You may be asking whats Tax ACT 20 & 22?
Puerto Rico is the ONLY place where these incentives are being offered. Imagine living in a place where everyone dream and vacation. Perfect year around weather, Beautiful Beaches, No passport necessary, Great exotic food & culture and is a territory of the United states?
The purpose of these Tax breaks is to offer a unique incentives to promote our island economic development being very atractive for U.S residents.
Plain & simple if you move or relocate your business to the island you may only pay 4% in tax, and/or move yourself to Puerto Rico and pay 0 in capital gains, set up a bank fund and pay only 4% tax, etc.
These incentives are very tempting for those that want to save thousands of dollars.
These incentives promote the establishment of manufacturing operations, international banking operations, international insurance operations, tourism activities and production of films in Puerto Rico, among others.
Disclaimer: There’s been changes to Puerto Rico’s Act that were signed into law on July 11, 2017. Changes from eliminating the requierements of 5 employees. We’re Not lawyers,.Tax experts or offer this service. We’re just Real Estate Brokers providing information about the take breaks Act 20 & 22 for those Investors that Relocate to PR or Relocate their businesses to the island.
Tax Incentive Act 20
This Act promote Export services a creation of a World Class International Service Center.
Puerto Rico’s Act 20 gets you a 4% corporate tax rate on business income earned from work performed on the island. The net profits of a business providing a service from Puerto Rico to companies or persons outside of Puerto Rico. 4% fixed income tax rate; 3% fixed income tax rate in the case of services
considered strategic; 100% tax exemption on distributions from earnings and profits; 90% tax exemption from personal property taxes for certain types of businesses (100% tax exemption for the first five years of operation) and so on.
Tax Incentive Act 22
This Act promote all those Investors relocating to the island. It provides a total exemption from tax on Puerto Rico sourced capital gains, interest, and dividends once the individual is declared a bonefide resident.
This will grant you a 100% tax exemption with respect to gains from the sale of Puerto Rico property. In addition, 90%-100% exemption on short and long-term capital gains, and 100% exemption on passive income, and 100% exemption on federal taxes on Puerto Rico source income for bona fide residents.
As of July 11, 2017, the requirements to qualify for Act 22 are:
- Move to the island and become a resident of Puerto Rico,
- Open a bank account in Puerto Rico,
- Spend at least 183 days a year on the island,
- Buy a home within 2 years, and
- Donate at least $5,000 a year to a charity in Puerto Rico (new for 2017).
A Lawyer specializing in Tax Act 20 & 22 may help you answer all your questions. If you would like more information I’ll gladly recommend a contact.
If you’re ready to make the move to Puerto Rico give us a call.
The Five Star Real Estate Group,