Puerto Rico Tax and CPA Professional Services
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INCOME TAX INCENTIVES FOR INDIVIDUAL INVESTORS WHO ESTABLISH DOMICILE IN PUERTO RICO

An Eligible Resident Investor is afforded 100% exemption from Puerto Rico income taxes, including the alternative minimum applicable to individuals, on:

a. Interest and dividends from all sources earned after becoming domiciled and before January 1, 2036, including but not limited to, interest and dividends received from local Registered Investment Companies.

b. Interest, finance charges, dividends and partnerships profits earned after becoming domiciled and before January 1, 2036 from international banking entities licensed under the International Banking Center Act of Puerto Rico.

c. Capital gains related to the appreciation of securities accruing after becoming domiciled in Puerto Rico and recognized before January 1, 2036.

A 5% tax rate would apply to the net long-term capital gain in connection with the appreciation of securities held before becoming domiciled in Puerto Rico and recognized (i) after 10 years of establishing such domicile but (ii) before January 1, 2036.

An Eligible Resident Investor is an individual who (i) is domiciled in Puerto Rico, (ii) was not domiciled in Puerto Rico during 6 years before January 17, 2012, and (iii) becomes domiciled in Puerto Rico before January 31, 2035. For this purpose, an individual who is present in Puerto Rico for more than 183 days during a calendar year is presumed to be domiciled in Puerto Rico.

In order to benefit the foregoing tax exemptions, the Eligible Resident Investor must apply for and obtain a tax exemption grant. The grant is in the nature of the contact between the grantee and the Government of Puerto Rico. The grant shall be effective during the exemption period set forth above.

ELIGIBLE RESIDENT INVESTORS WHO ARE BONA FIDE RESIDENTS

 

 

Puerto Rico Income  Tax Rate

Federal Income Tax Rate

1.

Capital Gains on Securities Acquired Pre-Moving

 

 

 

   Appreciation accrued before Moving 

  

 

 

 Long-term1 gains

  1. Realized before 10th year of residency
  2. Realized after 10th year of residency (but before 2036 in the case of PR taxation)

 

15%

5%

 

15%2 / 20%3

0%

 

Appreciation accrued after Moving 

 

 

 

Long and short term gains
(realized before 2036 in the case of PR taxation)

 

0%

0%

2.

Capital Gains on Securities Acquired Post-Moving

 

 

 

Long and short term gains
(realized before 2036 in the case of PR taxation)

 

0%

0%

3.

Dividends

Through
2035

 

 


Puerto Rico source

U.S source

Other sources


0%

0%

0%


0%

15%4/ 20%5

Ordinary rates
15%6 / 20%7

1 More than six-month holding period for Puerto Rico tax purpose and more than 12-month holding period for Federal tax purpose.

2 If the regular tax rate that would apply is 25% through 35%.

3 If the regular tax rate that would apply is 39.6%.

4 Qualified dividends if the regular tax rate that would apply is 25% through 35%.

5 Qualified dividends if the regular tax rate that would apply is 39.6%.

6 Qualified dividends if the regular tax rate that would apply is 25% through 35%.

7 Qualified dividends if the regular tax rate that would apply is 39.6%.

2013 Modifications to Income and Sales Taxes Regimes

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