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Act 22 | Individual Investors

Tax Grants / Act 22

What is Act 22?

Puerto Rico’s Act 22 is one of the most competitive tax advantages around, for individuals.

Act 22 grant holders enjoy a total exemption from Puerto Rico income taxes on all passive income earned or accrued after becoming residents of Puerto Rico. Act 22 grantees who are also US citizens would also pay no IRS tax on this same passive income.

By creating Act 22, Puerto Rico seeks to attract new residents who will bring wealth to the island by purchasing real estate, goods, and services, and by making use of the island’s banking system.

All of these things are geared to accelerate the Puerto Rico economy, creating new jobs for Puerto Rican citizens.

The Puerto Rican government will take at least 30 days to process your application, and may have followed up questions. For both the application process and any additional questions that may be asked, it is ideal to have professional assistance.

Benefits of Act 22

Individuals who hold an Act 22 grant enjoy the following tax exemptions:

  • Passive Income Tax Exemptions
  • 0% US federal tax on dividend and interest income that qualifies as Puerto Rico sourced income
  • 100% tax exemption from Puerto Rico taxes on all dividend and interest income
  • Option to reduce any tax that may be owed on non-Puerto Rico sourced income to 0% or 10% through certain Puerto Rico investment vehicles
  • Capital Gains Tax Exemptions
  • 0% US federal tax on capital gains earned after becoming a Puerto Rico resident
  • 100% tax exemption on these same capital gains
  • 5%-10% tax on capital gains accrued prior to becoming a Puerto Rico resident

How long is an Act 22 grant valid?

Act 22 grants are valid through December 31, 2035.

How to Qualify for Act 22

To enjoy these unprecedented benefits, you must apply for an Act 22 grant through the Office of Industrial Tax Exemption (OITE).

  • You must submit to a criminal background check.
  • A non-refundable application fee of $750 must be submitted with your application.
  • An additional fee of $5,000 is due upon grant approval.
  • To be approved, and to retain your Act 22 benefits, you must also become a bona fide resident of Puerto Rico.  Please see our detailed reference on residency.
  • It is also now required that Act 22 grantees purchase a residence property in Puerto Rico within two years of your grant application date.
  • On the application itself, you will need to supply information about your:

* Net worth
* Investment activity
* Residence history
* Criminal history

Application Process for Act 22

We have the ability to streamline the process of obtaining your Act 22 grant by assisting you with developing all of the necessary documents to apply.

Contact us for a free consultation!

We Can Help

Our team possesses the experience and inside knowledge to present your situation in the best light and assist with explaining any nuances that may otherwise be lost in translation when interpreted by government staff who may not be fluent in English.

Contact us for a free consultation!

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