Act 60 in Puerto Rico is attracting crypto companies and holders, as residents get to keep their American passports while reaping the benefits of decade-old tax laws.
A year-long tropical climate and friendly crypto-taxation make Puerto Rico a popular destination for the U.S. crypto-rich. The tax rules exempt non-Puerto Rican residents from paying any capital gains tax on gains realized while on the island. The rules came about ten years ago to invite cash and people to the island when both were dwindling. Nobel-prize-winning economist Joseph Stiglitz has said that he was skeptical of the economic benefits of the tax scheme.
A corporate and tax attorney Giovanni Mendez, whose job is to onboard new Puerto Ricans, is being kept busy. Almost 50% of his clients are crypto investors or companies. The primary tax benefit is that if one stays on the island for at least 183 days a year, one is not subject to capital gains tax. In the U.S., short-term capital gains are taxed up to 37%, while long-term capital gains are taxed up to 20%. The latter includes crypto held for more than a year. Corporate tax is also slashed by 17% compared to the U.S. mainland.
Former mainland residents testify
It’s important to note that gains accrued after residency is taken up are exempt from taxes and not gains realized prior to residency. Of the move to the island, American crypto investor George Burke said, “I got on a plane, I established my residency the same day I got off the plane just by renting a room at my friend’s house, and I started the clock.”
Theodore Agranat, a blockchain investment fund head who also recently moved to Puerto Rico, likes the open-minded community he lives in. He and his wife homeschool their children and have even added crypto-related topics to their curricula, such as NFTs, crypto games, and token-swapping.
A former Austin resident David Johnston moved with his family and company to Puerto Rico. He says that the office building he is occupying contains many crypto companies, including Pantera Capital, Redwood City Ventures (a crypto venture capital firm), and NFT.com.
Not everyone is happy
The influx of mainland citizens has irked some locals. Property prices and the cost of living have gone up, and resentment is building. “The lack of inventory and the high demand has resulted in prices that we have never seen before in Puerto Rico,” said Francisco Diaz Fournier of Luxury Collection Real Estate.
Keiko Yoshino, who is a former government employee from Washington D.C. is trying to bridge the crypto knowledge gap and sees crypto as an opportunity to build a community.
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Source: https://beincrypto.com/crypto-rich-flocking-puerto-rico-tax-benefits/