Preparing to Move to Puerto Rico for the Act 60 Tax Benefits
- Posted: May 27, 2021
- Posted by: Travis Lynk
- Last Reviewed: May 27, 2021
A life in Puerto Rico sounds paradisical to most Americans—a U.S. territory with year-round beach weather, a fun Caribbean culture, and a relatively low cost of living. But that’s not all Puerto Rico offers: the lucrative Act 60 tax incentives have drawn thousands to the U.S. Caribbean island. In particular, the Act 60 Export Services and Act 60 Individual Resident Investor incentives have attracted countless U.S. citizens and residents to Puerto Rico, enabling them to save big on taxes in the sunny paradise of Puerto Rico.
Relocating to Puerto Rico for the Act 60 tax benefits, however exciting, is a complicated process that involves many different processes and a lot of paperwork. Here are some of the most important processes in your relocation to Puerto Rico.
Have a criminal background check done
Before you can profit from the Act 60 tax benefits, you need to prove you’re not a criminal by requesting a criminal background check from your state. Every state has a different procedure, so it’s important to know the requirements for your state. Determining whether your state requires fingerprinting is imperative because if it does, you’ll need to allow for more time to receive your background check.
Obtain an official copy of your state driving record
If you plan to drive in Puerto Rico, you’ll need a Puerto Rican driver’s license, and to obtain that, you need to present an official copy of your state driving record. Requesting this document is as simple as going to your local DMV, although you’ll have to pay a small fee. The exact amount is different for each state.
Apply for your Act 60 tax benefits
If you’re moving to Puerto Rico for the tax incentives, this is the most important step! Fill out the necessary paperwork and collect the required documentation on your own or with our team of professionals and submit the application to the Puerto Rican government. If you’re interested in both the Act 60 Export Services and the Act 60 Individual Resident Investor tax incentives, you don’t need to choose—you can apply for both. In fact, many decree holders who qualify for both do exactly that.
Deregister as a U.S. voter
After you move to Puerto Rico, be sure to deregister as a U.S. voter. Even though Puerto Rico is a U.S. territory, it operates largely under its own political system, and Puerto Rican residents cannot vote in U.S. elections. All you have to do to give up your U.S. voter registration is consult the Election Directory for Cancellation Notices and mail your cancellation notice to the appropriate address.
Obtain a Puerto Rican driver’s license
It’s not mandatory to get a Puerto Rican driver’s license, but it is recommended, as it can help you pass the closer connection test, which is required to achieve bona fide residency in Puerto Rico. The process also requires you to surrender your U.S. driver’s license. Make sure to read up on the somewhat complicated procedure to successfully secure a Puerto Rican driver’s license.
File a declaration of non-domicile
After you have an address in Puerto Rico, it’s imperative that you file a declaration of non-domicile with your previous state of domicile. In some states, declaring non-domicile is necessary to nullify your tax status there, so doing so is really in your best interest. All you have to do is send a signed and notarized declaration to the Office of the Clerk in the state where your domicile is currently registered. Then, you should declare domicile in Puerto Rico, which can help satisfy the closer connections test for bona fide residency. To facilitate the process, you can download templates of both letters.
Relocating to Puerto Rico is complicated, but any Act 60 decree holder will assure you it’s worth it. Imagine spending your days at the beach, enjoying scrumptious Puerto Rican cuisine and exciting Caribbean festivals, all while saving huge amounts in taxes. The Act 60 tax benefits make that possible.
Disclaimer: Neither PRelocate, LLC, nor any of its affiliates (together “PRelocate”) are law firms, and this is not legal advice. You should use common sense and rely on your own legal counsel for a formal legal opinion on Puerto Rico’s tax incentives, maintaining bona fide residence in Puerto Rico, and any other issues related to taxes or residency in Puerto Rico. PRelocate does not assume any responsibility for the contents of, or the consequences of using, any version of any real estate or other document templates or any spreadsheets found on our website (together, the “Materials”). Before using any Materials, you should consult with legal counsel licensed to practice in the relevant jurisdiction.