Puerto Rico has fast become the new hot destination for the crypto contingent.
Facebook whistleblower Frances Haugen, who told the New York Times she bought crypto “at the right time,” made the move from San Francisco to Puerto Rico last year, in part to hang with her “crypto friends” on the island. Controversial YouTube star and NFT investor Logan Paul set up shop there, as did crypto billionaire Brock Pierce, a child actor (of “Mighty Ducks” fame) turned 2020 indie presidential candidate.
Redwood City Ventures, a fund that invests in bitcoin and blockchain companies, has also opened an office in the American territory.
For many, the big draw to the island has to do with Act 60, which offers significant tax savings to qualifying residents.
In the U.S., investors pay as much as 37% on short-term capital gains and up to 20% on long-term gains, which applies to crypto and other assets held for more than a year. One of the tax breaks under Act 60, known as the Individual Investors Act, drops that tax obligation down to zero if certain qualifications are met. This is especially huge for entrepreneurs and crypto traders.
There is also a major tax incentive for business owners to set down roots in Puerto Rico. Mainland companies are subject to a 21% federal corporate tax, plus a state tax, which varies. If a firm exports its services out of Puerto Rico, to the U.S. or really, anywhere else, they pay a 4% corporate tax rate.
