Understanding the Act 60 Puerto Rico requirements is essential if you want to legally benefit from one of the most powerful tax incentive programs available today. The Puerto Rico Incentives Code combines earlier incentives like Act 20 Puerto Rico and Act 22 Puerto Rico into one unified system.

This guide breaks down all the key requirements for individuals and businesses in a simple, clear format.

1. Act 60 Puerto Rico Requirements for Individuals

These rules mainly apply to investors, traders, and high-net-worth individuals seeking 0% tax on capital gains, dividends, and interest.

A. Bona Fide Residency Test

To qualify, you must become a bona fide resident of Puerto Rico by meeting ALL three IRS tests:

1. Physical Presence Test

• Spend at least 183 days per year in Puerto Rico
• Alternatively, meet other IRS day-count formulas

2. Tax Home Test

• Your main place of business must be in Puerto Rico
• You cannot have a primary tax home outside Puerto Rico

3. Closer Connection Test

• Stronger ties to Puerto Rico than any other location
• Includes:
  • Primary residence
  • Family location
  • Bank accounts
  • Driver’s license and voting registration

B. Additional Individual Requirements

• Apply and receive an Act 60 tax decree
• Make annual charitable donations (typically $10,000)
• Purchase residential property in Puerto Rico (required for new applicants)
• File annual compliance reports
• Pay annual government fees

2. Act 60 Puerto Rico Requirements for Businesses (Export Services)

These apply to entrepreneurs and companies seeking a 4% corporate tax rate.

A. Eligible Business Activities

Your business must provide services to clients outside Puerto Rico, such as:

• Consulting and advisory services
• Marketing and digital services
• Software development and IT
• Financial and investment services

B. Core Business Requirements

• Operate a Puerto Rico-based entity (LLC or corporation)
• Maintain a physical office in Puerto Rico
• Generate income from export services only
• Have real operations (not a shell company)

C. Employment Requirements

• Typically hire at least one full-time Puerto Rico employee
• Some businesses may require more employees depending on revenue

D. Tax Decree Requirement

• Submit an application through Puerto Rico’s incentives portal
• Pay application fees
• Receive an official tax decree confirming eligibility

3. Ongoing Compliance Requirements

Both individuals and businesses must maintain compliance to keep benefits.

A. Annual Filings

• Submit annual reports to Puerto Rico authorities
• File Puerto Rico tax returns

B. Fees & Contributions

• Pay annual compliance fees
• Make required charitable contributions (individuals)

C. Record Keeping

• Maintain proper financial and legal documentation
• Prove eligibility if audited

4. Key Timeline Requirements

• You must establish residency before claiming benefits
• Tax exemptions apply after becoming a resident
• Decrees are typically valid until 2035 (or longer depending on approval date)

5. Common Mistakes to Avoid

Many applicants fail because they:

• Do not meet the 183-day rule
• Keep stronger ties outside Puerto Rico
• Operate a paper business with no real activity
• Misunderstand U.S. federal tax obligations
• Fail to maintain annual compliance

6. Who Qualifies for Act 60?

You may qualify if you are:

• An investor or stock/crypto trader
• A remote business owner
• A consultant or service provider
• A high-income entrepreneur

7. Why These Requirements Matter

The Puerto Rico government and IRS strictly enforce these rules. If you fail to comply:

• Your tax benefits can be revoked
• You may face penalties or back taxes
• Your decree can be canceled

Final Thoughts

The Act 60 Puerto Rico requirements are strict but highly rewarding. By meeting residency rules, maintaining compliance, and structuring your business correctly, you can legally achieve:

• 0% tax on capital gains (individuals)
• 4% corporate tax rate (businesses)

However, success depends on proper planning and execution.