What is the law 22 in Puerto Rico?

Act 22, the Individual Investors Act of 2012, offers tax incentives to individuals who relocate to Puerto Rico, including a 100 percent tax exemption on income from dividends, interest, and capital gains.

Who qualifies for Law 22 Puerto Rico?

Requirements to be considered a Puerto Rican resident: 183-day physical presence in Puerto Rico, to establish a presumption of residency under the Puerto Rico Tax Code. No tax home outside of Puerto Rico during the year. A tax home is determined to be located near a person's principal place of business.

Can a Puerto Rican use Act 22?

The benefits of Act No. 22, are only available to bona-fide residents of Puerto Rico that were not bona-fide residents of Puerto Rico for the 6-year period preceding the enactment of the Act on January 12, 2012 (“Eligible Individuals”).

When was Act 22 passed in Puerto Rico?

On January 17, 2012, Puerto Rico enacted Act No. 22 of 2012, as amended, known as the "Individual Investors Act" (the "Act"). The Act may have profound implications for the continued economic recovery of Puerto Rico. The Act provides tax exemptions to eligible individuals residing in Puerto Rico.

Who benefits from Act 22?

Act 22, or the Individual Investors Act, targets high net worth investors with the promise of 0% tax on interest, dividends, rental, short-term and long-term capital gains obtained while residing in Puerto Rico as a bona fide resident.

Puerto Rico Act 22 -- IRS Enforcement Explained

How does Act 22 affect Puerto Ricans?

To ignite the interest of these new investors, Act 22 provides an exemption from Puerto Rico income taxes on certain types of passive income attained or accrued after the individual establishes residency.

How does Act 22 work?

Act 22 entices individual investors to move to Puerto Rico. Significantly, new qualifying residents have 100% tax exemption from Puerto Rico taxes on all dividend and interest income and long-term capital gains accrued after becoming a qualifying new resident.

Do US citizens living in Puerto Rico pay taxes?

Further, U.S. citizens and resident aliens living in Puerto Rico are generally subject to U.S. tax on worldwide income. However, a bona fide resident of Puerto Rico for an entire taxable year may exclude income from sources within Puerto Rico for U.S. federal income tax purposes.

How long do you have to live in Puerto Rico to avoid capital gains tax?

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.

Do people in Puerto Rico pay US taxes?

If you're a bona fide resident of Puerto Rico during the entire tax year, you generally aren't required to file a U.S. federal income tax return if your only income is from sources within Puerto Rico.

What are Puerto Ricans not allowed to do?

For instance, in contrast to U.S. states, Puerto Rico residents cannot vote in U.S. presidential elections nor can they elect their own senators and representatives to the U.S. Congress. On the other hand, in contrast to U.S. states, only some residents of Puerto Rico are subject to federal income taxes.

Can I move to Puerto Rico to avoid taxes?

If you move to the island, you can legally pay none. There's 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 who'd watched years of high taxes fail to improve life on the island.

Can citizens own guns in Puerto Rico?

Is that legal? Under Puerto Rico law, a person cannot have or buy a gun unless s/he has a weapons license.

Do homeowners in Puerto Rico pay property taxes?

Puerto Rico real property is subject to an annual real property tax. This tax is computed based on property values that date back to the fiscal year 1957–1958 (which was the last time that a general appraisal was conducted by the government).

Does being born in Puerto Rico make you a US citizen?

All persons born in Puerto Rico on or after January 13, 1941, and subject to the jurisdiction of the United States, are citizens of the United States at birth. (June 27, 1952, ch. 477, title III, ch. 1, §302, 66 Stat.

Can 16 year olds drink in Puerto Rico?

For example, the legal drinking age in Puerto Rico is 18, and for those 18–20 years of age, BAC levels must be lower than . 02.

Do retirees pay taxes in Puerto Rico?

Retiring in Puerto Rico becomes an even more attractive option when you consider the generous tax policy known as the Individual Investors Act. Under this act, residents of Puerto Rico are exempt from paying island or federal income taxes on dividends, interest and capital gains.

What taxes do you not pay in Puerto Rico?

Consequently, while all Puerto Rico residents pay federal taxes, many residents are not required to pay federal income taxes. Aside from income tax, U.S. federal taxes include customs taxes, federal commodity taxes, and federal payroll taxes (Social Security, Medicare, and Unemployment taxes).

Can you lose citizenship in Puerto Rico?

Specifically, although people born in the Commonwealth of Puerto Rico are natural born U.S. citizens, their citizenship is not protected by the Citizenship Clause of the 14th Amendment to the U.S. Constitution. As such, the American citizenship of Puerto Ricans can be taken away by the U.S. Congress unilaterally.

Can an American just move to Puerto Rico?

Puerto Rico has been a U.S. territory since 1898 when the U.S. acquired it at the end of the Spanish-American war. (It also happens to be the most populated U.S. territory!) If you're a U.S. citizen, this means an easy transition for you. No need for work permits or visas if you decide to relocate.

How long can a US citizen stay in Puerto Rico?

The ESTA (Electronic System for Travel Authorization), is the online visa with which you can travel to Puerto Rico or any other state of the United States. This visa allows multiple entries within 2 years, with a maximum stay of 90 days per entry.

Do Puerto Ricans pay Social Security?

Social security contributions

Puerto Rico is covered under the US social security system; consequently, Puerto Rico employers and employees are subject to the US Social Security and Medicare taxes requirements. See the Other taxes section in the United States Individual tax summary for more information.

Who enacted Act 22 in Puerto Rico?

Individual Investors Act (Act 22) was passed by Puerto Rican lawmakers in an attempt to attract new, high-income residents.

Do Puerto Ricans have US passports?

Puerto Ricans are U.S. citizens: Puerto Rico was a Spanish colony until the U.S. took control of the island after the Spanish-American War of 1898. In 1917, the U.S. granted citizenship to Puerto Ricans through the Jones-Shafroth Act. Puerto Ricans have U.S. passports.

Does Puerto Rico tax 401k withdrawal?

Withdrawals from an IRA, 401(k), or other US tax deferred retirement account would not be covered by Act 22. So moving to the island won't lessen the tax on withdrawals. The situation is the same with Social Security and other pension income.