Puerto Rico is an archipelago located in the Caribbean on the continent of North America. It’s an unincorporated territory of the United States situated between the North Atlantic Ocean and the Caribbean Sea. With its mesmerizing waterfalls and rivers, and breathtaking views of nature, Puerto Rico is one of the top tourist destinations across the globe. On top of that, it’s also a great place to live for people in business and successful investors worldwide for incredible tax benefits and tremendous profit growth.
Moreover, for tax purposes, the residence status of an individual in Puerto Rico and the annual earned income determine the tax liability. Besides that, the nonresidents of the island will incur tax obligations from the income they’ve earned within this territory. But, those residents will pay owed taxes from the profit or income they receive both onshore and offshore.
On top of that, Puerto Rico’s bona fide residents don’t have to pay for the federal income taxes in the US from what they’ve earned locally. Besides that, one exciting thing about it is that Puerto Rico promotes various foreign investments by providing massive tax incentives to those who want to become bona fide residents and establish their businesses in this US territory.
Furthermore, Puerto Rico is also a great place for all crypto investors. If you decide to move and establish a legal residence on this island, you’ll surely enjoy your short or long-term capital gains without incurring any taxes at all. Hence, read this entire article for everything you need to know about Puerto Rico’s cryptocurrency taxes and discover other opportunities this US territory provides to its residents.
Is Puerto Rico a Crypto Tax Haven?
The IRS has increased its effort and made use of various ways to collect taxes from every investor making any crypto transaction. Because of that, many people are thinking about any possible legal methods where they can avoid paying any possible incurred cryptocurrency taxes. Hence, others are now considering moving to Puerto Rico as the best cryptocurrency tax haven.
It’s a US territory, but it has more independence to make and implement tax laws within the entire premises of the island. The best part about it is that you can continually enjoy these Puerto Rico cryptocurrency tax benefits as a legal resident on the island while you still keep your US citizenship. Moreover, when you decide to move to Puerto Rico, you still owe taxes in the US from the gains of your existing crypto assets.
However, when you sell it and purchase a new one, it’ll become your Puerto Rico crypto income with a rate of 0% for the capital gains taxes. So, like what was stated above, whatever gains or profits you’ll learn from any crypto transactions you make within the island, you’ll never face any tax obligations. That’s why many virtual currency investors worldwide consider the beauty of this island as a paradise for its wonderful natural tourist attractions and as a Puerto Rico crypto tax haven for more tax benefits and opportunities to increase profits.
Act 22
Puerto Rico Act 22 or the Individual Investors Act encourages foreign individuals to become bona fide residents on the island. It’s by giving them an attractive incentive of a hundred percent tax exemption from the earnings they receive while staying in Puerto Rico and from what they get in their passive income. Besides that, the said relocation must result in new investments, like establishing new local businesses, providing services to the community, selling products to the local consumers, and many other types of investment that will help boost the economy of Puerto Rico.
Moreover, the validity of the tax exemption under Act 22 is until the 31st of December, 2035. Besides that, when you finally become a new resident in Puerto Rico, you’ll have a full exemption from the US federal taxes and Puerto Rico taxes. However, if you’ve realized an income within your ten-year residency in Puerto Rico from the investment you had before you acquired a bona fide residence on the island, you’ve incurred a tax obligation of 10% of that particular profit. However, it’ll become a 5% tax rate if you realize your gains after your ten-year residency in Puerto Rico.
Act 60
The Code of Incentives or the Puerto Rico Act 60 of 2019 took effect on the 1st of July, 2019. This particular law has been created to gather and calculate the ROI or the return of investment from the tax incentives of Puerto Rico. Besides that, with the implementation of this new law, there are some items included in the scope of limitation from other incentive acts that have been changed or modified on the Code of Incentives.
For example, according to Act 22, anyone won’t be a resident in Puerto Rico 6 years before the 17th of January, 2012. But, Act 60 of 2019 has been updated to 10 years before the 1st of July, 2019. In addition, Act 22 also stated that there’s no requirement for purchasing a residential property. However, when Act 60 took effect, you’re now required to buy one as a sole owner or together with your spouse. Besides that, the decree’s effectiveness has also been modified from 31st of December, 2035, to being a renewable term for 15 years.
Moreover, other tax benefits included in Act 60 are having 4% income tax, 2 to 4% corporate tax, 50% municipal tax exemption, and the 75% state property tax exemption. As mentioned earlier, you can take advantage of these benefits while you keep your US citizenship. Hence, using Act 60, crypto investors will surely have hundreds to thousands of US dollars of savings in federal taxes and other tax obligations.
Crypto Tax in Puerto Rico For Individuals
As discussed earlier regarding Act 22 of 2012, it’s also called IIA or Individual Investors Act that aims to boost the current economy of Puerto Rico. It has an objective to provide every investor residing on the island with various tax benefits. Besides that, if you want to take advantage of the benefits included in IIA, you have to meet the requirements.
First, you need to become a legal and bona fide resident of Puerto Rico by staying there for at least 183 days in a taxable year. In addition, you shouldn’t have closer ties to other countries besides Puerto Rico, and you should also not have a tax home offshore during a particular taxable year.
Moreover, every taxpayer or investor will get various benefits from this Individual Investors Act. As long as you qualify for it by meeting the said requirements, you’ll get crypto tax exemption from your income taxes on all dividends, interest, and long and short-capital gains acquired after you become a bona fide resident in Puerto Rico.
Crypto Mining Taxes and Other Considerations
Crypto miners make use of computers to validate crypto transactions and record them on a blockchain, which serves as a public ledger while solving the intricate details of algorithms. It’ll then time-stamp on every transaction made. Besides that, mining includes the activities of the investors that may trigger profits, which will become an ordinary income and may be subject to self-employment tax.
However, Puerto Rico is an island that offers generous crypto tax benefits that most crypto investors worldwide have been looking for. It’s now considered a land of opportunities for the blockchain industry, where thriving crypto investors have been popping around the island. Hence, if you decide to move to Puerto Rico and do your crypto mining there, you’ll surely enjoy so many tax savings. In fact, many crypto miners are now relocating to Puerto Rico to search for a greener pasture to plant crypto seeds and expect enormous profits with generous tax benefits.
It includes Act 73 of 2008 or the Economic Incentives for the Development of Puerto Rico that provides businesses with tax exemptions, economic incentives, and tax credits, which have various activities focusing on industrial development. Besides that, businesses that export services from the island in the areas of investment banking, advertising, research and development, and many others will also be eligible for various tax benefits according to Act 20 of January 17, 2012, or the Export Services Act.
Moreover, those businesses that qualified to be called international financial entities will also be eligible for tax exemptions as stipulated in Act 273 of September 25, 2012, or the International Financial Center Regulatory Act. These are some tax benefits that you can enjoy when you establish your business in Puerto Rico. Besides that, those investors in cryptocurrency and the crypto miners will surely have tons of opportunities to take advantage of this list of tax incentives as they move to the beautiful island of Puerto Rico.
FAQs
Is cryptocurrency legal in Puerto Rico?
Cryptocurrency is legal in Puerto Rico. In fact, it offers various tax incentives to those who want to move to this island and become bona fide residents. Besides that, whatever crypto asset you’ve invested and earned, you won’t face a Puerto Rico capital gains tax as long as it happens after your residency has been established on the island.
Is Puerto Rico a crypto tax haven?
Puerto Rico is a US territory with more independence to create and implement tax laws for its residents. The exciting thing about it is that you’ll surely enjoy the tax incentives when you move to this beautiful island and become a bona fide resident. Whatever capital gains you’ll earn, you won’t deal with any tax obligations. Hence, many cryptocurrency investors worldwide find this particular island as a Puerto Rico crypto haven.
Is Coinbase available in Puerto Rico?
As of the moment, Coinbase is not yet available in Puerto Rico. It doesn’t offer its services in this US territory because Coinbase isn’t regulated in this location, and you can’t also process any payments for that virtual currency. Hence, you can’t open a Coinbase account when you try to access it on the website. However, you can find many options online other than Coinbase. In fact, you can buy, sell, and even convert other cryptocurrencies by processing your payments through a debit card, bank account, or PayPal.
Why do crypto people move to Puerto Rico?
Many virtual currency investors and crypto miners worldwide find this particular island a Puerto Rico crypto tax haven. With its various laws that provide its residents with generous tax incentives, every investor will always grab the opportunity to enjoy these tax savings that will help maximize their capital gains and profit. Hence, many crypto people want to move to this beautiful island because of what it can provide to its residents.
Can I move to Puerto Rico to avoid crypto taxes?
One big reason for most crypto investors moving to Puerto Rico is the tax benefits it provides. It’s the best way to lawfully avoid paying taxes and maximize capital gains from your crypto investments. However, it may have some requirements you need to meet before you can enjoy these tax incentives. Then, when you successfully qualify for it, you will no longer face any tax obligations from the income you earn with your crypto assets.
Conclusion
The cryptocurrency industry offers tons of opportunities for investors to have a passive income and eventually achieve a life with financial freedom. However, with the tax implications from every crypto transaction you make that triggers a profit, you might be thinking of ways on how to get rid of your owed taxes or, at least, minimize your tax obligations every year. Because of that, moving to Puerto Rico to start a new life is one of the best ways that most crypto investors see to make the most out of their crypto investment. With the generous tax incentives that Puerto Rico provides to its residents, every crypto investor will surely grab the opportunity to enjoy these tax savings to maximize their earnings potential.
