Advice on tax implications

Best of luck.

Welcome to the forum Christian.  You are correct regarding payment of income tax.  Here's a link to IRS information on the topic of federal taxes for Puerto Rican residents.

Thank you, Warner!

ChristianEKR wrote:

Hi Everyone,

My name is Christian and my wife and son and I are looking to move to Rincon/Aguada area in the next upcoming year. We are a young, active, and hopefully growing family and want to set up Puerto Rican roots. We grew up going to Rincon regularly and want to immerse ourselves in the culture, environment, and lifestyle permanently.

I am C-Suite Operations and Legal Executive and at a Bay Area software company and my wife is a Marketing Executive at that same company. We both work remotely and are looking to move to the island for more outdoor time, less traffic, more affordable housing, and a closer commute to family and friends on the East Coast.

We do have some questions about the tax implications of our situation so any insight we can gain would be great. We would draw salary from a Delaware C-Corp and would not have any "on-island" sources of income. I want to begin wrapping up our affairs but do not want to do so if we are going to increase our tax liability. As I understand it, we will pay our regular Federal Income tax and then will receive a credit for Puerto Rico? Can anyone advise or does anyone have any resources they can connect me with?

Looking forward to learning more!

You should consult with a tax lawyer in PR and maybe consider joining the act 20/ 22 program. It is designed specifically for service type companies where the vast majority of the business is with the US and other countries and only partial to none with PR itself. Tax advantages can be huge. go into google or facebook and search for act 20/22

I wish I could however my company is post series A round of venture capital funding so I unfortunately cannot unwind the c-Corp from Delaware at this time. If you have an on island tax attorney whom you could recommend would be greatly appreciated!

ChristianEKR wrote:

I wish I could however my company is post series A round of venture capital funding so I unfortunately cannot unwind the c-Corp from Delaware at this time. If you have an on island tax attorney whom you could recommend would be greatly appreciated!

I dont but participants ofact 20/22 do know tax lawyers. Check with them.

I have heard of some ppl that create an act 20/22 (forget which one) company, that then bills services to their 'home' business, be it consulting or other, to essentially move profits from one bucket, to another, thus lowering their tax liability.

More importantly, I would advise a 3-6 month stay in PR first, to see if you like it here before making a large move.

I have met others from the mainland that have left as I was arriving, and now I myself am leaving too.

Good luck.