Act 60 Resource Center

Puerto Rico's Act 60 (formerly Acts 20 and 22) offers significant tax benefits to individuals and businesses that establish bona fide residency on the island. But qualifying for—and keeping—those benefits requires navigating complex federal and Puerto Rico tax rules. Our Act 60 educational series covers the legal framework every decree holder needs to understand.

Residency & Compliance Fundamentals

The Three-Part Federal Residency Test
Act 60 benefits depend on passing the federal bona fide residency test under IRC §937(a). Learn the presence test, tax home test, and closer connection test requirements.

Compliance Requirements & Audit Triggers
Annual requirements, reporting obligations, charitable donations, and what commonly triggers an IRS audit of Act 60 decree holders.

Compliance Checklist & Quick Reference Tables
A practical checklist covering residency planning, closer connection factors, income sourcing, filing obligations, and key federal tax provisions.

Income Sourcing & Tax Planning

Income Sourcing Rules for Act 60 Residents
Act 60 tax benefits apply only to Puerto Rico-source income. Learn how compensation, investment income, capital gains, and business income are sourced under IRC §937(b).

The Working-Days Allocation
For services income, where you physically perform work determines your tax benefit. Learn how the working-days allocation works and why mainland travel creates U.S.-source income.

Software & Technology Income Under Act 60
How classification of software income under Reg. §1.861-18 determines whether it qualifies for Act 60 benefits—services, licensing, product sales, and know-how each source differently.

Business Structuring

Export Services (Chapter 3): The 4% Rate
Chapter 3 of Act 60 offers a 4% corporate tax rate on eligible export services income. Learn eligibility, sourcing rules, compliance obligations, and common structuring issues.

Transition & State Departure

The Year-of-Move Safe Harbor
Special rules apply in the year you relocate. Learn the safe harbor under Treas. Reg. §1.937-1(f), its three conditions, and what it does not cover.

State Departure Audits
Relocating from a high-tax state? Your former state may audit your departure. Learn how state domicile audits work and how they overlap with federal residency rules.

Estate Planning

Estate Planning & the NRNC Classification
Puerto Rico residents born in a U.S. territory are classified as non-residents not citizens (NRNC) for estate and gift tax. Learn the situs rules, exemption amounts, and planning implications.

These articles are for educational purposes only and do not constitute legal or tax advice. Each decree holder's situation is unique.

Riefkohl Law advises Act 60 decree holders on residency compliance, income sourcing, and tax planning. Schedule a consultation to discuss your specific situation.