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Frequently Asked Questions
Do I have to move my entire business to Puerto Rico to qualify for Act 60?
While you don't necessarily need to move every single component of your business, the core income-generating activities must be performed in Puerto Rico. This typically means that management, strategic decision-making, and key operational functions should be based on the island to satisfy the economic substance requirements.
What is the difference between service income and sales income for an e-commerce business under Act 60?
Service income, which qualifies for Act 60 benefits, is generated from activities performed in Puerto Rico for clients outside of Puerto Rico. For e-commerce, this could be marketing, management, or product development services. Sales income, derived from the sale of goods, is generally sourced to where the sale occurs, which can create tax liabilities outside of Puerto Rico. Proper structuring is key.
How does the physical presence test affect my e-commerce business?
The physical presence test requires you, as the decree holder, to reside in Puerto Rico for at least 183 days a year. This demonstrates that you are a bona fide resident of Puerto Rico. For your business, it reinforces the narrative that your company's management and control are exercised from the island, which is crucial for income sourcing.
Can my Amazon FBA business benefit from Act 60?
It can be challenging. Because Amazon FBA involves storing inventory in warehouses across the U.S., it can create nexus in multiple states, and the income from those sales may be sourced to those states. A careful analysis of your specific operational model is required to determine if and how you can structure your business to benefit from Act 60.
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This content is for informational purposes only and does not constitute tax, legal, or accounting advice.