For individuals, Act 60 provides extraordinary personal tax incentives. By becoming a bona fide resident of Puerto Rico and meeting the necessary criteria, individuals can enjoy:

• 100% exemption on Puerto Rico-sourced dividend and interest income
  Residents are exempt from paying Puerto Rico income taxes on qualified dividends and interest earned within the island, making it a powerful strategy for managing wealth.

• 100% exemption on capital gains tax
  One of the most compelling advantages is the ability to avoid U.S. federal capital gains taxes on Puerto Rico sourced capital gains. This is especially attractive for those who want to divest or reinvest assets with minimal tax impact. These capital gains can be from securities, commodities, currency, or any other blockchain-based digital assets.

• 5% income tax on pre-residency capital gains after 10 years
  Another unique advantage is that Act 60 grantees can enjoy a fixed income tax rate of 5% on all capital gains that were accrued before the grantee became a resident of Puerto Rico and recognized after the grantee has been a resident of Puerto Rico for 10+ years, but before January 1, 2036.

Businesses established under Act 60 benefit from substantial tax incentives, making Puerto Rico an appealing jurisdiction for entrepreneurs and businesses:

• 4% income tax rate on export services income
  For businesses with volumes over $3M that provide services to clients outside of Puerto Rico, the Act offers a highly competitive income tax rate of just 4%, far lower than most global tax jurisdictions. For businesses recognized as small or medium enterprises (with annual revenue of $3M or less) (“SMEs”), the income tax rate may be reduced to 2% for 5 years and 4% thereafter, subject to meeting eligibility requirements.
  

• Property tax exemptions
  Businesses operating under Act 60 with a business volume of over $3M are entitled to a 75% exemption from personal and real property taxes. For eligible SMEs, the property tax exemption may be 100% for five years, and 75% thereafter, subject to meeting certain eligibility requirements.
  

• 100% exemption on dividends from export services
  Companies exporting services to markets outside of Puerto Rico can distribute dividends to their owners 100% exempt from Puerto Rico income tax.

• Municipal license tax exemption
  Businesses with annual revenues over $3M receive a 50% exemption from municipal license taxes. For businesses recognized as SMEs, the exemption is 100% for the first 5 years, and 50% thereafter. Since 2012, Puerto Rico’s municipalities have been allowed to determine their own municipal license tax rate. This creates an opportunity for businesses to strategically register in municipalities with lower tax rates to further reduce their tax obligations.

Beyond personal and corporate tax benefits, Act 60 offers additional advantages for those individuals and businesses relocating to Puerto Rico. These incentives not only provide substantial financial savings but also encourage investment and economic growth on the island. Key benefits include the following:

• No federal income tax on Puerto Rico-sourced income
  As a U.S. territory, Puerto Rico offers a unique opportunity for residents to contribute to the island’s economy while enjoying significant tax benefits. Residents retain their U.S. citizenship and are exempt from federal income taxes on income earned within Puerto Rico. This structure supports local economic growth and provides substantial financial advantages for individuals and businesses committed to investing in and contributing to Puerto Rico’s development.

• Estate and gift tax advantages
  Puerto Rico does not impose estate or gift taxes at the local level, providing significant advantages for wealth preservation. However, U.S.-situated assets may still be subject to federal estate and gift taxes, with specific rules and exemptions applicable to Puerto Rico residents based on their place of birth, domicile and the nature of the assets.

In addition to the widely popular individual resident investor and export services decrees, Act 60 offers a diverse range of incentives programs designed to promote economic growth, create jobs and attract investment across various industries. These programs offer tailored benefits to meet the unique needs of different sectors. A few examples include:

• Difficult to hire employees – Exempt businesses employing individuals considered “difficult to hire” can benefit from a 100% tax exemption on income in excess of $100,000, derived from wages and benefits paid to these employees.

• Private equity funds – Accredited investors in qualified private equity funds enjoy several benefits, including a 10% tax rate on income derived from qualified interest and dividends, a 100% tax exemption on Puerto Rico-sourced capital gains, and a 30-60% tax deduction on the amount invested in the fund.

• Researchers and scientists – To foster innovation and research, Act 60 provides a 100% tax exemption for researchers and scientists working in Puerto Rico. This exemption applies to income up to $195,000 for individuals at higher education institutions and up to $250,000 for those employed by entities within the Science District.

• Creative industries – Puerto Rico’s thriving creative sector benefits from a 4% income tax rate, 75% property tax exemption, and 75% municipal tax exemption. Additionally, qualifying productions may receive a tax credit of up to 40% on production expenses in Puerto Rico and up to 20% on payments to foreign professionals. These incentives aim to position Puerto Rico as a hub for film, music, and other creative projects.

Please note that each program under Act 60 has specific eligibility criteria, requirements and application processes that must be met to qualify for the benefits. For more information and guidance on these programs, we encourage you to contact our team of professionals, who can assist you in navigating the details and maximizing the advantages available to you.

Relocating to Puerto Rico and becoming part of Moncayo’s community is an exciting journey. This checklist is designed to guide you through the key steps to ensure a smooth transition, showcasing Moncayo as your gateway to an unparalleled lifestyle and a meaningful connection to the island’s future.

As part of our commitment to supporting your relocation journey, Moncayo can connect you with independent professionals experienced in Puerto Rico’s relocation and business integration requirements. While we provide this as a resource, we encourage you to independently evaluate and select advisors who best meet your needs.

Initial Decision

• Begin your journey by touring Moncayo to explore its integration of luxurious living and amenities, with opportunities to engage in Puerto Rico’s culture, economy, and local community.

• Consult with advisors and legal experts to understand the relocation process, including qualifying for Act 60 incentives and contributing to Puerto Rico’s growth.

Professional Selection

• Retain trusted tax and legal professionals to assist you with your Act 60 compliance and relocation planning.

Residency Preparation

• Prepare all necessary documents to establish Puerto Rico bona fide residency, a key step to become part of the island’s community.

• Begin aligning your personal and professional ties with Puerto Rico, reflecting your commitment to the island’s economic growth.

• Actively engage in local cultural and professional activities to establish strong ties to Puerto Rico’s economy and community.

Business Setup

• Register your business in Puerto Rico, taking advantage of the resources and networking opportunities available within the Moncayo community.

Real Estate Acquisition

• Work with Moncayo’s exceptional sales team to find the right residence for you—from turnkey residences to custom-built properties tailored to your needs.

Application for Act 60 Benefits

• Complete and submit your Act 60 application with the Puerto Rico Department of Economic Development and Commerce (DDEC), ensuring that all required documentation is accurate and complete.

Asset Transfer

• Plan and execute the transfer of assets to Puerto Rico in consultation with your advisors, ensuring compliance with Act 60 guidelines.

Final Steps

• Complete tax filings to secure Act 60 benefits.

• Maintain detailed records of residency, business activities, and evidence of compliance with regulatory requirements.

This relocation process is more than a move—it’s an opportunity to become part of a community that celebrates Puerto Rico’s natural beauty, rich culture, and promising future. Moncayo invites you to embrace a lifestyle that combines luxury, adventure, and meaningful contributions to the island’s growth as a global destination. For further assistance, Moncayo’s team is here to support you every step of the way.

History of Tax Incentives in Puerto Rico
Puerto Rico has a longstanding tradition of offering tax incentives designed to attract businesses and individuals, fostering economic growth and development on the island. In 1997, Puerto Rico enacted Act 135, which introduced broad tax incentives to promote investment and economic development across various sectors. This law provided significant tax credits, exemptions, and incentives to attract businesses to Puerto Rico, encouraging them to establish operations on the island.

In 2008, the Puerto Rican government introduced Act 73, which laid the groundwork for targeted tax incentives aimed at encouraging manufacturing and other select industries, while introducing incentives for the export services businesses. In 2012, Puerto Rico enacted Act 20 for a more specific and detailed treatment and enhancement of incentives for that sector. That same year, Act 22 was introduced to attract individual investors by offering significant tax exemption for those relocating to the island. Together, Acts 20 and 22, created a comprehensive framework to promote export services and attract individual investors, respectively.

Act 20 offered tax incentives to businesses that provide services from Puerto Rico to outside markets, allowing them to benefit from a reduced corporate tax rate. Meanwhile, Act 22 incentivized new residents to relocate to Puerto Rico by providing significant tax exemptions on capital gains realized after moving to the island. These acts aimed to enhance Puerto Rico’s global competitiveness and economic sustainability.

In 2019, the Puerto Rican government consolidated these and other incentives, under Act 60, streamlining over 30 previously separate laws and programs, including Act 20 and 22, into a unified legislative framework. Act 60 served to simplify the administration of incentives and ensure a more cohesive and efficient system, centralizing the management of these programs under a single governmental entity.

Continuity
The Puerto Rican government has demonstrated a strong commitment to maintaining and enhancing Act 60, recognizing the importance of these incentives as a key driver for economic growth and development on the island. This commitment is evident through ongoing legislative efforts to improve and reinforce framework of Act 60, ensuring it remains competitive and attractive option for both local and international investors. In addition to these legislative efforts, the Puerto Rican government actively promotes Act 60 both locally and globally, emphasizing its role in attracting foreign investment and high-net-worth individuals. This proactive approach not only highlights the financial benefits of relocating to

Puerto Rico but also underscores the island’s growing reputation as a hub for innovation, business, and sustainable development. By leveraging Act 60, Puerto Rico has successfully attracted a diverse range of industries, from high-tech and biotech to tourism, and finance, creating a thriving community of like-minded investors, entrepreneurs and businesses.

As Puerto Rico continues to evolve as a premier destination for relocation, the historical context of its tax incentives, combined with the commitment to Act 60, provides prospective residents and investors with a strong sense of confidence and stability. With this supportive policy landscape, prospective investors can be assured that their investment and commitment to the island will yield significant benefits for years to come.

At Moncayo we strive to make your transition to life in Puerto Rico as seamless as possible by addressing common questions about relocating, Act 60 benefits, and life in our community. Below you will find answers to frequently asked questions to help you better understand the process and requirements.

Please keep in mind that the information provided in this FAQ section is for general information purposes only and should not be considered legal, financial, or tax advice. Moncayo serves as the developer of this beautiful community and does not assume responsibility for ensuring compliance with Act 60 or other legal requirements. We encourage you to consult with qualified legal, tax, or financial advisors to address your specific needs and circumstances.

Who qualifies for Act 60 benefits?
Act 60 benefits are available to U.S. citizens and resident aliens who relocate to Puerto Rico and meet the program’s specific requirements. This includes individuals who establish bona fide residency on the island and businesses that create or relocate operations in Puerto Rico, actively contributing to its economic growth.

Are there specific residency requirements?
Please refer to “Eligibility & Qualification Requirements” section.

How do I apply for Act 60 benefits?
You can apply for Act 60 benefits by completing the application process through the Puerto Rico Department of Economic Development and Commerce (DDEC)’s online platform. The application requires detailed information about your residency status, business activities, and intended tax benefits. Ensuring accurate and complete documentation will streamline the process and improve the likelihood of approval.

Why are residents of Puerto Rico excluded from paying federal taxes to the IRS?
Residents of Puerto Rico are generally excluded from paying federal income taxes on Puerto Rico-sourced income due to the island’s status as a U.S. territory. This exemption is established under the U.S. Internal Revenue Code Section 933, which allows bona fide residents of Puerto Rico to exclude income earned within the island from federal taxation. However, the exemption applies only to Puerto Rico-sourced income. U.S.-sourced income, or income from other jurisdictions, remains subject to federal taxes, and Puerto Rico residents may need to file federal tax returns if they have taxable income from the

U.S. Additionally, Puerto Rico residents contribute to local taxes and still pay certain federal taxes, such as Social Security and Medicare.

How do capital gains tax exemptions work?
Under Act 60, individuals holding a decree under the Individual Resident Investor program can benefit from significant capital gains tax exemptions. A 100% exemption applies to gains from assets acquired after relocating to the island. For assets held before relocation, gains are taxed at a reduced 5% rate if recognized 10 years or more after establishing residency, while gains realized earlier are subject to a 15% rate. Additionally, any appreciation in the value of securities or assets after becoming a Puerto Rico resident qualifies for the full exemption.

Under the U.S. Internal Revenue Code Section 933, Puerto Rico-sourced capital gains for bona fide residents are exempt from U.S. federal income tax, but U.S.-sourced gains or pre-relocation appreciation remain subject to federal taxation.

Can I purchase property in Puerto Rico before applying for Act 60 benefits?
Yes, you can purchase property before applying for Act 60 benefits. However, to fully enjoy the tax advantages associated with your investment, you will need to establish bona fide residency (more details can be found in the “Eligibility & Qualification Requirements” section) and successfully complete the Act 60 application process.

Can the U.S. eliminate these programs or change this?
Puerto Rico’s tax incentive programs, including those under Act 60, have been in place for decades. While there is always the possibility that these programs could be modified or eliminated in the future, once your decree is granted, you will have access to these benefits for the duration of your grant. Additionally, if new laws or regulations are introduced offering more favorable terms than your existing grant, you may request a modification to reflect those enhanced benefits.

Can I continue to own or lease a home in the U.S.?
Owning or leasing a home in the U.S. while benefiting from Act 60 can complicate your residency status if your primary residence and significant personal and financial ties are not clearly centered in Puerto Rico. To strengthen your position, it is generally recommended that any U.S. property be leased out, made available for lease, or listed for sale. Consulting with a qualified advisor can help ensure compliance with Act 60 requirements while addressing your specific circumstances.

Can I lease/sublease out my Puerto Rico home while I’m not there?
Leasing or subleasing your primary residence in Puerto Rico may impact your bona fide residency status. Generally, your home should remain available for your personal use throughout the year to maintain its status as your primary residence. Consulting with a qualified advisor can help you understand how this may apply to your specific situation.

How long do I have to stay in Puerto Rico?
The Individual Resident Investor program under Act 60 is designed for individuals who demonstrate a genuine intent to establish long-term residency in Puerto Rico. While the program does not prescribe a minimum number of years, maintaining a sustained presence and connection to the island is essential for complying with residency requirements. It is important to note that federal authorities, such as the IRS, may scrutinize shorter durations of residency and generally expect individuals to demonstrate a

commitment of several years to establish a bona fide status. Consulting with a qualified advisor can help ensure compliance with both Act 60 and federal guidelines.

Do I need to have an office in Puerto Rico?
To comply with Act 60 requirements under the Export Services Program, you must have an office or bona fide establishment in Puerto Rico. This means maintaining a physical location actively used for legitimate business operations, such as managing activities, meeting clients, or employing staff, ensuring your business demonstrates a genuine presence on the island.

Do I need to incorporate my business in Puerto Rico?
While incorporating in Puerto Rico is not explicitly required under the Export Services Program, maintaining compliance with Act 60 often involves meeting specific sourcing and operational rules that may favor incorporating locally. To ensure full compliance with the program’s requirements and to optimize your business structure, it is strongly recommended to consult with a qualified lawyer familiar with Act 60 and Puerto Rico’s regulations.

How long does the application process take?
The timeline for processing Act 60 applications can vary, as the Department of Economic Development and Commerce (DDEC) often faces understaffing and high demand, which may lead to delays. However, the benefits under Act 60 decrees are effective retroactively to the date of filing the application, ensuring you can take advantage of the incentives as of your application date, regardless of when the decree is issued. For the most accurate information on timelines, consult with a qualified advisor.

Are there annual reporting requirements for Act 60 beneficiaries?
Act 60 beneficiaries must file annual reports to maintain their benefits. These reports must include documentation proving ongoing compliance with residency requirements, business activities and tax filings to ensure continued eligibility for the incentives. A qualified legal or tax professional can assist in preparing and submitting these reports to ensure accuracy and compliance.

How can Moncayo assist with the relocation process and ongoing management of my tax strategy?
Moncayo offers support to help residents navigate the complexities of relocating to Puerto Rico. This includes connecting you with independent financial and legal professionals who can provide expert guidance tailored to your needs. While Moncayo facilitates access to these resources, we encourage you to independently evaluate and select advisors, as Moncayo does not assume responsibility for the services provided by these professionals. Our goal is to help ensure a smooth transition and support ongoing compliance with Act 60 requirements.

At Moncayo, we understand the complexities of relocating and taking full advantage of Act 60. Our dedicated team is here to provide guidance and connect you with independent professionals who specialize in areas such as real estate acquisition, residency requirements, and tax planning. While we offer access to resources and expertise to support your transition, we encourage you to consult qualified advisors for tailored advice. With Moncayo, you will have the tools and support needed to confidently begin your new chapter in Puerto Rico.

Contact us today:

Phone: +1.787.665.9966

Email: sales@moncayo.com