Act 60 checklist: relocating to Puerto Rico and staying compliant

Individual Resident Investor applications filed by Dec 31, 2026 are processed under the 0% rules (decree expiring Dec 31, 2035), per DDEC Informative Bulletin 2026-004.

Dec 31, 2026, 11:59 PM AST

Countdown to 11:59 PM Atlantic Standard Time (UTC-4). Under the bulletin, the filing time is the Incentives Portal's filing-fee timestamp.

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• Confirm you are looking at the right program. Act 60 is Puerto Rico’s Incentives Code. The two programs people usually mean are the Individual Resident Investor decree (formerly Act 22) and the Export Services decree (formerly Act 20). They have different eligibility rules and benefits.
• Do not treat an Act 60 decree as a waiver of U.S. federal tax. A U.S. citizen or resident who is a bona fide resident of Puerto Rico for the entire tax year generally excludes Puerto Rico-source income from the U.S. return under IRC Section 933, with important exceptions (including U.S. government wages). Income from sources outside Puerto Rico can still be federally taxable, and you may still have to file a U.S. return. See IRS Topic 901 and Publication 570.
• If the 0% Individual Resident Investor rates matter to you, the binding date is when the application is filed, not when the decree is approved. Under DDEC Bulletin 2026-004, applications received by December 31, 2026 at 11:59 p.m., measured by the Incentives Portal’s filing-fee timestamp, are treated as requests for the 0% rate on net capital gains, interest, and dividends, with those decrees expiring December 31, 2035. Applications filed on or after January 1, 2027 are under the amended rates and a longer program term. Details are in our Act 60 after Act 38-2026 guide.
• A decree does not replace bona fide residency. The IRS, not the DDEC, decides whether you meet the federal residency tests for a given year.
• Read the special federal source rules for gains on certain investment property you owned before becoming a Puerto Rico resident. Publication 570 explains that those gains are often not treated as Puerto Rico-source income, with a possible allocation election.

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Presence test

For a U.S. citizen or resident alien, the most commonly discussed path is being present in Puerto Rico for at least 183 days during the tax year. That is not the only way. Publication 570 also describes alternative ways to satisfy the presence test, including:

• at least 549 days in Puerto Rico during the current year and the two immediately preceding years, with at least 60 days in Puerto Rico in each of those three years;
• no more than 90 days in the United States during the tax year;
• more days in Puerto Rico than in the United States, and U.S. earned income of no more than $3,000; or
• no significant connection to the United States (for example, no permanent home, voter registration, or spouse or minor child whose main home is in the United States, subject to the publication’s definitions and exceptions).

A day generally counts if you are physically present in Puerto Rico at any time during the day. If you are in both the United States and Puerto Rico on the same day, that day counts as a day in Puerto Rico. Some days you are outside Puerto Rico can still count (for example, certain qualifying medical treatment, major-disaster, or mandatory-evacuation days), and some days in the United States are disregarded. The IRS expects supporting records for those special days.

Tax home

Your tax home is generally your regular or main place of business, employment, or post of duty — not necessarily where your family lives. If you have no regular place of business, it is where you regularly live. You generally cannot have a tax home outside Puerto Rico during any part of the tax year, with a limited exception in the year you move.

Closer connection

You meet this test if you do not have a closer connection to the United States or a foreign country than to Puerto Rico. The IRS looks at the facts, including where your permanent home and family are, where you keep personal belongings, where you bank, the jurisdiction of your driver’s license and voter registration, your social and professional ties, the charities you support, and the residence you list on official forms. Form 8898, Part III, walks through many of these contacts.

Year you move to Puerto Rico

In the year of a move to Puerto Rico, a special rule can help you meet the tax home and closer connection tests if, among other requirements, you were not a bona fide resident of Puerto Rico in any of the three prior tax years, you do not have a tax home outside Puerto Rico or a closer connection to the United States or a foreign country during any of the last 183 days of the move year, and you are a bona fide resident for each of the three tax years immediately after the move year. See Publication 570, “Special Rules in the Year of a Move.”

• Plan the calendar so you can actually meet the presence test in the first year, including travel already booked.
• Shift your tax home and closer-connection facts to Puerto Rico — housing, work, banking, licenses, family arrangements, and the address you use on forms — rather than only counting days.
• If you will still work or keep a business on the mainland, get advice on whether that creates a tax home outside Puerto Rico.

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• File the application through the DDEC Office of Incentives’ Incentives Portal. The Department’s incentives brochure states that applications can be filed continuously through that portal.
• Choose the correct program (Individual Resident Investor, Export Services, or both if that is your situation) and upload the documents the portal requests.
• Pay the filing fee in the portal. For Individual Resident Investor applications aimed at the 0% rules, Bulletin 2026-004 treats the portal’s filing-fee timestamp as the filing time.
• Do not rush a thin application just to beat a deadline. A filed application can still be incomplete or later denied or revoked. Get professional help if you need it before you submit.
• Keep copies of the filing receipt, timestamp, and everything you uploaded.

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Prior Puerto Rico residency

Eligibility depends in part on when you file:

Applications filed by Dec 31, 2026	Applications filed on or after Jan 1, 2027
The longstanding test, still described in DDEC materials for the pre-Act 38 rules, is that you were not a bona fide resident of Puerto Rico between January 17, 2006 and January 17, 2012.	Under Act 38-2026, as summarized in Bulletin 2026-004 and professional alerts, you must not have been a Puerto Rico resident in the six years before moving.

Annual donations

Section 6020.10(b), as restated in Circular 2026-001, requires Individual Resident Investor decree holders to show annual donations or contributions of at least $10,000 with the Exempt Business Annual Report (IANE):

• $5,000 to Puerto Rico nonprofits that provide services aimed at eradicating child poverty, that operate under Section 1101.01 of the Puerto Rico Internal Revenue Code, that are not controlled by the decree holder or certain family members, and that appear on the annual list published by the Special Joint Commission of Legislative Funds for Community Impact;
• of the remaining $5,000, at least $2,500 to the Special Fund for Social Equality (Fondo Especial para la Igualdad Social), after Act 32-2024; and
• the remaining $2,500 to other Section 1101.01 nonprofits that are not controlled by the decree holder or those family members.

The circular notes that the entire $10,000 may instead go to organizations on the Commission’s child-poverty list. Use the list and contribution-certification process in effect for the year you donate, and keep receipts to file with the annual report. Circular 2026-001 also addresses timing problems with prior-year lists; if you are catching up on an earlier year, read that circular or ask a professional.

Buy and keep a Puerto Rico principal residence

Under Section 6020.10(c), as quoted in Circular 2026-001, you must, within two years after obtaining the decree, acquire by purchase — as sole owner or jointly with your spouse — title to real property in Puerto Rico from a seller (a person or company) wholly unrelated to you, to serve as your principal residence. You must also show in each annual report that you keep exclusive and complete domain of a principal residence, alone or with your spouse, for the entire term of the decree.

Act 38-2026 tightened how title may be held for applications filed on or after January 1, 2027: Bulletin 2026-004 says compliance is verified by evidence of full domain and title, duly registered or pending registration with the Property Registry, in the name of the individual, jointly with the spouse, or in a trust covered by Section 2022.07 of the Incentives Code (a grantor trust). Applications filed before January 1, 2027, and already-approved decrees, keep the residence rules in effect before Act 38-2026.

Annual report and fee

• File the Exempt Business Annual Report (IANE / EAR) through the Incentives Portal, with supporting documents and the applicable filing fee, as the DDEC requires.
• Deadlines depend on your decree and which law it was issued under. A DDEC filing reminder treated Act 60 reports for a recent calendar year as due on the 15th day of the 11th month after year-end, and older Act 22 reports on a different schedule tied to the Puerto Rico income tax return. Confirm the current year’s due date in the portal and in any new DDEC bulletin.
• Attach evidence of the required donations and of your principal residence.

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• Eligible activity. The DDEC’s Incentives Code brochure describes this program as the export of services or goods from Puerto Rico to foreign markets. The business generally needs a real presence in Puerto Rico. Work performed as someone else’s employee is not the kind of activity this decree is built for; the applicant is an eligible business.
• Puerto Rico tax benefits listed in that official brochure include a 4% income tax rate, a 75% property tax exemption, a 50% municipal tax exemption, and a 100% income tax exemption on dividends. The 4% rate on net income from the export of services, and the dividend exemption, are also in the Incentives Code (see 13 L.P.R.A. § 45241). Benefits on a particular decree can be narrower, and other limitations (including a “base period” rule for businesses already doing the activity) can apply.
• Employees. Export-services decrees can include a job-creation or Puerto Rico-resident employee requirement, often tied to the business’s volume and to the terms written into the decree. Confirm the headcount, timing, and who counts as a qualifying employee in your own decree rather than assuming a single island-wide number.
• Annual compliance. File the business’s Puerto Rico income tax return with Hacienda, and file the annual report in the Incentives Portal with the applicable fee and supporting documents. Keep the records the decree requires, including segregated accounting for the exempt activity when that is required.
• Apply through the same Incentives Portal.

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IRS Form 8898

If you become or cease to be a bona fide resident of Puerto Rico during a tax year and your worldwide gross income for that year is more than $75,000, you must file Form 8898. For married people, the $75,000 threshold applies to each spouse separately, and each spouse who is required to file files a separate form. File it by itself — not attached to Form 1040 — by the due date, including extensions, for Form 1040 or 1040-NR. The IRS may assess a $1,000 penalty for failing to file a required Form 8898, or for omitting required information, unless you show reasonable cause.

Puerto Rico income tax return

• Bona fide residents generally file a Puerto Rico individual income tax return with Hacienda reporting worldwide income (Form 482.0 / Planilla). Hacienda’s instructions say calendar-year returns are due April 15 of the following year and must be filed electronically through SURI or a certified application.
• If you moved to Puerto Rico during the year, Hacienda’s instructions say you generally report income from the date of the residence change through year-end, plus Puerto Rico-source income received while you were not a resident. Complete the residency questions on the return heading.
• If you are a resident individual investor, the return asks you to identify that status and to attach the related schedule (Schedule F1 on the recent Form 482.0) so exempt interest, dividends, and qualifying gains can be reported as the form requires.

U.S. federal return

• If all of your income is Puerto Rico-source and you are a bona fide resident for the year, you generally are not required to file a U.S. income tax return, with exceptions. If you have income from sources outside Puerto Rico above the U.S. filing threshold, you file a U.S. return and exclude qualifying Puerto Rico-source income. See Topic 901 and Publication 570.
• Self-employment tax is a separate obligation. Publication 570 says bona fide residents of a U.S. territory who have self-employment income must generally pay self-employment tax to the United States, often on Form 1040-SS, even if they have no U.S. income tax return filing requirement.
• Other federal items can still apply, including Additional Medicare Tax and, in some cases, Net Investment Income Tax on non-territory income. Get advice for your facts.

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• Keep a contemporaneous travel log of where you were each day of the year, supported by tickets, boarding passes, passport stamps, calendar entries, or similar records. The presence test is a day count, and the IRS can ask you to prove it.
• If you rely on special counting rules (for example, days outside Puerto Rico for qualifying medical treatment), Publication 570 tells you to keep specific documentation and to be able to produce it within 30 days if the IRS or the territory tax administrator asks.
• Keep a file for closer-connection and tax-home facts: lease or deed, utility bills, driver’s license, voter registration, bank statements, school or family records, and the addresses used on tax and legal forms.
• Keep decree filings, portal receipts, donation acknowledgments, the Commission list you relied on, the deed and evidence of your principal residence, annual reports, and both Puerto Rico and U.S. returns, with backups.

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