Trading from Puerto Rico

Discussion in 'Taxes and Accounting' started by braman09, Apr 9, 2014.

  1. braman09

    braman09

    I believe if you live in Puerto Rico, you don't have to pay the US federal income tax. Is that true ? Any one trading from PR ?
    Thanks,
    -br
     
  2. Clint

    Clint

    No need to move to Malta,

    http://etfdailynews.com/2014/04/09/puerto-ricos-tax-benefits-more-than-the-better-florida/
     
  3. Clint

    Clint

  4. tjtrend

    tjtrend

    I have been here for a few months. Some of that content is not accurate... Dividends and interest do not qualify for preferential tax treatment unless the issuer is PR based. There are a few exceptions
    w/ complicated tax treatment that I am investigating ( pass through
    entities- reits, mlp's etc.). I am a little dismayed that the likes of Casey and Schiff are hyping this program now. No Bueno... BTW , if you are a US tax slave, moving to Malta won't help you.
     
  5. I'm working on a blog about Puerto Rico tax incentives for American investors Act 22 and export service businesses Act 20.

    You are right the reality does not match the hype.

    There is some confusion about active trading gains and whether they qualify for the passive income exclusion under act 22.

    Americans with a bona-fide residence (tax home) in Puerto Rico still must pay taxes in America - to the IRS - on all worldwide income sourced outside of Puerto Rico. Interest and dividends are sourced where the payer of the income is located and that's almost always outside of Puerto Rico , so it's still taxed in the US. Apple pays dividends from the US.

    The big tax benefit is on capital gains which are sourced where the seller's tax home is. But some local tax advisors question whether Hacienda will allow act 22 exclusion on very active trading since they may argue it's not passive income.

    I'm trying to get a definitive answer on that Important question. I'll publish the blog afterwards.
     
  6. From what I understood when this was on CNBC was that you will pay a 4% flat tax on all income.

    Now I have spent some time there and know the economy is in a huge hole. There are highways and bridges started that are just left sitting. This tax is ment to get the economy moving there.

    I will warn those who don't know the area. There are some areas with high crime rates, the hospitals and Dr's suck BIG TIME and everyone is looking for a bribe (It business Latin American Style).
     
  7. Catoosa

    Catoosa

    I lived there for 4 years. People lived in cardboard boxes or anything else they can find to sleep in. I lived most of that time within a military base with MP at all gates. The base was a very nice safe place; However, outside of the base was the pits. Any house worth anything was made out of poured concrete with bars in all doors and windows and in a neighborhood with similar houses. Life there is like that in Central America or other islands in the Caribbean. Every day is an adventure with a ?.
     
  8. I am almost done with my new blog on Puerto Rico taxes.

    Great news, traders can exclude their short-term and long-term capital gains under act 22 in PR and from the US IRS under Section 933.

    Stay tuned.
     
  9. Great news! Got the answer. Short-term capital gains are excluded. It's irrelevant if they are daytrading positions.

    My blog is being edited now and should post early next week.
     
    WS_MJH likes this.
  10. tjtrend

    tjtrend

    Treatment of s/t gains is the same. This info is available on any of the various Government sites dealing with Act 20/22. I would be interested on any opinion on how pass through entities are treated, as that seems to me to be a way to achieve income and still be compliant. I don't know if k-1's and expense items therein would be problematic etc.
    In regards to quality of life- conditions vary greatly by area. Suffice it to say that the better neighborhoods are OK. You wouldn't hang around the Projects in NY or Chicago, same applies here. Compliance with the residency tests is not easy. Bottom line: I wouldn't consider
    the move unless you expect your income to be over 500k and are pretty mobile/flexible.
     
    #10     May 10, 2014