Expatriate tax ebook - Puerto Rico

What taxes?

Capital gains tax
Inheritance, estate and gift taxes
Investment income
Local taxes
Real estate taxes 
Social security taxes  
Stock options 
Wealth taxes 
Other specific taxes

Capital gains tax
Long term capital gains are subject to a maximum rate of 10% as of 2012. Short term gains (six months or less) are subject to the regular income tax rates. Again, an expatriate's exposure to income tax on capital gains will be determined by their Puerto Rican tax residence status. Under the new provisions of the Puerto Rican Internal Revenue Code, capital gain source of Income on the sale of personal property in general, depends on the residence states of the taxpayer. In general, capital gains tax will be assessed on net gains after deducting the cost of acquisition of the asset from sale proceeds.

Inheritance, estate & gift taxes
A liability for estate and gift depends on the expatriate's Puerto Rico tax residence and domicile position. Non resident expatriates will be subject to Puerto Rico estate and gift taxes only upon the transfer of Puerto Rico property.

Investment income
The expatriate's tax residence status determines whether investment income such as interest, dividends etc, is subject to Puerto Rican income tax.

Local taxes
There are no other local taxes for the expatriate to consider.

Real estate tax
Real estate tax rates fluctuate depending on the municipality the property is located in. Rates vary from 7.80% to 10.33%. Expatriates are affected only if they own real property, i.e. a house, in Puerto Rico.

Social security taxes
United States social security contributions apply in Puerto Rico on the same basis and rates as in the US. Please refer to these rules to determine how they may affect your assignments to Puerto Rico.

Stock options
Stock options may be qualified or non-qualified. The tax advantages of qualified stock options are generally the deferral of the imposition of the income tax on compensation and generating a capital gain later when the shares are disposed of after holding them for at least six months and a day.

Wealth tax
There is no wealth tax in Puerto Rico.

Other specific taxes
There are no other specific taxes related to expatriates in Puerto Rico.


Information about Puerto Rico:

 

Last updated March 2013

This information has been provided by Kevane Grant Thornton, Puerto Rican member firm within Grant Thornton International Ltd, and is for informational purposes only. Neither Kevane Grant Thornton or Grant Thornton International Ltd can guarantee the accuracy, timeliness or completeness of the data contained herein. As such, you should not act on the information without first seeking professional tax advice.

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