Puerto Rico’s Act 60 is changing. Does the opportunity still add up?

A founder considering Puerto Rico has two calendars open. One belongs to the business: contracts, investment decisions, perhaps a sale. The other belongs to the family: the school year, a partner’s work, visits to parents and the point at which moving becomes practical.

At the end of 2026, a third date enters the calculation. Puerto Rico is changing the terms offered to new applicants under its individual resident investor incentive. The opportunity deserves a fresh assessment, starting with the income a household actually earns.

Act 60 is an incentives code containing several programmes. Someone running an export business and someone living on an investment portfolio may be looking at different provisions, even when both describe their plans as an “Act 60 move”.

The change taking effect in 2027 concerns the individual resident investor programme. Under Act 38-2026, applications from January 1, 2027 generally bring a 4% Puerto Rico rate on qualifying interest, dividends and post-residency capital appreciation, with a benefit horizon through 2055. A more favourable applicable statutory rate can still prevail. Puerto Rico Incentives Code

DDEC says qualifying applications received by December 31, 2026 retain the earlier exemption framework through 2035, even if approval comes later. The filing-fee timestamp matters. Existing compliant decrees are not automatically switched to the new rate. DDEC’s April 2026 guidance

That distinction gives an eligible applicant a reason to assess the timing promptly. It does not establish that a hurried relocation will be worthwhile.

A tax incentive changes the return on a decision. It cannot supply customers, make a difficult school transition easy or create the time a founder needs to establish a functioning operation.

Eligibility and the home purchase deserve attention. The consolidated statute retains its historical restriction on Puerto Rico residence between January 17, 2006 and January 17, 2012, and adds a six-year pre-move nonresidence requirement for applications after 2026. A returning former resident therefore needs a careful eligibility review. Consolidated Act 60, section 1020.02

For new applications from 2027, DDEC also specifies how ownership of the required principal residence must be evidenced: directly, jointly with a spouse, or through a qualifying grantor trust. Buying through an ordinary company should not be assumed to satisfy that commitment. DDEC guidance

The implication is practical. Property ownership, financing and estate planning should be settled together before a family signs a purchase contract.

The business owner needs a separate calculation. Act 60’s export-services provisions generally provide a 4% Puerto Rico rate on eligible net business income under an approved decree. That is a different regime from the incoming investor rate. Receiving a decree for one activity does not establish that every receipt, salary or distribution enjoys the same treatment. Act 60, sections 2031.01 and 2032.01

An owner should begin with a map of the income: fees for work, software subscriptions, dividends, interest and potential gains on a sale. Next comes a map of the people and assets that produce it. Where is the work performed? Who owns the intellectual property? Which company signs the customer contract? Where do the people making decisions live?

Those questions reveal whether there is a business that can sensibly operate from Puerto Rico, and which parts require a different treatment.

Consider two illustrative households, rather than actual client cases. One owns a profitable consulting company whose clients rarely require an in-person meeting. Its founder wants to relocate the operation and remain active for another decade. The other has already sold a business and lives on a diversified portfolio. The first household’s assessment centres on operating income, remuneration and company structure. The second centres on the portfolio’s income sources, acquisition history and expected disposals.

They may choose the same neighbourhood. They should not copy the same tax plan.

Puerto Rico’s treatment is only one part of the tax result. For US citizens and resident aliens, the federal exclusion generally depends on bona fide Puerto Rico residence and Puerto Rico-source income. A Puerto Rico exemption does not make US-source income federally exempt, and gains accumulated before a move require particular attention. IRS Publication 570

Residency also involves more than a day count. The federal framework examines presence, tax home and closer connection. A home, working routine and family life that remain predominantly elsewhere can complicate the position. IRS residence guidance

That is why the household calendar belongs beside the financial model. A founder who expects to travel constantly may have a different practical answer from someone ready to build a settled life on the island.

The model should include setup and recurring professional costs, required donations and filings, housing, insurance, schooling, travel and the cost of maintaining any existing operations. Use actual quotes where possible. Then test a quieter business year, a delayed move and an unexpected return home.

The longer 2055 horizon may appeal to someone planning decades ahead. Existing holders considering an extension must also understand that DDEC links it to a change in rate; the extension is not an automatic continuation of zero taxation. DDEC extension provisions

Puerto Rico can remain a serious proposition for an eligible owner or investor. The strongest case is a household whose business, finances and daily life fit the same location. A useful next step is to test that fit while there is still time to make deliberate choices.

Research checked October 27, 2026. General editorial information; individual eligibility and tax outcomes require advice on the relevant facts.

Could Puerto Rico work for your business and your family?

Reach out to Grey River Associates to discuss your income, ownership structure, relocation timetable and family priorities. Explore how Act 60 may fit your circumstances and identify the tax, legal and practical questions to resolve before making a move.