Why Europeans Should Consider Moving to Puerto Rico: A Strategic Guide to Tax Benefits and Business Opportunities

As economic pressures and high taxation continue to affect individuals and businesses across Europe, many are exploring new jurisdictions that offer not only financial relief but also stability, lifestyle, and access to global markets. Puerto Rico—a U.S. territory in the Caribbean—offers a unique combination of tax incentives, quality of life, and legal protections under U.S. law.

This guide outlines the key benefits available to European individuals and corporations, including 0% tax on capital gains, 4% corporate tax rates for exporters, and exemption from certain U.S. federal taxes. With attractive residency options, affordable living costs, and robust infrastructure, Puerto Rico presents a compelling destination for relocation and investment.

European Tax Environment at a Glance

• Income taxes exceeding 45% in countries like France, Germany, and Sweden
• Capital gains taxes ranging from 20% to 30%
• Social security contributions adding an additional 15–30%
• Corporate taxes typically between 20%–30%

Comparative Tax Rates (Europe vs. Puerto Rico)

Introduction to Puerto Rico’s Tax System

• Act 60 is a legal framework that consolidates previous laws (Acts 20 & 22)
• Targets new residents and export businesses
• Benefits include dramatically reduced taxes for individuals and businesses

Tax Benefits for Individuals

• 0% Long-Term Capital Gains Tax (post-residency)
• 0% Tax on Dividends and Interest Income (Puerto Rico-sourced)
• No Tax on U.S. Federal Income for Puerto Rico-earned income
• Residency Requirement: Minimum 183 days per year

Annual Tax Savings Example for a €1M Capital Gain

Legal and Business Advantages

• Protection of U.S. intellectual property laws
• Access to U.S. banking and financial systems
• U.S. dollar as official currency
• No requirement to renounce European citizenship

Cost of Living and Lifestyle Comparison

Compared to major European cities, Puerto Rico offers:

• Lower cost of housing, utilities, and labor
• Affordable private healthcare
• Year-round warm climate and natural beauty
• Growing communities of European and American expats

Residency Requirements and Legal Steps

To benefit from Act 60, individuals must:

1. Establish Bona Fide Residency (183+ days, tax home, and closer connection tests)
2. Apply for an Individual Resident Investor Decree
3. Submit Annual Reports and maintain local presence

Checklist for Becoming a Bona Fide Resident

• Move to Puerto Rico
• Obtain PR driver's license
• Register to vote locally
• Open Puerto Rico-based bank accounts

Relocation Strategy for Europeans

Step-by-Step Plan:

1. Evaluate potential tax savings with an advisor
2. Visit Puerto Rico to scout housing and business locations
3. Establish residency before year-end for full-year benefits
4. Apply for Act 60 incentives and register your business locally

Real-Life Case Studies

Case Study 1: Tech Entrepreneur from Germany

• Moved company’s HQ to Puerto Rico
• Reduced effective tax rate from 32% to 4%
• Saves over €300,000 annually

Case Study 2: French Investor

• Realized €5M capital gains in crypto portfolio
• Paid €0 under Puerto Rico’s investor incentives

Risks and Considerations

• Need for legal and tax compliance with both PR and EU laws
• Must establish real economic presence
• Currency risk for Euro-based earners
• Cultural and language adaptation (Spanish widely spoken)

Tips: Work with dual-jurisdiction advisors and local experts

Contact

Puerto Rico stands as one of the most attractive destinations for Europeans seeking a legal, financially rewarding, and lifestyle-rich relocation. Whether you are an investor, entrepreneur, or remote professional, Act 60 provides a gateway to significantly reduce your tax liabilities while enjoying all the benefits of a Caribbean life with U.S. protections.

Next Steps:

• Schedule a consultation with an international tax specialist
• Join expat forums and relocation networks
• Explore residency, investment, and business registration options