Presence
Usually 183 days in Puerto Rico for the year — or another qualifying presence test. Boarding passes, phones, and calendars are evidence. Memory is not.
Incentives Code
Act 60, as it stands now.
The Puerto Rico Incentives Code (Act 60-2019) is the current frame for what used to be Act 22 and Act 20. The 2026 amendment — Act 38-2026 — extends the individual program to 2055 and changes the rate for new applicants from 2027.
Rate lock is generally by application date, not by when the decree is later issued. Do not wait on a closing to start the file.
Chapter 2 · formerly Act 22
Individual investors
For U.S. persons who become bona fide residents of Puerto Rico. Interest, dividends, and post-move capital gains can be taxed at 0% if the decree is filed in 2026 — or 4% for applications filed from 2027 under Act 38-2026.
- Bona fide residency: presence, tax home, closer connection
- Built-in gains before the move stay in the U.S. system
- Annual giving and principal-residence conditions apply
Chapter 3 · formerly Act 20
Export of services
Eligible services performed from a bona fide Puerto Rico office for clients with no island nexus — consulting, software, finance, creative, and other DDEC-approved work. The headline rate is 4%. The rate most companies actually take is 2% for the first five years when annual business volume is $3 million or less.
- 2% for five years if volume is $3M or less; 4% thereafter (4% from day one above $3M)
- 100% exemption on distributions from the exempt business
- 100% property-tax relief for five years at the small-volume tier, then 75%
- Substance: real office, real work, real export clients
The export rate is 2% for most files
Chapter 3 is often sold as a flat 4%. The statute is more useful than that. If annual business volume is $3 million or less, net income from the exempt operation is generally taxed at 2% for five years, then 4%. Above $3 million, 4% from day one. A novel-pioneer activity can take 1%. Volume is gross, not net.
| Annual business volume | Years 1–5 | Thereafter |
|---|---|---|
| $3 million or less | 2% | 4% |
| Over $3 million | 4% | 4% |
Small-volume files also take 100% property-tax exemption for five years, then 75%. We check volume before we file — most of the businesses we see qualify for 2%.
IRC 933 / 937
The three federal tests
The decree is a Puerto Rico instrument. The U.S. exclusion of Puerto Rico-source income for bona fide residents sits in IRC §§ 933 and 937. Fail the federal tests and the local grant will not save you.
Tax home
Your regular place of business and abode cannot sit on the mainland during the year. A Pied-à-terre and a Zoom calendar in Miami is a fact pattern, not a plan.
Closer connection
Family, clubs, voting, banking, cars, and doctors should point here. The IRS reads the whole life, not the lease.
What Act 38-2026 changed
Filed in 2026
New individual applications submitted on or before 31 December 2026 may still take the 0% Puerto Rico rate on interest, dividends, and post-residency capital gains (with the existing 5% path on certain pre-move gains after ten years).
Filed from 2027
New individual applications generally take a 4% preferential Puerto Rico tax on those same categories. A six-year prior non-residency showing and a principal residence titled here within two years also apply.
Export services
Act 38-2026 did not rewrite this chapter. Volume of $3 million or less still takes 2% for five years, then 4%. Above $3 million, 4% from day one. Substance — a real office and real export work — is still the whole game.
The island, in numbers
This incentive already moved thousands of files.
Act 60 is not a rumor. DDEC has been granting export-service and resident-investor decrees for more than a decade. The 2% band is where most operating companies actually sit.
2%
First-five-year export rate when annual volume is $3 million or less — the tier most businesses qualify for.
100%
Approval on Act 60 applications Bonn LLC has filed. Not a government guarantee — our record.
3,899
Export-service decrees granted in Puerto Rico from 2012 through 2024 (DDEC / GAO).
5,852
Resident-investor decrees in the same window. Not everyone who holds a decree has relocated — the ones who live the tests keep the benefit.
Decree counts: Puerto Rico DDEC data as reported by the U.S. Government Accountability Office (GAO-26-107225), 2012–2024. Approval rate is Bonn LLC’s filing record.
Illustration
What the rate difference looks like on paper.
A simplified picture of Puerto Rico tax on passive income under a valid individual decree versus a typical U.S. long-term capital-gains stack. It is not your return.
U.S. stack (illustrative 23.8%)
$123,760
Act 60 filed in 2026 (0%)
$0
Act 60 filed from 2027 (4%)
$20,800
23.8% is the 20% long-term rate plus 3.8% NIIT — many filers are lower or higher. Pre-move built-in gains, state tax, and source rules are ignored here on purpose. This is a teaching tool.
Questions we actually get
This page is a briefing, not an opinion letter. Numbers and deadlines can move with regulation, FOMB endorsement, and your own facts.
Bring the facts. We will tell you if Act 60 fits.
A consult is a working session, not a pitch. If the profile is wrong for a decree, we say so.