Aprendiendo Boriqua - An approved Investor under PR Tax Decree Act 60 Part I - LUMA & AAA Set-up

The term "Approved Investor" under Puerto Rico's Tax Decree Act 60 refers to individuals or entities that qualify for special tax incentives provided by Puerto Rico to attract investment, residents, and businesses. Act 60, also known as the Puerto Rico Incentives Code, consolidates various incentive programs, including the benefits previously offered under Acts 20 and 22, now under a unified framework aimed at boosting economic development.
Benefits of Act 60 for Approved Investors:
1. Capital Gains Tax Exemption: For qualifying individuals who move to Puerto Rico and become residents, long-term capital gains on assets acquired after becoming a resident are taxed at a 0% rate.
2. Interest and Dividend Income: Approved Investors are eligible for a 0% tax rate on Puerto Rican-sourced interest and dividends.
3. Real Estate and Property Investment: Investors under Act 60 may enjoy reduced property taxes, especially in areas designated for economic development.
Qualification for Approved Investor Status:
To become an Approved Investor under Act 60, an individual must:
Become a bona fide resident of Puerto Rico. This requires spending at least 183 days in Puerto Rico and proving primary residence.
Submit an application to the Puerto Rico Department of Economic Development and Commerce (DDEC) for the relevant decree.
Make a local contribution: Investors must contribute to Puerto Rican non-profit organizations to meet one of the program's social impact requirements. As of 2020, this includes a mandatory annual donation of at least $10,000 to a local non-profit.
Approved Investor status under Act 60 is granted via a tax decree, which is essentially a contract between the individual and the Puerto Rican government. This decree typically lasts for 15 to 20 years, ensuring that the investor enjoys the tax benefits for an extended period.
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Summary:
The purpose of these tax incentives is to attract high-net-worth individuals and investors to Puerto Rico, stimulate the local economy, promote real estate development, and enhance Puerto Rico's position as a financial and business hub.
This tax-friendly environment has drawn many individuals, especially from the mainland United States, seeking to benefit from Puerto Rico's preferential tax treatment. I came from Florida!
Thank you to ChatGPT for the information above!