Act 60 Investor: Compliance Made Easy
Act 60 provides substantial tax incentives for investors relocating to Puerto Rico. However, maintaining compliance is essential to fully benefit from the program. This guide simplifies Act 60 compliance by covering residency requirements, tax filing, annual reporting, how to apply, and additional considerations.
Act 60 Investor: Compliance Made Easy
Table of Contents
- Residency Requirements
- Tax Filing Requirements
- Annual Compliance Requirements
- How to Apply for Act 60 Investor
- Additional Considerations
Residency Requirements
To qualify as an Act 60 investor, you must meet the following tests:
1. Presence Test
You must be physically present in Puerto Rico for at least 183 days annually. However, staying for over 200 days is recommended to ensure compliance. Keep a detailed day-by-day tracking sheet of your presence on the island.
2. Tax Home Test
Your primary place of business (tax home) must be in Puerto Rico. This includes the location of your main work, office, or professional activities.
3. Closer Connection Test
To demonstrate a closer connection to Puerto Rico than to the mainland U.S., consider these steps:
- Property Ownership: Use Zillow or Clasificados Online to find properties in Puerto Rico.
- Vehicles: You can transport your car from the mainland for $1,200–$3,300 but be prepared for an import tariff of up to 35%. Alternatively, use Clasificados Online to purchase vehicles locally.
- Driver’s License: Obtain your Puerto Rico driver’s license without an agent. Medical reports can be completed onsite at the DMV for a small fee.
- Voter Registration: Register with the Puerto Rico State Election Commission.
Tax Filing Requirements
1. U.S. Federal Taxes
As a U.S. citizen or resident, you’re generally required to file federal tax returns. However, Puerto Rico-sourced income can be excluded under Section 933 of the Internal Revenue Code.
- Year of Move: Capital gains/losses must be prorated by the date of the move. Gains before the move are taxable by the IRS, while gains after are taxed by Puerto Rico.
- Form 8898: Notify the IRS of your residency change using Form 8898.
- Deadlines: File by April 15. Extensions to June 15 are available for Puerto Rico residents, but taxes owed are due by April 15.
2. Puerto Rico Taxes
File Puerto Rico Form 482 to report worldwide income. Qualifying Act 60 income, such as dividends and capital gains, may be exempt.
- Deadline: April 15, with extensions available.
3. State Taxes
Income from mainland states, such as rental income from Virginia, requires filing non-resident state tax returns. Deadlines usually align with federal deadlines.
Annual Compliance Requirements
1. Annual Report
File your annual report for the previous with the Puerto Rico Department of Economic Development and Commerce (DDEC) by November 15. For example, the 2024 annual report is due on Nov 15, 2025. Include:
- Proof of residency (e.g., utility bills or lease agreements).
- Proof of $10,000 in qualified act 60 donation
- A $5,005 compliance fee.
2. Charitable Contributions
Donate $10,000 annually to approved non-profits. $5,000 of this donation must be to a non-profit approved by the Comisión Especial Conjunta de Fondos Legislativos para Impacto Comunitario (CECFL). These organizations typically focus on children and community development. addressing child poverty. The other $5,000 donation can be made to any charity certified under Section 1101.01(a)(2)(A)(iii) by the Hacienda de Puerto Rico. You will have to file proof of donations along with your annual report.
How to Apply for Act 60 Investor
Applying for Act 60 can be done independently or through professional assistance:
- Do It Yourself: Research the process, gather required documentation, and submit your application directly through the Puerto Rico Department of Economic Development and Commerce (DDEC).
- Hire Professionals: Contact agencies like PRelocate for guidance and application support.
Before applying:
- Consult with a CPA and tax attorney to ensure you meet all financial and tax requirements.
- Speak with other Act 60 investors to learn about their experiences and gain practical insights.
Additional Considerations
- BOI Reporting: Learn more in our BOI Report Guide.
- Pay CRIM Taxes: Ensure timely payment of property taxes to Puerto Rico’s CRIM office to avoid penalties.
- Mailing Tax Returns: Use USPS certified mail, retain receipts, and scan copies for your records.
- Professional Assistance: Engage a tax professional experienced in U.S. and Puerto Rico tax laws.
By following these guidelines, Act 60 investors can fully leverage the program’s benefits while staying compliant with all legal requirements.
Frequently Asked Questions
What is Act 60 in Puerto Rico?
Act 60 (formerly Acts 20 and 22) is Puerto Rico’s tax incentive program offering qualifying businesses a 4% corporate tax rate on export services and qualifying individuals 0% tax on capital gains. The program requires bona fide Puerto Rico residency and compliance with specific employment and charitable donation requirements.
Who qualifies as an Act 60 investor?
To qualify as an Act 60 individual investor, you must become a bona fide resident of Puerto Rico (183+ days per year), not have been a Puerto Rico resident in the prior 15 years, purchase residential property within two years, and make annual charitable donations to Puerto Rico nonprofits.
Do Act 60 investors need specialized bookkeeping?
Yes. Act 60 compliance requires careful tracking of Puerto Rico-sourced vs. non-Puerto Rico-sourced income, documentation of residency requirements, and accurate records for both Puerto Rico and federal tax filings. Maxim Liberty provides bookkeeping services for Act 60 investors starting at $10/hour.
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