Act 60 in Puerto Rico is attracting crypto companies and holders, as residents take advantage of decades-old tax laws to keep their US passports.
The year-long tropical climate and favorable crypto-taxation make Puerto Rico a popular destination for the US crypto-rich. The tax rules exempt non-Puerto Rican residents from paying any capital gains tax on gains gained while on the island. About ten years ago the rules came to invite cash and people to the island, when both were running out. Nobel Prize-winning economist Joseph Stiglitz has said he was skeptical of the economic benefits of the tax plan.
Giovanni Mendez, a corporate and tax attorney whose job it is to ship the new Puerto Rican, is being kept busy. About 50% of their clients are crypto investors or companies. The primary tax advantage is that if one lives on the island for at least 183 days a year, they are not taxed capital gains. In the US, short-term capital gains are taxed at up to 37%, while long-term capital gains are taxed at up to 20%. The latter includes crypto held for over a year. Corporate tax has also been cut by 17% compared to the US mainland.
Former mainland residents testify
It is important to note that gains earned after residence are exempt from taxes and gains earned before residence are not. About visiting the island, American crypto investor George Burke said, “I got on a plane, I set up my residence the same day I got off the plane renting a room at my friend’s house, and I watched started.”
Theodore Agranat, a blockchain investment fund head who recently moved to Puerto Rico, likes the open-minded community he lives in. He and his wife homeschool their children and even add crypto-related topics to their curriculum, such as NFTs, crypto games, and token-swapping.
David Johnson, a former Austin resident, moved to Puerto Rico with his family and company. He says that his office building houses several 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 upset some locals. Property prices and the cost of living have soared, and resentment is mounting. “Lack of inventory and high demand have led to price increases that we’ve never seen before in Puerto Rico,” said Francisco Diaz Fournier, of Luxury Collection Real Estate.
Keiko Yoshino, a former Washington DC government employee, is trying to bridge the crypto knowledge gap and sees crypto as an opportunity to build a community.