Starting a business in Puerto Rico
- Rank of 25
- 22
- Index score of 100
- 69
The case for Puerto Rico
Puerto Rico suits a services business that can run from the island and sell to clients elsewhere, and an owner who is willing to live there. A company with an Act 60 export services decree pays a fixed 4% on that income, against a headline rate of up to 37.5%. A corporation is formed online with the Department of State for $150, and a US citizen can move there without a visa. Bona fide residents generally pay no US federal income tax on Puerto Rico source income.
It suits less well a passive holding company, a business serving the local market, or an owner who is not a US citizen, as foreign nationals need US immigration status such as an EB-5 green card. The main drawback is that the benefits depend on real residence and a decree: for Act 60 investor applications filed from 1 January 2027, the rate on post move gains, interest and dividends rises from 0% to 4%, and US citizens still pay US federal tax on income from outside Puerto Rico.
How a company is taxed
The normal tax is 18.5% plus a surtax of up to 19%, giving a top rate of 37.5%. An Act 60 export services decree fixes the rate at 4%, with dividends from that income exempt. There is no VAT; the sales and use tax is 11.5%. Puerto Rico income tax rises to 33% above $61,500 of net taxable income. Long-term capital gains and dividends are taxed at 15%.
Setting up and running a company
Online, on filing
A stock corporation is formed online with the Department of State for $150, or an LLC for $250, with no set waiting period. A corporation files a $150 annual report by 15 April; an LLC pays a $150 annual fee.
Resident agent
The certificate must name a designated office and a resident agent in Puerto Rico. Directors need not live there, and audited accounts are needed once the volume of business passes $10 million.
No register
There is no beneficial ownership register. FinCEN's March 2025 interim rule removed federal beneficial ownership reporting for companies formed in the US, including Puerto Rico.
US rules apply
US citizens can move to Puerto Rico freely. Foreign nationals need US immigration status, such as an EB-5 green card from $800,000 in a targeted employment area or $1,050,000 elsewhere.
Fees shown are government registry fees only. Agent, licence, office, audit and professional costs are additional and usually make up most of the cost of setting up.
Life in San Juan
- US federal tax
- Bona fide residents generally leave Puerto Rico source income off their US return, but US citizens are taxed by the US on income from elsewhere. US Social Security and Medicare apply.
- Act 60 investors
- Applications filed by 31 December 2026 keep 0% on post move capital gains and on Puerto Rico source interest and dividends. From 1 January 2027 the rate is 4%.
- Flights
- San Juan's Luis Munoz Marin airport has nonstop flights to about 60 destinations, mostly on the US mainland, plus Madrid, Bogota and Panama City.
- Languages
- Spanish and English are both official languages.
- Banking
- Banks operate within the US system, so US dollar accounts and US payment rails are standard.
Wealth, inheritance and a family home
- Inheritance and gift tax
- US citizens living in Puerto Rico generally stay within US federal estate and gift tax, which in 2026 exempts $15 million per person and charges 40% above that, though special rules apply to people whose citizenship comes only from Puerto Rico.
- Wealth tax
- Puerto Rico has no net wealth tax, though municipalities levy property tax on real and business personal property.
- Capital gains
- Long-term gains are taxed at 15%, while an Act 60 resident investor pays 0% on gains built up after moving if they applied by 31 December 2026, or 4% if they apply from 2027.
- Personal income tax
- Puerto Rico taxes residents on worldwide income at up to 33%, and bona fide residents generally pay no US federal income tax on Puerto Rico source income, though US citizens still pay it on income from elsewhere.
- Tax information exchange
- Puerto Rico sits inside the US system, which exchanges information through FATCA and tax treaties rather than the OECD Common Reporting Standard.
- Buying a home
- Act 60 resident investors must buy a home in Puerto Rico from an unrelated seller within 2 years of their decree and keep it as their main residence, and from 2027 applicants must have the title recorded in the Property Registry.
The Puerto Rico dossier
About 30 pages on business and life there, with official sources.
Questions people ask about Puerto Rico
The normal tax is 18.5%, plus a graduated surtax of up to 19% on surtax net income above $275,000, for a top combined rate of 37.5%. A proposal to cut the top rate was not enacted.
An eligible business exporting services from Puerto Rico can obtain a decree fixing its income tax at 4% on that income, with dividends from it exempt. Act 38-2026 did not change this.
Bona fide residents generally exclude Puerto Rico source income from US tax under section 933. US citizens still pay US tax on income from outside Puerto Rico, and US Social Security and Medicare apply.
A resident investor pays 0% on capital gains built up after moving and on Puerto Rico source interest and dividends, if the application was filed by 31 December 2026. They must give $10,000 a year to approved charities, pay a $5,000 annual report fee and buy a home within 2 years.
Under Act 38-2026, applications filed from 1 January 2027 pay 4% on that income, 5% on pre move gains recognised after 10 years, and need 6 years of prior non residence. The programme now runs to 2055.
A stock corporation costs $150 to form online with the Department of State, and an LLC $250. The corporation annual report and the LLC annual fee are each $150, due by 15 April.
No. Puerto Rico charges a sales and use tax (IVU) of 11.5%, of which 10.5% is state and 1% municipal, with a 4% rate on business to business and designated professional services.
Puerto Rico has no beneficial ownership register. Since FinCEN's March 2025 interim rule, companies formed in the US, including Puerto Rico, no longer report beneficial owners under the Corporate Transparency Act.
Thinking about Puerto Rico?
A short call settles what a ranking cannot: your residence, your structure and your timeline.