Comprehensive Analysis of Act 60 Benefits for International Investors
Why Puerto Rico Stands Out
Capital Gains Tax
Income Tax Rate
Foreign Ownership Allowed
Puerto Rico offers a unique combination of U.S. legal protections with Caribbean tax advantages, making it an attractive destination for high-net-worth individuals and businesses seeking tax optimization while maintaining U.S. citizenship and access to American markets.
Investment Migration
No Formal CBI Program
Puerto Rico is a U.S. territory and does not offer a separate citizenship by investment program. However, U.S. citizens can relocate and benefit from Act 60 tax incentives immediately upon establishing bona fide residency.
Residency Requirements
Path to U.S. Citizenship
Foreign nationals can pursue standard U.S. immigration pathways (EB-5, family-based, employment-based) while potentially benefiting from Puerto Rico's tax advantages once they establish residency. The territory follows federal immigration laws.
Important Note: You must not have been a Puerto Rico resident in the 10 years prior to applying for Act 60 benefits.
Asset Protection
Legal Framework
Puerto Rico operates under U.S. federal law and maintains a robust judicial system with strong property rights protection. While the territory does not offer Domestic Asset Protection Trust (DAPT) laws, investors benefit from the stability of the U.S. legal system.
Foreign Ownership Rights
Asset Seizure Protection
Strong constitutional protections against arbitrary asset seizure apply. No capital controls are in place, and expropriation risks are minimal due to U.S. constitutional safeguards. However, privacy-enhanced structures are limited compared to traditional offshore jurisdictions.
Tax Optimization
Act 60 Tax Benefits
Capital Gains Tax
Income Tax Rate
Property Tax Discount
Municipal Tax Exemption
Taxation System
Puerto Rico operates a territorial taxation system. Bona fide residents pay no U.S. federal income tax on Puerto Rico-sourced income, but are subject to local Puerto Rico taxes at preferential rates under Act 60.
Investment Income Benefits
Important Limitations
Banking & Business Setup
Banking for Non-Residents
Non-residents can open bank accounts in Puerto Rico, particularly through International Banking Centers (IBCs) which offer tax-exempt status on interest earned. Personal visits are typically required for account opening.
CRS and Reporting
As a U.S. territory, Puerto Rico follows U.S. financial reporting standards including FATCA. The territory is not independently subject to CRS but benefits from the U.S. regulatory framework's credibility in international finance.
Company Formation
Real Estate & Investment Environment
Foreign Property Ownership
Market Characteristics
The Puerto Rico real estate market operates under U.S. standards with established legal frameworks. Properties can qualify for Act 60 residency requirements, and the market offers diverse options from luxury coastal properties to urban developments.
Property Taxation
Payment Systems & Financial Infrastructure
International Payment Solutions
Cross-Border Payments
As a U.S. territory, Puerto Rico benefits from seamless integration with U.S. financial systems. Cross-border payments to and from the mainland U.S. are treated as domestic transfers, offering significant advantages for international businesses.
Banking Infrastructure
Modern banking infrastructure with digital capabilities. Local banks offer online banking, mobile apps, and international services. The financial system is well-integrated with global networks and follows U.S. regulatory standards.
Cryptocurrency Treatment
Crypto Tax Benefits Under Act 60
Capital Gains Tax on Crypto
Tax on Trading/Swapping
Tax on Staking Rewards
Legal Framework
Cryptocurrency is legal and regulated under U.S. federal law. The IRS treats crypto as property for tax purposes, but Act 60 residents benefit from 0% capital gains tax on crypto dispositions that occur after establishing Puerto Rico residency.
Business Operations
Reporting Requirements
Standard U.S. crypto reporting requirements apply, including Form 8949 for capital gains/losses. However, Act 60 residents may report $0 gains on qualifying crypto transactions. Large transactions may require additional reporting under federal anti-money laundering laws.
Critical: Only crypto gains realized AFTER establishing Puerto Rico residency qualify for 0% tax treatment. Pre-residency gains remain subject to U.S. federal capital gains tax.
General Considerations
Political Stability & Safety
As a U.S. territory, Puerto Rico benefits from U.S. constitutional protections and federal oversight. The jurisdiction is considered politically stable with established democratic institutions, though local economic challenges should be considered in long-term planning.
Language & Services
International Standing
Puerto Rico is not subject to FATF monitoring as a separate jurisdiction and benefits from the U.S.'s strong international reputation. The territory uses the U.S. dollar and has stable currency policies. No sanctions or international restrictions apply.
IRS Enforcement: The IRS has increased scrutiny of Act 60 beneficiaries. Over 2,300 individuals claimed benefits between 2012-2019, with enforcement campaigns targeting improper claims. Professional guidance is essential to ensure compliance.
Frequently Asked Questions
The primary attractions include 0% capital gains tax, 4% income tax rates, 75% property tax discounts, and the ability to maintain U.S. citizenship while accessing Caribbean tax benefits. The jurisdiction offers political stability, modern infrastructure, no foreign ownership restrictions, and integration with U.S. financial systems.
Yes, particularly those with high income or capital gains. Entrepreneurs can establish corporations with 2-4% corporate tax rates and take dividends tax-free. Digital nomads benefit from 0% tax on passive income and capital gains, though they must meet strict residency requirements including 183+ days annual presence and purchasing property within two years.
While offering significant tax advantages, it operates under U.S. law rather than as a traditional tax haven. The benefits are substantial but require genuine residency and business presence. It's more accurately described as a U.S. territory with preferential tax treatment for residents rather than a secretive offshore jurisdiction.
Company formation typically takes days to weeks with filing fees of $150-250. Bank account opening for non-residents usually requires a personal visit and can take several weeks to complete, particularly for International Banking Center accounts. The process is generally faster for those who have already established residency.
Cryptocurrency is welcomed and offers exceptional tax benefits under Act 60. Residents pay 0% capital gains tax on crypto trading, swapping, and staking rewards (for gains realized after establishing residency). The regulatory environment follows U.S. federal law, providing clarity and legitimacy for crypto businesses and investors.