ACT 22

The Individual Investors Act

Act 22 attracts new residents to Puerto Rico through compelling tax incentives. To qualify for this specific decree, the IRS has specific criteria that must be met – most notably the Physical Presence Test.

Although this applies to all countries from a tax perspective, Puerto Rico’s unique status as a territory of the United States means that all Puerto Rican residents are US citizens. Only 1,000 miles from the mainland, Puerto Rico’s island lifestyle, developed economy and low cost of living create an inviting retreat for Act 22 decree holders.

BENEFITS

0% tax on Puerto Rican sourced income

No Alternative Minimum Tax

0% tax on capital gains, dividend and interest income earned as a Puerto Rican resident

After 10 years of residency, Built-In-Gains are subject to a 5% tax

REQUIREMENTS

• Physical Presence Test – Spend the majority of time in Puerto Rico (168-183 days, depending on international travel)
• No Closer Connection – Establish a tax home in Puerto Rico and engage in other activities to prove actual residency (Voter registration, a Puerto Rico driver’s license, mailing address, and local affiliations such as clubs, organizations and charities are approved IRS characteristics).
• Other Requirements – Open a Puerto Rican bank account and purchase a residence within two years of obtaining an Act 22 decree
• $5,000 one-time application fee
• $5,000 annual donation to a PR charity