Puerto Rico Short-Term Incentive Plan
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Therefore, if an individual relocates to Puerto Rico, the move does not result in an expatriation tax. Further, U.S. citizens and resident aliens living in Puerto Rico are generally subject to U.S. tax on worldwide income.
Puerto Rico Tax Act 22 A complement to Puerto Rico Acts 20, 27 and 73, Act 22 offers special Puerto Rico tax incentives to business owners, entrepreneurs, and executives.
Specifically, a U.S. citizen who becomes a bona fide Puerto Rico resident and moves his or her business to Puerto Rico (thus, generating Puerto Rico sourced income) may benefit from a 4% corporate tax/fixed income tax rate, a 100% exemption on property taxes, and a 100% exemption on dividends from export services.
Short-term capital gains are subject to the regular gradual rates. In the case of long-term capital gains, Puerto Rican non-resident foreign nationals are subject to a flat withholding rate of 25%. Puerto Rican non-resident US citizens are only subject to a flat withholding rate of 15% on long-term capital gains.
What does this mean? It means that once the person becomes a resident individual investor of Puerto Rico unde Puerto Rico Incentives Code 60 ? and until 1/1/2036 ? any dividend or interest income is exempt from tax in Puerto Rico.
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Specifically, a U.S. citizen who becomes a bona fide Puerto Rico resident and moves his or her business to Puerto Rico (thus, generating Puerto Rico sourced income) may benefit from a 4% corporate tax/fixed income tax rate, a 100% exemption on property taxes, and a 100% exemption on dividends from export services.
U.S. citizens who become bona fide residents of Puerto Rico can maintain their U.S. citizenship, avoid U.S. federal income tax on capital gains, including U.S.-source capital gains, and avoid paying any income tax on interest and dividends from Puerto Rican sources.
