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Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 3011
Experience:  18+ years of experience in tax preparation; 25+ years of experience as a real estate/corporate paralegal.
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I am a person with reasonable (and growing) savings that I

Customer Question

I am a young person with reasonable (and growing) savings that I invest in a variety of strategies that generate short term taxable gains (including options trading, among others). My understanding is that Puerto Rico recently instituted tax incentives that enable Registered Investment Companies (RICs) to substantially avoid the need to pay capital gains taxes. a) is this true? b) if it is, would it be possible for me to set up a RIC in Puerto Rico today through which I would manage my savings without paying capital gains? c) if b works, how could I ultimately repatriate those savings to the U.S.? E.g. could I live in Puerto Rico for a year and then repatriate my savings, etc.? Thanks for the help.
Submitted: 1 year ago.
Category: Tax
Expert:  Barbara replied 1 year ago.

Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

Puerto Rico enacted the Puerto Rico Investment Companies Act of 2013 (Act 93) to promote investment into the Puerto Rico economy through the establishment of investment companies funded by both its residents and foreign investors. In order to stimulate its economy, the Puerto Rico Government provides special tax treatment, in addition to providing tax exemptions to those companies that participate in the creation of employment.

There are certain requirements to establish an RIC which can be found at the following links:

http://www.kevane.com/files/publications/2013/10.25.13%20TAX%20ALERT%20THE%20PUERTO%20RICO%20INVESTMENT%20COMPANY%20ACT%20OF%202013.pdf

http://www.bgfpr.com/investors_resources/documents/2013-Ley93.pdf

Specifically, in the second link, refer to the requirements referred to in Section 11, Items A through Q. For example, be a resident of Puerto Rico, maintain a principal office in Puerto Rico, hold all meetings of directors and shareholders within Puerto Rico, etc.

Further, as a U.S. citizen, you are required to report and pay tax on your worldwide income when filing a U.S. tax return.

After reviewing the information provided, please let me know if you require further information or clarification.

Thank you and best regards,

Barb