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https://taxlawventures.com/Puerto Rico has become one of the most talked-about tax havens in recent years, and it’s all thanks to Act 60. Whether you’re an entrepreneur, investor, or crypto trader, this law offers opportunities to reduce your tax burden while enjoying the tropical island lifestyle. But what exactly is Act 60, and is it the right move for you? Let’s dive deep.

What is Act 60?

The Origins of Act 60

Act 60, also known as the Puerto Rico Incentives Code, was enacted in 2019. It unified and simplified several earlier tax laws, most notably Act 20 (Export Services Act) and Act 22 (Individual Investors Act).

Transition from Act 20 and Act 22

Instead of juggling multiple incentive programs, Puerto Rico consolidated them into one streamlined code. This makes it easier for individuals and corporations to understand the benefits and requirements.

Why Puerto Rico Created Act 60

Attracting Investors and Entrepreneurs

Puerto Rico wanted to bring in high-net-worth individuals, startups, and corporations that could contribute to its economic growth.

Stimulating Local Economy

By reducing taxes for outsiders who move to the island, the government hopes to generate jobs, investment, and long-term financial stability.

Key Benefits of Act 60

Tax Exemptions on Dividends and Capital Gains

One of the most attractive features of Act 60 is the 0% tax rate on dividends and capital gains for qualifying residents.

Reduced Corporate Tax Rates

Export service companies enjoy a 4% corporate tax rate, which is significantly lower than the U.S. federal corporate tax of 21%.

No Federal Taxes for Puerto Rico-Sourced Income

Since Puerto Rico is a U.S. territory, residents still use the U.S. dollar and legal system, but qualifying income sourced in Puerto Rico is exempt from U.S. federal income tax.

Who Qualifies for Act 60?

Residency Requirements

To qualify, you must become a bona fide resident of Puerto Rico, which means:

Spending at least 183 days per year on the island.

Establishing your primary residence in Puerto Rico.

Demonstrating closer ties to Puerto Rico than anywhere else.

Business Eligibility Criteria

Service-based companies that export outside Puerto Rico are eligible for the 4% tax rate.

Individual Investor Eligibility

High-net-worth individuals, crypto traders, and stock investors can apply for personal tax exemptions under Act 60.

Popular Industries Benefiting from Act 60

Technology and Software Companies

Puerto Rico has become a hub for IT outsourcing and software development.

Financial Services and Investment Firms

Hedge funds, private equity firms, and financial advisors are relocating to Puerto Rico for the tax incentives.

Crypto and Blockchain Businesses

The crypto community has embraced Puerto Rico as a tax-friendly haven, often calling it the "Crypto Capital of the Caribbean."

Export Service Companies

Marketing, consulting, and professional services that sell to U.S. or international clients thrive under Act 60.

How to Apply for Act 60

Step-by-Step Application Process

Hire a tax attorney or advisor in Puerto Rico.

File an application with the Puerto Rico Department of Economic Development and Commerce (DDEC).

Submit personal and financial documents.

Pay the required fees.

Await approval and relocation requirements.

Important Documents Needed

Proof of residency

Financial statements

Business plans (for companies)

Common Mistakes to Avoid

Not meeting the 183-day residency rule

Failing to establish genuine ties to Puerto Rico

Overlooking ongoing compliance costs

Costs of Compliance Under Act 60

Annual Contributions and Fees

Beneficiaries must pay an annual fee to maintain their decree.

Local Community Donation Requirements

Individuals must donate at least $10,000 per year to a local nonprofit organization.

Reporting Obligations

Both individuals and corporations must file annual compliance reports with the government.

Lifestyle Benefits of Moving to Puerto Rico

Warm Climate and Culture

Year-round sunshine, beaches, and a mix of Caribbean and U.S. culture.

Cost of Living Advantages

Housing, healthcare, and services are often cheaper than mainland U.S. cities.

Access to U.S. Legal System and Currency

Residents enjoy the convenience of the U.S. dollar, legal protections, and ease of travel.

Challenges and Criticisms of Act 60

Concerns from Local Communities

Some Puerto Ricans argue that Act 60 primarily benefits wealthy outsiders and increases property prices.

Risks for Investors

Tax laws may change with political shifts, creating uncertainty.

Political and Legal Uncertainties

There’s always a risk that future governments could scale back or eliminate these incentives.

Act 60 vs. U.S. Mainland Taxation

Compared to the U.S. mainland, Puerto Rico’s 4% corporate tax and 0% capital gains are highly attractive.

Act 60 and the Crypto Community

Puerto Rico has become a crypto tax haven, drawing Bitcoin and Ethereum investors who want to legally minimize taxes.

Long-Term Economic Impact of Act 60 on Puerto Rico

If managed properly, Act 60 could create sustainable growth, jobs, and new industries on the island.

Expert Tips for Maximizing Act 60 Benefits

Work with a local tax attorney.

Relocate fully and establish strong residency ties.

Stay compliant with reporting and donation requirements.

Diversify income sources to maximize exemptions.

Conclusion

Act 60 Puerto Rico offers a rare opportunity to enjoy paradise while significantly lowering your tax burden. Whether you’re a business owner, investor, or crypto enthusiast, this law provides a legal pathway to financial freedom. Still, it comes with responsibilities, compliance costs, and potential political risks. If you’re considering the move, do your research, seek expert advice, and weigh both the benefits and challenges carefully.

FAQs

1. Can U.S. citizens benefit from Act 60 without giving up citizenship?

Yes, U.S. citizens can keep their citizenship while benefiting from Puerto Rico’s tax incentives.

2. Do I have to live in Puerto Rico full-time?

You must meet the 183-day residency rule, but many spend additional time on the mainland.

3. Is crypto income fully exempt under Act 60?

Yes, if you are a bona fide resident, Puerto Rico-sourced capital gains are exempt.

4. How long does it take to get Act 60 approval?

The process typically takes 3–6 months, depending on documentation and review.

5. Can Act 60 be revoked in the future?

While future governments may revise laws, current decrees are legally binding contracts that provide protection.