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Pros and Cons of a Puerto Rica residency

One thing I know is that as a Puerto Rican resident a person does not lose their US citizenship. A person does not have to pay US federal income tax and cannot vote in US elections. As I am moving to Puerto Rico full time next month I am considering becoming a resident as I will be moving my online business there too. I am not sure if there are any differences in operating a business in PR versus in the US. I think medicare pays less and what effects might take place with a Republican administration. Has anyone else have any insights?

To my knowledge if you do not get income from US government or a business registered in US then no Federal taxes. You would need to incorporate in PR and may want to take advantage of 20/22 laws I think they would apply (not sure) since it is an export business. If so your business would be subject to a 4% corporate tax.

law 20/22 is worth investigating. I will look into incorporating several business ventures under one corporation if that is possible. Once this permanent move is made (all depending on the sale of my building in the US going through on December 9.) I will kn ow for sure by the end of this month after inspections etc. I have a few projects in the works in Puerto Rico but those will be under another topic.

Yes it it just a different type of corporation if you want to incorporate multiple corporations under 1. You can start multiple little corporations and then bring them under 1 umbrella, like Alphabet and Google for example.

When we first became interested in buying property in PR, we considered it as a business investment.  We currently have an LLC operating college-rental units, and thought that our LLC might purchase the property and do business in Puerto Rico.  This it turns out is not uncommon, but businesses incorporated on the mainland are considered foreign corporations in PR, and must secure a license to do business.  If memory serves, the fees were not prohibitive, perhaps $100.

Of course, if incorporating on the island is a possibility, this will likely cause you fewer headaches.  On top of that, Act 20 may very well apply, provided that your business "is engaged in an eligible service for export."

If going for Act 20 incorporate in PR.

You're probably right Rey, though as far as I can tell, Act 20 and Act 22 were passed largely with the intent to keep tax attorneys employed.

Good information on these tax incentives can be found here

http://puertoricotaxincentives.com/

and here.

http://www.the2022actsociety.org/

The latter link has this to say about non-PR businesses:

"An eligible service done by a foreign entity or non-resident individual that does not relate to business activities within Puerto Rico qualifies as an export service."

I presume the Small Business Administration in PR might be able to answer questions about Act 20.  It might also be a good investment to speak with a tax attorney on the island.

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