Call (787) 641-8447

Experienced Act 22 Attorneys‎

Individual Investors Act (Act 22 Of 2012) / EB-5 Investor Program

Call us today to schedule your initial consultation.

Why invest in Puerto Rico in 2016 and 2017?

Because many encouraging conditions come together to make the island of Puerto Rico as a first-rate investment destination that can be found nowhere else in the world at this particular time.

Top reasons to invest in Puerto Rico, USA

Bullet presentation of tax incentives in Puerto Rico “The Last American Tax Haven” by Castellanos Group

STRATEGIC POSITION / ACCESSIBILITY

  • Puerto Rico is strategically located between the Caribbean Sea and Atlantic Ocean, midway between North and South America, making it the perfect bridge between both continents.
  • It is a 2.5-hour direct flight away from Miami and a 3.5-hour direct flight away from New York or Newark.  Additionally, direct international flights are available to Bogotá, Frankfurt, Panama City, Dominican Republic and beyond.

INVESTMENT PROFITABILITY

  • Puerto Rico offers the benefits of operating within a United States jurisdiction while providing the tax benefits of a foreign tax structure.
  • Strategic industries in manufacturing activities and services as well as in export services can enjoy a 4% fixed income tax rate. Pioneer activities can receive a preferential tax rate of 0% to 1%.
  • Attracting new capital investment from around the world and providing business incentives to local and foreign owned businesses.

STRONG BUSINESS CLIMATE

  • The U.S. Dollar is the official currency.
  • No passport is required for American citizens.
  • The official languages are English and Spanish.
  • There is full presence of international banks.
  • Effective suppliers provide support to life science, electronics, and technology among others.
  • Government business-friendly policies.
  • Our banking system is backed and regulated by the FDIC and we are protected under the Homeland Security Act.
  • Puerto Rico is subject to the American legal framework, including its intellectual property protections.

ACCESS TO WORLD-CLASS INFRASTRUCTURE AND TECHNOLOGY

  • 24,000 miles of highways and mass-transit system recognized by the U.S. Federal Transit Administration as one of the safest and most proficient in the United States.
  • First-rate airport system in the Caribbean and state-of-the-art port facilities, ranked as the 8th busiest port system in the United States.
  • Most technologically advanced convention center in the Caribbean and Latin America.
  • Island-wide broadband service, undersea fiber optic cable, and a robust satellite system.

SPRINGBOARD TO GLOBAL GROWTH

  • The World Economic Forum’s (WEF) 2012-2013 Competitiveness Report ranked Puerto Rico 30 out of 142 countries in the world, first in Latin America and third in all of the Americas.
  • The WEF’s 2012 Global Information Technology Report ranked Puerto Rico 36 out of 142 countries.

LABOR MARKET ATTRIBUTES

  • Hourly earnings in manufacturing average 65% to 80% of the U.S. average.
  • Provides the lowest labor costs of any region under United States jurisdiction.
  • San Juan has the lowest cost of doing business among the largest cities in the United States.
  • Transition to a knowledge based economy.
  • Puerto Rico workforce is made up of highly educated, bilingual and quality conscious professionals who will guarantee Puerto Rico a seat at the global table.

ATTRACTIVE QUALITY OF LIFE

  • Average year-round temperature for the island is 82ºF (28º).
  • San Juan’s quality of life and visitor experience was ranked 3 among 35 top U.S. cities by Travel & Leisure magazine, ahead of Miami, New York City, Los Angeles, San Diego, and Honolulu.
  • Culebra Island’s, Flamenco Beach has been ranked among the world’s best secret beaches on Earth by Travel & Leisure magazine.
  • Legendary renowned architects like Robert Trent Jones, Greg Norman, and Tom Kite designed over 23 golf courses.

Structural reform, economic programs, along with an array of special tax incentives are some of the formidable combinations in which the investors have direct access that distinguish the island as an ideal destination for the relocation or expansion of businesses.

Attracting industries in the following areas:

  • Real Estate
  • Banking
  • Pharmaceuticals
  • Biologics
  • Medical Devices
  • Aviation/ Aerospace
  • Information technology
  • Renewable Energy
  • Specialized Manufacturing
  • Healthcare
  • Retirement Communities

THE INDIVIDUAL INVESTORS ACT (ACT 22 OF 2012)

The enactment of Act 22 of 2012 was established to promote the relocation of high net worth individuals, retirees and investors from the mainland and other foreign countries to Puerto Rico, by providing total tax exemption on all passive income realized or accrued after such individuals become bona-fide residents of the island.

ELIGIBILITY

The tax benefits of Act 22 shall only be made available to those non-resident American citizens and non-resident aliens who become bona-fide residents of Puerto Rico, on or before December 31, 2035. Subject to the condition of not having acquired domicile in Puerto Rico at any moment during the 15 year period preceding the enactment of the above referenced legislation. (January 16, 1997 – January 16, 2012).  In order to become eligible and avail the benefits offered by ACT 22, an individual investor, must be a qualified bona-fide resident of Puerto Rico, as defined in US-IRC §937:

Bona fide resident:

For purposes of this subpart, section 865 (g)(3), section 876, section 881 (b), paragraphs (2) and (3) of section 901 (b), section 957(c), section 3401 (a)(8)(C), and section 7654 (a), except as provided in regulations, the term “bona fide resident” means a person—

(1) who is present for at least 183 days during the taxable year in Guam, American Samoa, the Northern Mariana Islands, Puerto Rico, or the Virgin Islands, as the case may be, and

(2) who does not have a tax home (determined under the principles of section 911 (d)(3) without regard to the second sentence thereof) outside such specified possession during the taxable year and does not have a closer connection (determined under the principles of section7701 (b)(3)(B)(ii)) to the United States or a foreign country than to such specified possession.

 TAX EXEMPTIONS

The tax benefits of ACT 22, provides the following benefits to new Puerto Rico bona-fide residents on qualified investments:

  • 100% tax exemption from Puerto Rico income taxes on all dividends
  • 100% tax exemption from Puerto Rico income taxes on all interest
  • 100% tax exemption from Puerto Rico income taxes on all short-term and long-term capital gains accrued after the individual becomes a bona-fide resident of Puerto Rico if such gain is recognized prior to January 1, 2036.
  • 0% federal taxes on Puerto Rico source income

TAX EXEMPTION DECREE

The individual investor will need to submit an application within the Office of Industrial Tax Exemption of Puerto Rico, in order to obtain a tax grant exemption decree.  The tax decree will be considered to all effects as a contract between the individual investor and the commonwealth of Puerto Rico, as a contractual right, the aforementioned decree was designed to ensure that the tax benefits granted will continue to be secured during the term of the decree, regardless of any future changes in the Puerto Rico tax law.  The term of the tax decree will be valid until December 31, 2035.

PUERTO RICO’S EFFECTIVE USE OF THE EB-5 INVESTOR PROGRAM

  • The EB-5 visa provides a method of obtaining a green card for foreign nationals who invest money in the United States.
  • The EB-5 (Employment-Based, Fifth-Preference Category) Immigrant Investor Pilot Program, which began in 1992, grants U.S. residency to foreigners who make investments and create jobs in the U.S. Rural areas with low population density or depressed urban areas where the unemployment rate exceeds 150% of the national average, can also qualify to host EB-5 regional centers.
  • The investment requirement is typically US $1,000,000 per foreign investor. A minimum investment of US $500,000 is accepted if the investment is made in a designated Target Employment Area, such as a rural or high unemployment area. Puerto Rico is a Target Employment Area and therefore all projects offered by Iconic-Caribbean EB-5 program require only the minimum of $500,000 in investment by the foreign investor.
  • Proponents have said that Puerto Rico is particularly attractive to such investors because of the island’s Spanish language and culture.
  • Under the program, investors don’t have to maintain a physical presence in Puerto Rico, but they are attracted to the program for the U.S. visa it can bring them. That offers investors the advantages of getting their products into the U.S. market, and enabling them to educate their children in the U.S., even if they choose to remain residents of their countries.

The materials and information on this presentation are provided by Castellanos Group for informational purposes only and should not be construed as legal advice. The transmission and receipt of information from this website does not create an attorney-client relationship between the recipient and Castellanos Group, nor is it intended to do so. Persons receiving the information on this website should not act upon the information provided without seeking professional legal counsel.[1]

[1] The information contained in this document is part of the Puerto Rico Industrial Development Company. PRIDCO.

Puerto Rico - America's Last Tax Haven

Act 22 known as the “Individual Investors Act” (the “Act”) and Act 20 known as the “Export Services Act” provide tax exemptions to eligible individuals and businesses. Our tax and local investment division under Act 22, among others, is comprised of experienced attorneys that are ready to help you take advantage of the America’s last tax haven – Puerto Rico.

Mr. Castellanos is personally supervising all legal and consulting work done by Castellanos Group, P.S.C., including but not limited to, client development and client communication, among other areas of the law, including all new investment tax exempt laws (Act 22, etc,) in Puerto Rico. He’s available to our clients 24-7.

Mr. Castellanos’s diverse professional experience has entailed extensive work in the following areas of law: litigation, corporate law, arbitration and mediation, constitutional law, licensing agreements, entertainment law, franchise, intellectual property, construction, health care, copyright, trademark, distribution agreements, estate planning, asset protection, estates, construction agreements, patent related work, bankruptcy (Chapter 7, Chapter 11, Chapter 13, numerous adversary proceedings and contested matters, including jury trial rights in bankruptcy proceedings, security law and regulations and FINRA arbitration, administrative proceedings, among other fields of law.

For more information or an appointment please call us at (787) 641-8447 or use our contact form.

Alfredo Castellanos – LinkedIn Profile

View Alfredo Castellanos's profile on LinkedIn

about-us1