The Caribbean Haven: Puerto Rico Act 60 (Act 20/22)
The Caribbean Haven: Puerto Rico Act 60 (Act 20/22)
The only way for a US citizen to escape the IRS dragnet without renouncing citizenship. How moving to Puerto Rico grants you 0% Capital Gains Tax and a 4% Corporate Tax rate.
Executive Summary
- The Unique Loophole: The US taxes its citizens wherever they live (Paris, Tokyo, Seoul). However, Puerto Rico is a US Commonwealth. Under Section 933 of the IRC, income derived from sources within Puerto Rico is exempt from US Federal Tax.
- Act 60 (Individual Investor): Formerly Act 22. If you become a Bona Fide Resident, you pay 0% tax on all Interest, Dividends, and Capital Gains (Crypto/Stocks) accrued after you move.
- Act 60 (Export Services): Formerly Act 20. If you move your consulting, trading, or software business to PR and export services to the US/Global market, your corporate tax rate is a flat 4%. Dividends paid to you are tax-free.
The “Bona Fide” Test
No Faking It: This is not a “PO Box” strategy. To qualify, you must:
1. Spend at least 183 days/year physically in Puerto Rico.
2. Move your “Center of Vital Interests” (Family, Bank, Doctor, Gym, Dog) to the island.
3. Close “Closer Connections” to the mainland US. The IRS audits this heavily.
Mechanic: The Split Holding Period
0% Tax
New Cap Gains
4% Tax
Business Income
US Passport
Keep Citizenship
183 Days
Must Live There
Simulation: Crypto Trader / Consultant ($1M Biz Income + $1M Crypto Gain)
Total Tax Bill Comparison
| Feature | US Mainland (Standard) | Puerto Rico (Act 60 Decree) |
|---|---|---|
| Capital Gains Tax | 23.8% (Fed) + State Tax | 0% (On gains after moving) |
| Business Tax | 21% (Corp) + Dividend Tax | 4% Flat Rate (No Dividend Tax) |
| Pre-Move Gains | Taxable | Still Taxable to US (Built-in Gain) |
“If you have mobile assets (Crypto, Stocks) or a location-independent business, your zip code is your highest expense. Puerto Rico is the only place where Uncle Sam agrees to leave your wallet alone.”
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