2. Incentives for Individual Resident Investors (formerly Act 22)
Act 22 offers tax breaks for individual traders and investors who become bona fide residents of Puerto Rico. This incentive is primarily used to eliminate capital gains on stocks, bonds, and cryptocurrencies.
Key incentive highlights:
- Act 22 cuts capital gains taxes to zero on any appreciation of your stocks, bonds, crypto, etc. incurred after you move to Puerto Rico.
- Enjoy a 0% tax rate on interest, dividends, and royalties from Puerto Rican sources.
Important: Act 22 can only slash your taxation on
income originating in Puerto Rico; not elsewhere. Full capital gains tax elimination only applies to capital gains accrued on your assets
after you moved to Puerto Rico.
This means that if you invested in Apple stock 20 years ago, and are sitting on serious capital gains before moving to Puerto Rico, you won’t be able to avoid paying tax on it.
But any stock appreciation during your time in Puerto Rico as a bona fide resident will be tax-free.