One firm for both sides of Act 60.
Chapter 2 for individual investors and Chapter 3 for export-services businesses. We prepare the decree application, the US federal return and the Puerto Rico Hacienda filings that keep the benefit intact, all in-house.
Hiltzik CPA, PLLC. Licensed CPA with offices in San Juan and New York. The federal return and the Puerto Rico Hacienda filings are prepared in-house and signed by a licensed CPA.
Two paths under one law.
Act 60 unified the old Act 22 and Act 20 incentives into a single decree code. Most clients fall into one of two camps.
Individual investors
Formerly Act 22. If you hold significant unrealized gains in stocks, real estate, business equity or other appreciated assets, Chapter 2 takes your Puerto Rico-source long-term capital gains and dividends to 0%, once you become a bona fide resident.
- 0% for applications filed by December 31, 2026, then 4%
- 0% federal tax on PR-source income under IRC §933
- Bona fide residency required from day one
- Annual decree fee and charitable contribution
Export-services businesses
Formerly Act 20. If your company sells services to clients located outside Puerto Rico (consulting, software, marketing, research and development, professional services), Chapter 3 reduces the Puerto Rico corporate income tax on that income, with a full dividend exemption to owner-residents.
- 2% for the first five years, new businesses under $3M annual volume
- 4% standard rate above the $3M threshold
- 100% dividend exemption for owner-residents
- Real Puerto Rico substance required: employees, office, operations
What changes on January 1, 2027.
Under HB 505 / Act 38-2026, signed in March 2026, applications submitted on or after January 1, 2027 carry a 4% Puerto Rico tax on capital gains, dividends and interest instead of 0%. Which side of that deadline you want to be on depends on what you already hold and when you expect to sell.
Existing decree holders are grandfathered through December 31, 2035. The program itself runs to 2055, but that longer horizon belongs to the 4% rate, not the 0%. Post-2026 applicants also face a six-year non-residency lookback and an obligation to register a Puerto Rico primary residence in the Property Registry within two years of the decree.
For anyone weighing the move now, a decree before December 31, 2026 is the difference between 0% and 4%. Whether that difference is worth the deadline depends on the size and timing of your gains, which is a modeling question rather than a headline-rate question.
Whether a decree before the deadline is worth it depends on the size and timing of your gains. That is a modeling question, and it is what the first call is for. Book a 30-minute call →
How Chapter 2 works for individual investors.
Chapter 2 is what most people mean when they say “Act 22”.
The decree gives bona fide Puerto Rico residents a 0% rate on Puerto Rico-source capital gains and dividends. IRC §933 already excludes PR-source income from the federal return. Together that is a powerful structure for someone planning to realize a large gain. For the full mechanics, including how stocks, crypto and real estate are sourced, see our Puerto Rico capital gains tax guide.
The 0% rate reaches only appreciation that happens after you establish bona fide residency. Buy an asset for $100,000, move when it is worth $1,000,000, and the first $900,000 of gain is still taxed by the IRS at federal long-term capital gains rates. Only growth from $1,000,000 onward qualifies for the 0% Puerto Rico rate.
Beyond the rate, decree holders pay a $5,000 annual filing fee to the Government of Puerto Rico and make a $10,000 annual charitable contribution, split between two qualifying Puerto Rico nonprofits: $5,000 to organizations working to eradicate child poverty, $5,000 to any other Puerto Rico nonprofit under Section 1101.01 of the PR Internal Revenue Code. Form 8898 is filed with the IRS in the year residency is established.
None of that is a deal-breaker. It does change the arithmetic, and it needs to be modeled before the move rather than after.
The split between pre-move and post-move appreciation is specific to your holdings and your move date. Talk it through with a CPA →
How Chapter 3 works for export-services businesses.
Chapter 3 sits on the company, not on you.
If your company sells services to clients located outside Puerto Rico, the decree reduces the Puerto Rico corporate income tax on eligible export-services income to 4%, and to 2% for the first five years where the business is new and has under $3 million in annual business volume. Dividends paid from that company to its owner-residents are exempt at the Puerto Rico level, and exempt federally under §933 where the corporation is engaged in the active conduct of a Puerto Rico trade or business.
The eligible service list is broad: management consulting, software development, marketing, research and development, distribution services, accounting, legal advisory and telemedicine, among others. Section 2031.01 of the statute sets out the full list. Whether a particular contract falls inside it is usually the first thing worth checking, and the guide to the Chapter 3 decree walks through the nexus rule that decides it.
What is not optional is real economic substance. The Puerto Rico Treasury Department has tightened enforcement on shell arrangements. Holding the decree means employees physically working in Puerto Rico, an actual office, and operations that resemble a business rather than a paper entity. US clients suddenly appearing as Puerto Rico clients on paper is the fastest way to lose a decree.
The decree fixes the corporate rate on eligible export income. Your own federal position (whether you are a bona fide resident, what your salary looks like, how dividends reach you) is a separate analysis that runs alongside it. An owner who moves and an owner who stays do not get the same answer.
Whether your contracts fall inside the eligible service list is usually the first thing worth checking. Have your contracts reviewed →
The filings that keep a decree intact.
An Act 60 engagement runs on two parallel tracks: the US federal side, and the Puerto Rico territorial side filed with Hacienda. Hiltzik CPA is a US CPA firm authorized to file Puerto Rico tax returns, so both are prepared in-house.
Form 8898
Statement for individuals who begin or end bona fide residence in a US territory. Establishes bona fide Puerto Rico residency for federal purposes, required where worldwide gross income is $75,000 or more in the year of the move.
Form 1040
Federal individual return, with Puerto Rico-source income excluded under IRC §933 and US-source income fully reported.
Schedules B, D and E
US-source interest, dividends, capital gains and rental income that remains fully taxable at federal rates.
Forma 482
Puerto Rico individual income tax return filed with the Departamento de Hacienda, reporting Puerto Rico-source income under the decree.
Forma 480.20
Puerto Rico corporate income tax return for Chapter 3 export-services entities, applying the 2% or 4% decree rate.
Annual decree report
Compliance report to Puerto Rico’s Department of Economic Development and Commerce, confirming the decree’s residency, contribution and substance conditions are met. The date it falls due, the fees and the automatic fines are covered in the annual report guide.
That is before the bona fide residency tests under IRC §937, which the IRS examines more closely each year as Act 60 enrollment grows. Audit defense for residency challenges is a meaningful part of what this practice does.
Decrees are far more often lost on the annual filings than refused at application.
Keeping a decree intact is the long part of the work, and it is where the benefit is actually protected. See how the engagement runs →.
Built for Act 60, not adapted to it.
Federal specialty, not generalist
Section 933 sourcing, §937 residency tests and the Form 8898 election are their own body of US tax law, not general foreign-income rules. That is the core of this firm’s practice.
Both sides, one firm
Authorized to file Puerto Rico returns as well as federal, so one firm holds the residency documentation, the decree compliance and every return. Nothing falls through the gap between two advisors.
Documentation from day one
Decree holders who lose audits usually lose them on documentation. Calendar logs, presence tracking and tax-home evidence are set up the day you arrive.
Signed by a licensed CPA
Every Act 60 engagement is handled in-house, and every federal and Puerto Rico return is signed by a licensed CPA.
From discovery call to year-ten compliance.
Discovery call
Thirty minutes, at no cost. We map your tax position, gain exposure, business structure and timing. By the end you will know whether Act 60 is realistic for you and roughly what it is worth.
Planning and decree
Residency strategy under §937, US-side entity considerations, gain-timing analysis and the Form 8898 election. We prepare and file the decree application with DDEC and handle the territorial setup. Typically 60 to 90 days before the move.
Ongoing compliance, both sides
Federal returns with the §933 exclusion, residency documentation and audit defense, alongside the Hacienda returns and the annual decree report. All filed in-house. This is the long-term work where most of the value is protected.
What the firm does.
Three scopes. Most clients begin with the first and stay on the second.
Decree application and move-year planning
Residency strategy under §937, gain-timing analysis, a review of your US-side entities, preparation and filing of the Chapter 2 or Chapter 3 application with DDEC, and the Form 8898 election. Usually begun 60 to 90 days before the move.
Annual compliance, both sides
Federal Form 1040 with the §933 exclusion and full US-source reporting; Forma 482 and, for Chapter 3 entities, Forma 480.20 with Hacienda; the annual decree report to DDEC; and the charitable contribution and filing-fee documentation. One firm, one set of workpapers.
Residency documentation and audit defense
Presence tracking, tax-home and closer-connection evidence maintained from the day you arrive, and representation if the IRS examines bona fide residency under §937.
Engagements are quoted as a fixed annual fee after the first call, once the scope is clear. There is no charge for the call.
Common questions before you file.
Is Puerto Rico Act 60 still available in 2026?
Yes, but the rules are changing. Applications submitted by December 31, 2026 lock in the current 0% rate on Puerto Rico-source capital gains, dividends and interest under Chapter 2. Applications filed on or after January 1, 2027 carry a 4% rate on that income under HB 505 / Act 38-2026, signed in March 2026. Existing decree holders are grandfathered through December 31, 2035. Post-2026 applicants also face a six-year non-residency lookback and must register a Puerto Rico primary residence in the Property Registry within two years of the decree.
Do I still file a US tax return after moving to Puerto Rico?
Yes. Bona fide residents of Puerto Rico file a Form 1040 every year. Puerto Rico-source income is excluded under IRC §933, but US-source income, such as most W-2 wages from US employers, US rental property and US-traded securities, stays fully taxable at federal rates.
What is bona fide residency, and how is it tested?
Three tests under IRC §937: a presence test, generally 183 days in Puerto Rico; a tax home test; and a closer connection test. All three have to be met. Failing any one means losing the decree benefits for that year.
Can I keep working remotely for a US employer after I move?
You can, but carefully. Remote W-2 income from a US employer is US-source under standard rules and stays fully taxable. It also threatens the tax home test, which can disqualify you from bona fide residency entirely. Most clients restructure this income before they move.
What is the minimum income or business size to make Act 60 worth it?
As a rough guide, Chapter 2 tends to make financial sense where you expect $500,000 or more in capital gains over five years, and Chapter 3 for export-services businesses with $250,000 or more in annual eligible income. Below those figures the relocation cost, annual fees and compliance load usually exceed the savings. We model the actual breakeven on the discovery call.
Do you handle the Puerto Rico filings too?
Yes, both sides in-house. On the federal side: Form 8898, Form 1040 with the §933 exclusion, residency documentation and audit defense. On the Puerto Rico side: the decree application, the annual Hacienda returns (Forma 482 and Forma 480.20), and the decree compliance report to DDEC. You work with one firm for the whole engagement rather than hiring a separate Puerto Rico CPA and hoping the two coordinate.
What happens if I lose my decree?
The tax savings are clawed back, with interest and penalties. On the federal side the common risks are residency tests failing under IRS scrutiny, US-source income misclassified as Puerto Rico-source, or the Form 8898 election missed or filed incorrectly. On the Puerto Rico side, the decree report can be filed late or the charitable contribution missed. Either side can revoke the savings, which is why we keep both under one roof.
Talk to us before you commit.
Act 60 is one of the most powerful US tax structures available, and one of the easiest to get wrong. A 30-minute discovery call gives you a clear answer on whether the move makes financial sense, what the realistic savings are after fees and compliance, and what the next twelve months would look like.
Or call (787) 478-8820.