Puerto Rico’s Act 60, often referred to as the Puerto Rico Incentives Code, is one of the most attractive tax incentive programs in the world. Originally known as Act 20 (Export Services) and Act 22 (Individual Investors Act), these incentives were consolidated under Act 60 in 2019. The goal is simple: attract entrepreneurs, investors, corporations, and remote professionals to relocate to Puerto Rico while contributing to the island’s economic development.

Today, Act 60 has become especially popular among crypto investors, digital entrepreneurs, financial traders, and service-based companies seeking a legal, compliant, and sustainable way to dramatically reduce tax obligations.

This article provides a complete, easy-to-understand overview of Act 60—what it is, who qualifies, what the benefits are, and how you can take advantage of one of the world’s best tax incentive programs.

What Is Puerto Rico Act 60?

Act 60 is a tax incentive law designed to encourage economic growth by offering both individuals and businesses significant tax reductions when they relocate to Puerto Rico and contribute to the island’s economy.

The two most popular chapters are:

Act 60 Export Services (Formerly Act 20)

Act 60 Individual Resident Investor (Formerly Act 22)

Each has completely different requirements and benefits, but both offer powerful tax advantages for those who qualify.

Act 60 for Individuals (Former Act 22)

This portion of the law is what attracts high-net-worth individuals, crypto traders, stock traders, and investors.

Major Benefits for Individuals
1. 100% Tax Exemption on Capital Gains

One of the most famous benefits:

No tax on gains from stocks

No tax on crypto gains

No tax on ETFs, options, dividends (with conditions), and other capital assets acquired after moving

This is a game-changer for traders and long-term investors.

2. No Federal Capital Gains Tax

Since Puerto Rico is a U.S. territory with its own tax system, qualified residents can legally avoid federal capital gains taxes.

3. 0% Tax on Passive Income (Certain Types)

Certain forms of interest and dividends can also be eligible for preferential tax rates.

Requirements for Individual Residency

Act 60 isn’t just a tax hack—you must become a bona fide resident of Puerto Rico.

This involves:

1. Presence Test

Spend at least 183 days per year in Puerto Rico.

2. Tax Home Test

Your primary economic activity must be on the island.

3. Closer Connection Test

You must demonstrate stronger ties to Puerto Rico than to the mainland U.S.

Examples include:

Puerto Rico home ownership or long-term lease

Local bank accounts

Puerto Rican driver’s license

Puerto Rican voter registration

Community involvement

Act 60 for Businesses (Former Act 20 – Export Services)

This is the business side of the incentives code. It’s one of the best tax structures for remote and online companies.

Main Requirements for Businesses

Your company must:

Provide services from Puerto Rico

Export those services to clients outside Puerto Rico

Examples include:

Online businesses

Digital marketing agencies

Consulting firms

Software companies

Remote service providers

Investment advisory

Call centers

Back-office operations

Major Benefits for Businesses
1. 4% Corporate Tax Rate

Instead of paying 21% U.S. federal corporate tax plus state taxes, Act 60 companies pay just 4%.

2. 100% Tax Exemption on Dividends

Dividends distributed from an Act 60 business to its Puerto Rican owner are tax-free.

3. 75%+ Exemption on Municipal Taxes

Significant reduction in local taxes makes operating more cost-effective.

4. No Federal Corporate Income Tax

Puerto Rico businesses operating under Act 60 do not pay U.S. federal corporate tax.

Who Can Benefit from Act 60?
1. Crypto Traders and Investors

Capital gains at 0% is one of the biggest draws.

2. Stock and Options Traders

Day traders and long-term investors both benefit.

3. Digital Entrepreneurs

Online businesses pay just 4% corporate tax.

4. Consultants and Remote Workers

As long as the service is exported off the island, it qualifies.

5. High-Net-Worth Individuals

Those looking to optimize wealth preservation find Act 60 extremely appealing.

Steps to Apply for Act 60
1. Establish Residency

Meet the presence, tax home, and closer connection tests.

2. Form a Puerto Rico Corporation (For Act 60 Export Services)

This must be done locally through Puerto Rico’s governmental agencies.

3. Apply Through the Department of Economic Development (DDEC)

Submit required documentation, business plans, and fees.

4. Pay the Annual Reports and Compliance Fees

Both individuals and businesses have yearly obligations.

5. Maintain Compliance

This includes:

Annual filings

Community contribution requirements

Proper documentation

Proof of residency

Costs Involved in Act 60
Government Fees

Application fee for individuals: $750

Application fee for businesses: $1,500

Annual Government Contributions

Individuals must contribute annually to approved Puerto Rican nonprofits.

Professional Fees

You will need:

Lawyer

CPA

Local compliance support

Act 60 Myths vs. Reality
Myth 1: It’s a tax loophole.

Reality: Act 60 is a legally established government incentive.

Myth 2: Anyone can get approved.

Reality: Only those who meet strict residency and compliance rules qualify.

Myth 3: You don’t need to actually live in Puerto Rico.

Reality: Physical presence is mandatory.

Myth 4: It’s only for millionaires.

Reality: Many small business owners qualify too.

Common Challenges with Act 60

Failing the residency test

Not properly structuring the business

Inaccurate tax filings

Non-compliance with yearly donations

Not separating personal and corporate finances

Hiring a Puerto Rico corporate/tax attorney is highly recommended.

Is Act 60 Right for You?

Act 60 is ideal if you:

Can move to Puerto Rico

Can operate your business remotely

Want long-term tax reduction

Are an active investor or trader

Want a stable, legal, U.S.-aligned tax incentive

If these apply, Act 60 can be one of the best tax strategies available today.

Conclusion

Puerto Rico’s Act 60 is one of the most powerful and legally secure tax incentive programs in the world. Whether you’re an investor seeking 0% capital gains or a business owner looking for a 4% corporate tax rate, Act 60 offers unbeatable financial advantages.

However, success with Act 60 depends on proper planning, legal compliance, and becoming a genuine resident of Puerto Rico. With the right guidance, Act 60 can transform your tax strategy, accelerate your financial growth, and open the door to a new lifestyle on one of the most beautiful islands in the world.

FAQs
1. Is Act 60 legal for U.S. citizens?

Yes. Puerto Rico has its own tax system, so qualified residents legally benefit from reduced tax rates.

2. Do I have to live full-time in Puerto Rico?

You must meet the residency requirements, including spending around 183+ days per year on the island.

3. Can crypto investors benefit from Act 60?

Absolutely. Crypto gains acquired after residency can be taxed at 0%.

4. Do Act 60 businesses pay U.S. federal tax?

No—Puerto Rican corporations under Act 60 do not pay federal corporate income tax.

5. How long does approval take?

Typically 4–12 weeks, depending on government processing times and documentation quality.