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To enjoy these Puerto Rico tax incentives, you must qualify as a bona fide Puerto Rican resident by passing three teststhe presence test, the tax home test, and the closer connection testto prove your intention for living in Puerto Rico long term.
If you move to the island, you can legally pay none. Theres also no capital gains tax. You just have to give 4 percent of your income to Puerto Rico. The tax break was started by a Puerto Rican politician whod watched years of high taxes fail to improve life on the island.
If you move to the island, you can legally pay none. Theres also no capital gains tax. You just have to give 4 percent of your income to Puerto Rico. The tax break was started by a Puerto Rican politician whod watched years of high taxes fail to improve life on the island.
In addition to being in Puerto Rico for 183 days, you must also pass two additional tests: You must not have a tax home outside of Puerto Rico at any point in that taxable year, and. You must not have closer connections to any place other than Puerto Rico during that taxable year.
The Tax Incentive Code, known as Act 60, provides tax exemptions to businesses and investors that relocate to, or are established in, Puerto Rico.
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U.S. citizens who become bona fide residents of Puerto Rico can maintain their U.S. citizenship, avoid U.S. federal income tax on capital gains, including U.S.-source capital gains, and avoid paying any income tax on interest and dividends from Puerto Rican sources.
Therefore, in many cases, a U.S. citizen or resident cannot avoid U.S. income taxation on gains associated with appreciation in investment assets by establishing bona fide residence in Puerto Rico unless recognized after 10 years of bona fide residence in Puerto Rico.
You must become a resident of Puerto Rico, and you must reside there for at least 183 days a year, or meet one of several other tests that are less clear cut.
For example, a Puerto Rican investment incentive law passed in 2012, the Individual Investors Act (Act 22, now Chapter 2 of Act 60), exempts from taxation all passive income, such as interest, dividends, and capital gains, realized or accrued after an individual becomes a bona fide resident of Puerto Rico.
If you move to the island, you can legally pay none. Theres also no capital gains tax. You just have to give 4 percent of your income to Puerto Rico. The tax break was started by a Puerto Rican politician whod watched years of high taxes fail to improve life on the island.

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