Becoming as tax efficient as possible depends on many personal and financial factors. For some Americans, moving to another state may be the best option. For some American entrepreneurs, moving to Puerto Rico may make good sense. For others, moving to another country may offer better long term benefits.
Can you save taxes by moving to Puerto Rico?
Therefore, if an individual relocates to Puerto Rico, the move does not result in an expatriation tax. 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.
What is the Puerto Rico income tax rate?
33 percent
The Personal Income Tax Rate in Puerto Rico stands at 33 percent. source: Puerto Rican Department of Treasury.
Do I have to pay income tax if I live in Puerto Rico?
Puerto Rico is an unincorporated territory of the United States and Puerto Ricans are U.S. citizens; however, Puerto Rico is not a U.S. state, but a U.S. insular area. Consequently, while all Puerto Rico residents pay federal taxes, many residents are not required to pay federal income taxes.
What are the tax benefits for living in Puerto Rico?
Specifically, a U.S. citizen who becomes a bona fide Puerto Rico resident and moves his or her business to Puerto Rico (thus, generating Puerto Rico sourced income) may benefit from a 4% corporate tax/fixed income tax rate, a 100% exemption on property taxes, and a 100% exemption on dividends from export services.
Does Puerto Rico citizens pay federal income tax?
Even though bona fide residents of Puerto Rico do not have to pay federal income taxes on income sourced from Puerto Rico, the situation is different if you are self-employed.
What’s the tax rate for moving to Puerto Rico?
If you qualify, there is a 4% income tax rate for new banking and financial businesses established in Puerto Rico. If you make the move, you’ll be in good company. More than 400 companies have already moved to Puerto Rico in order to benefit from its business-friendly incentives and low labor costs.
What are the benefits of moving to Puerto Rico?
This means that mainland Americans who move to Puerto Rico can eliminate taxation on investments they make on the island or in the markets. This is a huge benefit to stock traders, venture capitalists, M&A practitioners, or anyone who gets bitten by capital gains tax at the end of the year.
How is the cost of living in Puerto Rico?
In Puerto Rico the overall cost of living is about 13% higher than the mainland United States. The Jones Act of 1920 requires that everything that comes to Puerto Rico must first be shipped to the States and then reshipped to the island by US transport, thereby increasing cost. Groceries are about 23% higher than mainland US grocery stores.
Why are so many people leaving Puerto Rico?
Statistics and national news articles show debt-ridden Puerto Rico’s population declining in increasing numbers. Students, teachers, doctors and many more are leaving the island for better jobs, better pay and a more stable future. However, there is a small group of people moving to Puerto Rico from the U.S. in increasing numbers.
