Act 22 – Individual Investors

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The Act 22 - Individual Investors Act seeks to attract new residents to Puerto Rico

Act 22 is an economic development program. While almost all other economic development programs focus on incentives for businesses, this program is designed for individuals that relocate to the Commonwealth of Puerto Rico, a U.S. Territory. Act 22 provides a total exemption from Puerto Rico income taxes on all passive income realized or accrued after such individuals become bona fide residents of Puerto Rico. Incoming Act 22 participants has resulted in new local investments in real estate, services and other consumption products, and in capital injections to the Puerto Rico banking sector, all of which accelerate the economy of Puerto Rico. Act 22 complements Act 20 incentives, which are for active income from eligible services, and can be used in tandem by Act 20 participants. Very often, Act 22 is used stand-alone by individual investors that do not participate in Act 20 or other economic development programs.

Below is the description of the Act 22 program as provided by the Puerto Rico Department of Economic Development and Commerce (DDEC).

Act 22 - ​Individual Investors Act Overview​

  • ​APPLICABILITY
  • ​RESIDENCY
  • ​PASSIVE INCOME
  • ​EXEMPTION PERIOD

The Individual Investors Act applies to any individual investor that becomes a Puerto Rico resident on or before the taxable year ending on December 31, 2035 (hereinafter referred to as “Resident Individual Investor”), provided that such individual was not a resident of Puerto Rico at any time during the 6-year period preceding the effective date of the Individual Investors Act.

A Puerto Rico resident is an individual who is domiciled in Puerto Rico. Physical presence in Puerto Rico for a period of 183 days during the taxable year will create a presumption of residence in Puerto Rico for tax purposes.

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