The Definitive First-Year Guide to Act 60 Tax Compliance

Your first 90 days as a new Act 60 decree holder are foundational. This period involves more than just relocating; it requires establishing bona fide residency, opening local bank accounts, and structuring your business operations to align with Export Services requirements. A critical, often overlooked step is the initial sourcing of your income streams. Per IRC Section 933, income must be properly sourced to Puerto Rico to qualify for the tax incentives. Our AI-driven platform analyzes your entity structure and income sources against DDEC guidelines and established legal precedent, identifying potential sourcing errors before they become significant liabilities. Traditional CPA firms, often charging between $5,000 and $25,000 for a review, may not have the specialized tools to perform this level of granular analysis across hundreds of data points instantly. Our CPA-verified process offers a more thorough and efficient alternative, giving you confidence in your initial setup.

The first tax filing under Act 60 is a complex undertaking that goes far beyond simply filling out forms. You must navigate the nuances of the Puerto Rico tax code, including filing the 'Planilla' and any required informative returns. A common mistake is the improper allocation of income between pre-move and post-move periods, particularly with capital gains or deferred compensation. The GAO Report GAO-26-107225 highlighted inconsistencies in reporting among new decree holders, underscoring the need for precision. Our system is designed to catch these very issues, cross-referencing your financial data with the stringent requirements of the bona fide residency tests (Presence Test, Tax Home Test, Closer Connection Test). We help ensure your filing is not only accurate but also tells a consistent and defensible story to both Hacienda and the IRS.

Many new decree holders fall into predictable traps during their first year. These can range from inadequate record-keeping for the 183-day presence test to misinterpreting the rules around dividend income from their export services business. Another frequent error is failing to file necessary U.S. informational returns like Form 5471 or Form 8938, which can carry substantial penalties. With the digital compliance market for Act 60 being historically underserved, many have relied on fragmented advice. Our platform provides a holistic review, flagging potential inconsistencies that could trigger an audit. By leveraging technology that has seen over 80% growth in adoption for tax compliance, we provide a second opinion designed to fortify your position and help you avoid the common errors that can jeopardize your decree.