Tax Incentives

What are the benefits of purchasing a property in Old San Juan?

The fiscal benefits of purchasing a property in Old San Juan are that your property will be tax exempt from income and property taxes, with the understanding that your property has been restored according to the norms and regulations of the Institute of Puerto Rican Culture. The spirit of the law is that property owners maintain their historic property. Maintenance of historic properties is expensive, so the “taxes” that we do pay is in the maintenance of these historic properties.

94% of Old San Juan has been restored by residents, with private funding. Residents and merchants, are the custodians of the historic Zone of Old San Juan.

Incentives to Individuals that Relocate to Puerto Rico

For decades, the Government of Puerto Rico has offered aggressive incentives to businesses within certain industries that select to establish operations in Puerto Rico, making the island an excellent environment for business. In 2012 the Government of Puerto Rico enacted a number of statutes to foster the economic development of the island by attracting income from foreign sources. Two of the enacted statutes are Act No. 20 of January 17, 2012 (“Act 20”), known as the Act to Promote Export Services, and Act No. 22 of January 17, 2012 (“Act 22”), known as the “Act to Incentivize the Transfer of Investor Individuals to Puerto Rico”.

Act No. 22 of 2012

The Individual Investors Act (Act No. 22 of 2012) seeks to attract new residents to Puerto Rico by providing a total exemption from Puerto Rico income taxes on all passive income realized or accrued after such individuals become bona fide residents of Puerto Rico. To qualify, the new resident must not have been a resident of Puerto Rico at any time from January 16, 1997 through January 16, 2012.

The incredible benefits of this Act are as follows:

  • 100% tax exemption on interest and dividend income for new residents of Puerto Rico
  • 100% tax exemption on all long-term capital gains accrued after becoming a new resident

Export Services Act

Act No. 20 of 2012

The purpose of Act 20 is to develop Puerto Rico as an international export services center through encouraging local businesses to expand their services outside the Island and to promote the development of new businesses.

The benefits under Act 20 include:

  • 4% flat income tax rate
  • 100% tax exempt distributions from earnings and profits
  • 60% exemption on municipal license taxes
  • Up to 100% exemption from property taxes during the first five years of operations