax incentives. The tax laws, known as act 20, the export services act, and act 22, the individual investors act, shields new residents residing in puerto rico for at least half of the year from paying most federal income taxes. And within the first two years of living there you now need to buy a home in puerto rico.