Did you know that Puerto Rico offers some of the most attractive tax incentives in the world? If you’re a business owner or investor, you could be saving thousands—maybe even millions—in taxes! How Act 60 Benefits Investors Puerto Rico’s Incentives Code (Act 60-2019, as amended) grants a tax decree to individual resident investors who meet specific criteria. This decree allows eligible individuals to PAY ZERO TAXES on interest, dividends, and capital gains. To qualify, you must become a bona fide resident. This incentive became especially popular in the crypto and investment communities since it covers gains from stocks, commodities, digital assets, and blockchain-based holdings. But you have to hurry, as these incentives all end in 2036. Additionally, individuals can pair this with an operating business in Puerto Rico, which may qualify for a 15-year tax decree at just 4% corporate income tax. Some industries even benefit from tax rates between 0% and 10%, depending on their economic activity. While business incentives come with technical requirements (which we’ll cover in a future post), today’s focus is on individual resident investors and their residency qualifications.   Key Requirements for the Individual Resident Investor Decree If you want to retain your tax benefits, you must meet strict requirements: Residency – You (and your family) must establish Puerto Rico as your primary residence. You must have not lived in Puerto Rico between January 17, 2006 and January 17, 2012. Real Estate – Within two years of obtaining your decree, you must purchase a home in Puerto Rico that is exclusively owned by you and/or your spouse. Charitable Contribution – A $10,000 annual donation to a Puerto Rico-based nonprofit is mandatory. Annual Report – You must file an annual report with the Department of Economic Development and Commerce (DEDC), which costs $5,005.   Please note that Act 22 and Act 60 have grandfathered clauses, meaning some people with Act 22 decrees do not have to buy a house and only pay $5,000 to charity. Since it is a contract between you and the government, you have constitutional protection that no future law can amend to impair your contract. However, if Act 60 is amended with better benefits, you can request your decree be amended to benefit from the better terms.   ⚠️ Failure to comply with these requirements can lead to disqualification, revocation, and back taxes.While the housing requirement is non-negotiable (if not met, your decree is automatically revoked), other failures—like missing your donation or annual report—can sometimes be corrected by paying late fees, amending your decree and requesting clemency from the DEDC.   Residency: What You Think You Know is Wrong Most people assume they need to spend at least 183 days per year in Puerto Rico to qualify as a resident. But that’s only partially true. 🛑 The 183-day rule is just a presumption—not a requirement. 📌 The Puerto Rico Internal Revenue Code (PRIRC) states that spending 183 days physically in Puerto Rico automatically establishes residency. However, not meeting this threshold does NOT mean you are automatically a non-resident. Instead, if you spend less than 183 days in Puerto Rico, you must prove your residency using facts and circumstances under Puerto Rico’s domicile test.   How to Prove Puerto Rico Domicile Under the PRIRC, a resident individual is someone domiciled in Puerto Rico. But what does that mean? Your domicile is the place where you habitually reside when not away for work or other temporary reasons. You can only have ONE domicile at a time—if you want it to be in Puerto Rico, you must take intentional actions to establish it. You must demonstrate Puerto Rico is your “home base,” meaning it’s the place you return to during “seasons of repose.” On top of this, the IRS applies its own three-part test to determine if someone is a bona fide Puerto Rico resident: Presence Test – Being physically present in Puerto Rico for 183 days OR showing a “significant connection” to the island. The Internal Revenue Service (“IRS”) in Publication 570 establishes other ways to meet the Presence Test, which are outside the scope of this article, but you can check it out. Tax Home Test – Proving your primary place of business or employment is in Puerto Rico. Closer Connection Test – Demonstrating that your strongest ties (family, home, voting registration, community, mail, assets, etc.) are in Puerto Rico rather than the U.S. 🚨 Example: The IRS once ruled that a taxpayer who moved to Puerto Rico to start a business but whose spouse and children stayed in California was not a bona fide Puerto Rico resident. Despite owning a home in Puerto Rico, the taxpayer frequently traveled to the U.S. for business, family visits, and vacations. Because of his closer connections to the U.S., he failed the residency test.   The Bottom Line: Residency is Fact-Specific Puerto Rico has incredible incentives but you have to comply with the rule to avail yourself of them. The key takeaway? Puerto Rico residency isn’t as simple as counting days. It depends on your lifestyle, economic ties, and personal connections. If you’re considering relocating or need help optimizing your tax structure, consult a professional. Every case is different, and the consequences of getting it wrong can be costly. 💬 Thinking about moving your business to Puerto Rico? Not sure if you would qualify as a resident?📩 Let’s talk! Schedule a consultation today and ensure you don’t leave money on the table.   Legal Disclaimer This post is for informational purposes only and does not constitute legal advice. You should consult with legal counsel before making any decisions regarding residency, taxation, or business incentives. Accessing this post does not create an attorney-client relationship.