For the right privately held business owner—one who operates export-oriented services, seeks to optimize taxes on investment income, or is planning a business exit or succession—Act 60 can provide meaningful efficiencies on Puerto Rico-sourced income.

Key benefits include a 4% corporate income tax rate on qualifying export services and, for individuals meeting strict residency rules, exemptions or preferential rates on interest, dividends, and certain post-residency capital gains. These incentives are granted only through formal tax exemption decrees and require ongoing compliance with U.S. and Puerto Rico rules.

At Bespoke Capital, we work exclusively with successful business owners. We have seen how Act 60 can align with broader exit planning, wealth preservation, and family legacy goals—when approached correctly. I know this firsthand from spending part of my time in Puerto Rico and experiencing the lifestyle and opportunities the island provides.

This whitepaper is provided for educational and informational purposes only and does not constitute tax, legal, investment, financial, or business advice. Readers should consult their own qualified tax, legal, and financial professionals before taking action.

Benefits are available only through a formal decree issued through the Puerto Rico Department of Economic Development and Commerce’s Office of Incentives for Businesses. Decrees are not automatic and carry ongoing reporting, residency, operational, contribution, and other compliance requirements.

Act 38-2026 extended the Individual Resident Investor program through December 31, 2055. The applicable treatment depends principally on when the application is filed. Applications filed on or before December 31, 2026 generally remain eligible for the prior rules, subject to decree approval and continued compliance. Applications filed on or after January 1, 2027 are generally subject to a 4% Puerto Rico rate on covered interest, dividends, and post-residency capital appreciation, subject to the decree, applicable law, and any more favorable treatment otherwise available.

For the right client profile—typically an owner of a scalable service-based business with strong cash flow and investment holdings—Act 60 can support several strategic objectives:

A qualifying export-services business may be subject to a 4% Puerto Rico income-tax rate on eligible export-services income. U.S. federal and other tax consequences depend on the entity structure, ownership, income sourcing, decree terms, and the taxpayer’s specific facts.

Distributions of qualifying earnings and profits may also receive favorable Puerto Rico tax treatment in certain circumstances. Additional property-tax and municipal-license-tax benefits may be available, depending on the decree and applicable law.

Eligible individual resident investors may receive an exemption or preferential Puerto Rico rate on certain interest, dividend, and capital-gain income, depending on the application date, decree terms, acquisition date, and income source.

Federal income-source rules remain separate. Relocating to Puerto Rico does not automatically change the U.S. federal tax treatment of a mainland business sale, U.S. securities, or other U.S.-source income. These issues must be evaluated with qualified Puerto Rico and U.S. tax and legal professionals.

For the right owner, Act 60 may be one component of a broader business-transition, wealth-preservation, and family-planning strategy. Any potential benefits must be evaluated in the context of the owner’s business structure, income sourcing, transaction timing, residency facts, family goals, and ongoing compliance obligations.

Beyond taxes, Puerto Rico offers a U.S. territory environment with vibrant communities, modern infrastructure in areas like Dorado Beach, and a growing ecosystem of like-minded professionals.

These are not blanket benefits. Income must be properly sourced to Puerto Rico under strict rules, and federal tax treatment under IRC Section 933 depends on bona fide residency.

Act 60 is selective by design. To qualify:

Satisfy the federal bona fide residency requirements, including the applicable presence test, having no tax home outside Puerto Rico, and having no closer connection to the United States or another country. Spending at least 183 days in Puerto Rico is one common way to satisfy the presence test, but the complete analysis depends on the individual’s facts.

Prior-residency restrictions also apply. For applications filed after December 31, 2026, the individual generally must demonstrate that he or she was not a Puerto Rico resident during at least the six years preceding the move.

Comply with the annual $10,000 contribution requirement, which is allocated among qualifying Puerto Rico nonprofit organizations and the Special Fund for Social Equality, including at least $5,000 for qualifying organizations addressing child poverty.

For the export services decree, the company must perform qualifying activities from Puerto Rico and meet employment or investment thresholds.

I founded the firm in 2012 with a clear mission—to help owners achieve financial independence through tailored strategies in exit planning, tax efficiency, asset protection, and wealth transfer.

I understand the planning and lifestyle considerations firsthand through my own relocation to Puerto Rico. Living and working on the island has given me a direct appreciation for its opportunities, quality of life, and business environment- while reinforcing the importance of approaching Act 60 with qualified tax and legal specialists.

If you are a business owner evaluating whether Act 60 could support your goals, we invite you to schedule a confidential conversation. Together, we can assess fit, review your unique situation, and determine if a deeper analysis with your specialists makes sense.

Contact us at cody@bespokecap.com to begin the discussion.

This whitepaper is provided for educational and informational purposes only and does not constitute tax, legal, investment, financial, business, valuation, transaction, or other professional advice. It is not an offer, solicitation, or recommendation to buy or sell any security, business interest, or other asset. No representation is made that any transaction, planning strategy, valuation, tax result, sale price, or other outcome will be achieved.

Examples and questions included in this whitepaper are general and may be hypothetical or illustrative. They are not intended to represent any specific client, company, transaction, investment recommendation, or strategy. Actual outcomes depend on individual facts, market conditions, buyer interest, deal structure, professional execution, and other factors.

Tax laws, deal structures, legal agreements, valuation methods, accounting standards, estate-planning techniques, and market conditions are complex and subject to change. Certain planning strategies require substantial lead time and may not be available or appropriate in every situation. You should consult your own qualified tax advisor, attorney, accountant, valuation professional, investment banker, and financial professional before taking action. Raymond James and its financial advisors do not provide tax or legal advice.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Bespoke Capital is not a registered broker/dealer and is independent of Raymond James Financial Services.

This content was created with the assistance of artificial intelligence (AI) and reviewed for quality and relevance. AI-assisted content may not reflect all current developments or nuanced human perspectives.

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