Act 20 and 22
Not only is Puerto Rico a beautiful place to relocate, it holds a variety of tax benefits developed specifically to encourage empty nesters and high net worth residents.
Puerto Rico is the smallest island of the Greater Antilles, but it boasts the highest GNP per capita of all of Latin America at $64.84 billion. As a Commonwealth of the U.S., visitors do not need passports and goods manufactured in Puerto Rico bear the “Made in the USA” label.
In 2012 Act 20 and Act 22 passed, providing benefits for services provided to outside markets and exempting local taxes on passive income generated by individuals. What does that mean for you?
With Act 20, Puerto Rico intends to establish itself as an international export services center. Residents are encouraged to offer services to people outside of the Commonwealth to stimulate new business development. Tax benefits include a 4 percent corporate tax (that may be reduced to 3 percent), 100 percent exemption on dividends or profit distributions from export services businesses and 100 percent exemption on property taxes for certain businesses. These rates are guaranteed for 20 years, with the option to renew for an additional 10 years.
Individual Investors Act 22 exempts passive income from Puerto Rico income taxes earned by residents of Puerto Rico. New residents who were not residents from January 16, 1997 through January 16, 2012 are eligible. Designed to attract high net worth individuals to Puerto Rico, this act includes 100 percent tax exemption from Puerto Rico income taxes on all dividends, interest and short-term and long-term capital gains accrued after the individual becomes a bona-fide resident.
These amazing economic incentives make looking for property in Puerto Rico even easier!