Moving to Puerto Rico?
Here’s What You Need to Know in 2025 for Act 60.
Puerto Rico’s Act 60 offers powerful tax incentives, but only if you establish your residency and business correctly. Here’s a practical guide for new residents seeking compliance and clarity.
Introduction
Act 60 in Puerto Rico has become a top reason why entrepreneurs, investors, and professionals relocate to the island. The promise of reduced taxes is real, but only if the transition is executed properly. Too often, individuals make costly mistakes based on incomplete or outdated information.
Whether you’re already in Puerto Rico or planning the move, this guide will help you navigate Act 60 requirements and avoid common pitfalls.
Section 1: What Act 60 in Puerto Rico Really Offers
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Export Services (Former Act 20): Services performed for clients outside Puerto Rico may qualify for a 4% corporate tax rate.
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Individual Investor (Former Act 22): 100% tax exemption on certain capital gains accrued after you establish bona fide residency.
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Other Qualifying Activities: Includes creative services, financial services, tech industries, and more—each with specific compliance rules.
Not all income is exempt. Not all services qualify. Act 60 benefits aren’t automatic. Understanding eligibility and structuring correctly is essential.
Section 2: Your First 90 Days Matter Most
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Establish bona fide residency: This includes purchasing or renting a primary residence, obtaining a PR driver’s license, voter registration, and meeting the physical presence test.
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Set up your business entity: Proper Puerto Rico entity formation, permits, banking, and compliance.
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Set up compliant payroll or owner draws: Act 60 recipients must compensate themselves reasonably and report it correctly.
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The first few months set the tone for future audits. Get it right the first time.
Section 3: Avoid These Mistakes
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Relying on social media advice instead of licensed professionals
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Failing to align U.S. and Puerto Rico tax reporting
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Underestimating payroll or compliance responsibilities
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Not tracking time spent in/out of Puerto Rico
Clarity beats speed. Accurate planning ensures lasting tax benefits.
Section 4: When to Consult an Advisor
You don’t need help for everything. But here’s when it pays to bring in a qualified local advisor:
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You’re not sure if your business qualifies under Act 60
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You need entity formation or payroll setup
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You want to minimize IRS and PR Treasury (Hacienda) audit risk
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You’re ready to shift from basic compliance to proactive optimization
Section 5: Request the 2025 Act 60 Starter Pack
We created a free resource specifically for Act 60 newcomers. It includes:
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A checklist for your first 90 days in Puerto Rico
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An overview of key compliance requirements
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Tips to structure your business and income correctly
These exemptions are not new, and even the IRS published an introduction which highlighted the requirements and benefits of now Act 60 (formerly Act 20 and 22). Relocating under Act 60 is a powerful opportunity if handled with care. This guide is a first step toward making confident, informed decisions that maximize your benefits in Puerto Rico. Feel free to contact us for more information. Mention this ad and get a discounted assessment.
