At first glance, it might seem like the wave of crypto traders moving to Puerto Rico are searching for an affordable place to buy up beachfront property, enjoy island life, and soak up the sunshine, but there’s much more to it. While all of these are some of the best perks of moving to Puerto Rico, the uptick in immigration to Puerto Rico can be attributed to tax laws that were put in place in 2012.
Understanding Puerto Rico as a Tax Haven
In an effort to bring international business and create jobs in a struggling economy, Puerto Rican government passed two separate laws that aimed to attract entrepreneurs and corporations. The first, called Act 20, set a 4% tax for businesses that export services, which is a massive difference from the 21% tax in the United States. Though Act 20 is important, it was the second law, Act 22, that perked up the ears of crypto traders. Act 22 made it so that income from investments, interest, and dividends is completely untaxed. For crypto traders, this means they can keep their U.S. passport, live on a beach, make money trading, and avoid paying taxes on the money they make.
The Blockchain Surge
Puerto Rico is quickly becoming more than just a tax haven for investors; it is becoming a hub of all things blockchain. There are cryptocurrency businesses opening offices in Puerto Rico, large crypto conferences that bring in big names from the industry, and a professional network of other game-changers in blockchain. It’s becoming less important to move for tax purposes and more important to relocate to be a part of the community that’s cropping up in PR.
Impact on the Local Economy
Leaders at the Department of Economic Development and Commerce in Puerto Rico are happy with the job creation coming from the new tax laws. Between 2015 and 2019, Act 20 and 22 added upwards of 40,000 jobs to the Puerto Rican economy. These jobs range from customer service positions in call centers to advertising and public relations roles. Though job growth is good, critics of the tax laws are skeptical that there is an overall benefit to the local population.
With high-end investors and more mega-rich entrepreneurs moving to the area, real estate prices in Puerto Rico are soaring, pricing local families out of the market. Both laws were passed in an effort to “re-invent” Puerto Rico, but local communities are just hoping that reinvention doesn’t leave them behind.
Making the Move
People are making the jump to PR quickly, so it’s best to get ahead of the curve as much as you can. Moving to Puerto Rico is fairly simple for U.S. citizens, since the island is a U.S. territory, new residents get to keep their citizenship status in the United States. If you are considering making the transition for financial or lifestyle purposes, we highly recommend taking a visit to Puerto Rico to see if you can imagine a life there. If you need short-term accommodations for your visit, or if you are looking for real estate help, visit our website or talk to our team at Caribbean Luxury Rentals today and we’ll lay out the options for you!
References:
- https://www.coindesk.com/markets/2021/08/12/living-in-puerto-rico-where-the-taxes-are-low-and-crypto-thrives/
- https://cointelegraph.com/news/puerto-rico-sees-resurgence-of-interest-among-crypto-rich
- https://www.bloomberg.com/news/features/2021-12-11/crypto-rich-are-moving-to-puerto-rico-world-s-new-luxury-tax-haven
- https://www.washingtonpost.com/technology/2022/01/13/crypto-puerto-rico/