Your Affiliate Marketing Business Can Soar From Puerto Rico
- Posted: August 3, 2022
- Posted by: Travis Lynk
- Last Reviewed: August 3, 2022
If you’re thinking about taking your current affiliate marketing campaign to new heights or getting a new one off the ground, Puerto Rico is your ideal launchpad.
For those who are uninitiated but thinking about getting involved with affiliate marketing, here’s a brief overview. It’s a form of advertising in which a third-party publisher (affiliate) is paid a commission for promoting a merchant’s products or services. A multibillion-dollar industry, it can be a fantastic source of revenue for both sides and a pillar of a merchant’s growth. One recent review showed that about 37% of consumers purchased products through affiliate links in 2021. An affiliate might own several websites and email lists. By running ads or links on its websites or sending out emails, the affiliate directs visitor traffic to the e-commerce site of the merchant, who then pays the affiliate a commission if the visitor buys something.
Whether you’re a merchant or publisher, if your company plays a role in affiliate marketing, you have opportunities to maximize your profits and minimize your taxes by relocating from the United States to Puerto Rico. Plenty of entrepreneurs, Bitcoin billionaires, and others have moved their businesses to this U.S. territory in recent years to enjoy the island’s generous tax incentives under Act 60. This code, aimed at boosting economic development on the island, can provide tremendous tax benefits to qualified businesses and individual investors.
If your affiliate marketing business is conducting its activities inside Puerto Rico, it should be eligible for substantial benefits that apply to the income you receive from clients outside of Puerto Rico. One of these is a low 4% corporate tax rate (in contrast to the 21% corporate tax rate, plus state taxes, that a business pays on the mainland). Think about how much further your affiliate marketing commissions will go with a reduced rate like that.
There’s more. A 100% tax exemption on distributions from earnings and profits, a 50% tax exemption on municipal taxes, and a 75-100% tax exemption on municipal and state property taxes are among the other pluses. Take a look at all of these additional tax incentives that may apply to your business. In addition, an individual investor who becomes a bona fide resident of Puerto Rico can also receive a 100% tax exemption on interest, dividends, short- and long-term capital gains, and gains on crypto-based assets acquired after moving.
Once you’ve settled on the island, you’ll be ready to explore new options that will take your affiliate marketing campaign to the next level. Consider making better use of infographics in your affiliate marketing to stand out in a crowd of online content and attract more customers. Keep an eye on what else has been trending lately—such as livestream shopping, AI-based tools, changes to cookie-based tracking, and the rise of crypto affiliate marketing—for possible applications to your affiliate marketing strategy.
You’ll be well-positioned to do all of this and more in Puerto Rico thanks to average internet speeds here that are among the fastest in the world.
Don’t forget that you and your company must perform at least some of the work related to affiliate marketing while physically located in Puerto Rico before you can receive the tax advantages listed earlier. You can follow one of two paths to make this happen: a total relocation of your business or partial relocation of it to the island. Under the latter approach, you’d set up a new entity on the island that charges a “management fee” to the rest of your mainland-based business. To avoid penalties, this would require a transfer pricing analysis and intercompany agreements to determine the share of profits realized in Puerto Rico vs. on the mainland, as laid out in this guide.
Launching your affiliate marketing activities from Puerto Rico isn’t rocket science, but you’ll want to speak with experienced professionals prior to your move. Let our stellar PRelocate team help demystify the process for you. From its superb new base in the Caribbean, it won’t be long before your affiliate marketing business really takes off.
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.