# Puerto Rico: Act 60 (0% on Capital Gains for New Residents) > Act 60 (Individual Resident Investor): 0% on capital gains, dividends, and interest for bona fide residents; 4% from 2027; 183-day test, $10k contribution. Tool for US persons. Author: Ксения Воронова — юрист, Family Office (https://wiki.private.law/authors/voronova) Last modified: 2026-07-21T09:38:00.000Z Canonical: https://wiki.private.law/en/puerto-rico-act-60 Topics: investments, migration Jurisdictions: puerto-rico Product tags: tax-regime, residence-permit, wealth-planning Semantic tags: tax-regime, residence-permit, wealth-planning --- ## Concept > 🔗 **Related** > [Georgia](https://wiki.private.law/en/georgia-territorial-tax) · [Cyprus](https://wiki.private.law/en/cyprus-non-dom) Puerto Rico is an unincorporated U.S. territory with a special tax status. For U.S. citizens and residents it is a rare legal way to cut federal tax: a bona fide resident of Puerto Rico is exempt from U.S. federal tax on income sourced on the island (Section 933 IRC; see [IRS Publication 570](https://www.irs.gov/forms-pubs/about-publication-570)), and Act 60 then zeroes out the Puerto Rico tax on passive income itself. This is a tool specifically for US persons — citizens and green-card holders. For non-Americans it is usually irrelevant: they have no U.S. federal tax to begin with, so a territorial regime (for example, Georgia) or a non-dom regime (for example, Cyprus) makes more sense. > 🍓 Status as of June 2026. Act 38-2026 (signed by Governor Jenniffer González in March 2026) extended the individual-investor program from 2035 to 2055. Anyone who obtains a decree by December 31, 2026 keeps 0% on interest, dividends, and gains recognized before January 1, 2036; applications filed from January 1, 2027 carry a 4% rate. Existing decrees keep their terms. The law is signed but awaits final approval from the Financial Oversight and Management Board (FOMB). ## Where the regime came from > 🔗 **Related** > [crypto investors](https://wiki.private.law/en/crypto-jurisdictions) The incentives grew out of two 2012 laws — Act 20 (Export Services Act) for businesses and Act 22 (Individual Investors Act) for private investors. Puerto Rico was then suffocating under public debt and looking for outside capital, and a zero rate on gains and dividends became a direct lure for fund managers and crypto investors from the mainland. In 2019 both regimes were consolidated into a single Incentives Code — Act 60-2019, effective January 1, 2020. The former Act 22 became Chapter 2 (Individual Resident Investor), and Act 20 became the export-services regime with a 4% corporate rate. The terms were tightened along the way: the annual charitable contribution rose from $5,000 to $10,000, and a requirement to buy a home on the island was added. ## What Act 60 provides (Individual Resident Investor, Chapter 2) - 0% Puerto Rico tax on passive income sourced in Puerto Rico (capital gains, dividends, interest) received AFTER you become a resident; - for new applications from January 1, 2027 — 4% instead of 0% (on interest, dividends, and capital gains); - annually: a $10,000 charitable contribution to Puerto Rican nonprofits, plus a one-time $5,000 contribution to the economic-development fund when the decree is granted, and an annual compliance report; - an obligation to buy real estate in Puerto Rico within 2 years (as your primary residence). ## Who counts as a bona fide resident Three tests under §937 IRC: presence (generally at least 183 days a year in Puerto Rico — there are also alternative ways to meet it), tax home (your main place of business is on the island), and closer connection (the center of your personal ties is in Puerto Rico, not on the mainland or in a third country). Fail any one of them and you become an ordinary U.S. taxpayer again. ## What it means in practice > 🔗 **Related** > [crypto investors](https://wiki.private.law/en/crypto-tax-by-country) A typical Act 60 candidate is a fund manager, a founder ahead of selling a stake, or a large crypto investor: someone with big unrealized gains and mobile work. They usually move to Dorado, Condado, or San Juan — relocating family and the center of life first, and only then realizing gains as a bona fide resident. > ⚙️ The personal benefit often pairs with the business side. Chapter 3 of Act 60 (the former Act 20) gives an export-services company a 4% corporate rate: a consultant or manager bills mainland clients through a Puerto Rico LLC, pays 4% on company profit, and distributes dividends at 0% (for decrees obtained before 2027). The two benefits stack in layers. ## The main trap: pre-move appreciation and IRS scrutiny - appreciation built up BEFORE the move stays in the U.S. orbit: realized within 10 years of changing residency, it is taxed under U.S. sourcing rules (built-in gains). On the Puerto Rico side, such pre-relocation appreciation recognized after the move is taxed at 10% if realized in the first 10 years and 5% thereafter; only appreciation that accrues after you become a resident is fully zeroed out; - crypto is under particular IRS attention: when and where a token is "realized" is subject to close review, and a sourcing error costs more than any saving; - the "Puerto Rico source vs. U.S. source" divide is the key watershed; misclassification = U.S. federal tax. ## The IRS under the microscope > 🔗 **Related** > [FATCA and FBAR](https://wiki.private.law/en/fatca-fbar-form-8938) Since 2021 Act 60 has been a dedicated IRS compliance campaign. In July 2023 the agency reported roughly 100 cases against "high-dollar" movers, some aimed at criminal prosecution; in December 2025 the GAO issued a report calling for tighter oversight. Two things are checked: whether the person really lives on the island and whether income sourcing is allocated correctly. The practical takeaway is simple: the move must be real, and the documents gathered in advance. Presence logs, a clean break with the mainland, a sourcing analysis for every large item of income, and careful FATCA and FBAR reporting are the first things an audit looks at. A Puerto Rico decree does not cancel the federal obligations of a US person. ## What Act 38-2026 changed The main fork now is the date of the decree. Anyone who obtains it by December 31, 2026 stays at 0% on interest, dividends, and gains recognized through the end of 2035; applications from January 1, 2027 carry a 4% rate, and the program itself is extended to 2055. Existing decree holders keep their terms unchanged. Entry, meanwhile, was narrowed: applications after 2026 must show that the person was not a Puerto Rico resident for at least 6 years before the move, and the home purchase must be recorded in the Property Registry. An important caveat: the law is signed by the Governor but awaits final approval from the Financial Oversight and Management Board (FOMB), so individual details may still shift. > 🧭 For anyone seriously considering Puerto Rico, the 0% window closes at the end of 2026 — but the rush must not break the bona fide test itself. Existing decree holders have no reason to hurry. And until the FOMB signs off, calculations should be kept with room for possible adjustments. ## Who it's for - U.S. citizens/green-card holders with large capital gains or a large portfolio who are ready to genuinely move to Puerto Rico; - crypto investors (with the caveat about pre-move appreciation and IRS scrutiny); - NOT for non-Americans: they have no U.S. federal tax, and Act 60 offers no benefit — territorial/non-dom regimes are better. ## Risks > 🔗 **Related** > [FATCA and FBAR](https://wiki.private.law/en/fatca-fbar-form-8938) · [renunciation of citizenship](https://wiki.private.law/en/renunciation-statelessness) · [exit tax](https://wiki.private.law/en/exit-taxes-overview) - this is a U.S. tax-planning tool; an error in bona fide status or income sourcing = federal tax plus penalties; - US person status remains: FATCA and FBAR obligations, and U.S. estate and gift tax, do not disappear; - regulatory and political risk: Act 38-2026 raised the rate from 2027, introduced a "not a resident for 6 years" bar for new applications, and still awaits FOMB approval; - genuinely living in Puerto Rico is mandatory. > 🍓 To pull it together: Act 60 zeroes out — and from 2027 almost zeroes out, to 4% — the Puerto Rico tax on investment income for someone who truly moves their life to the island and stays within §933. Built-in gains, income sourcing, and IRS reporting remain a U.S. matter, and the cost of a mistake here is usually higher than the saving itself. For those ready for a more radical step, there is renunciation of citizenship with its exit tax — but that is a different route. ## Frequently asked questions > 🔗 **Related** > [exit tax](https://wiki.private.law/en/exit-taxes-overview) · [crypto taxation by country](https://wiki.private.law/en/crypto-tax-by-country) · [crypto-friendly jurisdictions](https://wiki.private.law/en/crypto-jurisdictions) · [renouncing U.S. citizenship](https://wiki.private.law/en/renunciation-statelessness) · [Cyprus: non-dom](https://wiki.private.law/en/cyprus-non-dom) · [Georgia: territorial tax](https://wiki.private.law/en/georgia-territorial-tax) ### Does Act 60 suit a non-American? Usually not. Without a U.S. tax tail there is no benefit; territorial or non-dom jurisdictions (Georgia, Cyprus, Turkey) make more sense. ### What does it cost per year? A $10,000 charitable contribution to Puerto Rican nonprofits plus a one-time $5,000 contribution to the development fund when the decree is granted, a mandatory purchase of a primary residence within 2 years, and an annual compliance report. ### Is pre-move appreciation exempt? No. Appreciation built up before you become a Puerto Rico resident stays under U.S. tax; the built-in gains rules and the 10-year window matter. ### What changes from 2027? For applications from January 1, 2027, the rate on interest, dividends, and gains rises from 0% to 4% (Act 38-2026); a decree obtained by December 31, 2026 locks in 0% through the end of 2035. Existing decree holders keep their prior terms. The law itself is signed but awaits FOMB approval. --- ## Sources - [IRS Publication 570](https://www.irs.gov/forms-pubs/about-publication-570) --- ## FAQ ### Does Act 60 suit a non-American? Usually not. Without a U.S. tax tail there is no benefit; territorial or non-dom jurisdictions (Georgia, Cyprus, Turkey) make more sense. ### What does it cost per year? A $10,000 charitable contribution to Puerto Rican nonprofits plus a one-time $5,000 contribution to the development fund when the decree is granted, a mandatory purchase of a primary residence within 2 years, and an annual compliance report. ### Is pre-move appreciation exempt? No. Appreciation built up before you become a Puerto Rico resident stays under U.S. tax; the built-in gains rules and the 10-year window matter. ### What changes from 2027? For applications from January 1, 2027, the rate on interest, dividends, and gains rises from 0% to 4% (Act 38-2026); a decree obtained by December 31, 2026 locks in 0% through the end of 2035. Existing decree holders keep their prior terms. The law itself is signed but awaits FOMB approval. --- ## Factual claims - The incentives grew out of two 2012 laws — Act 20 (Export Services Act) for businesses and Act 22 (Individual Investors Act) for private investors. - In 2019 both regimes were consolidated into a single Incentives Code — Act 60-2019, effective January 1, 2020. - A typical Act 60 candidate is a fund manager, a founder ahead of selling a stake, or a large crypto investor: someone with big unrealized gains and mobile work. - Since 2021 Act 60 has been a dedicated IRS compliance campaign. - Entry, meanwhile, was narrowed: applications after 2026 must show that the person was not a Puerto Rico resident for at least 6 years before the move, and the home purchase must be recorded in the Property Registry.