About the Course
Introduction
This CLE/CPE webinar will provide tax advisers guidance on Puerto Rico residency tax benefits and incentives for individuals and businesses and navigating applicable tax rules and IRS examination for Puerto Rico Act 60 grantees. The panel will discuss the potential risks of IRS audits for individuals and businesses taking advantage of U.S. tax incentives for Puerto Rico-sourced income. The panel will also discuss the favorable treatment of capital gains and dividend income and the challenges of relocating to Puerto Rico as an alternative to tax expatriation. The webinar will also detail residency requirements and outline potential caveats to U.S. taxpayers considering a relocation to Puerto Rico for tax purposes.
Description
With the enhanced focus on offshore tax avoidance, the IRS continues its audit campaign for Puerto Rico Act 60 (formerly Act 20 and 22) grantees. Taxpayers and their advisers must identify potential audit risks and properly advise taxpayers on how to take advantage of both the Internal Revenue Code and Puerto Rico tax laws. Our panel will feature experts on both of the U.S. rules affecting bona fide residents of Puerto Rico and on responding to IRS audit campaigns.
Generally, IRC Section 933 exempts bona fide residents of Puerto Rico from U.S. federal income tax on any Puerto Rico-source income. IRC Section 937 sets the threshold for establishing bona fide residency in Puerto Rico (and some other U.S. possessions) and contains rules for determining Puerto Rico-source income.
Puerto Rico has several tax provisions under Act 60 designed to attract investors and business owners to relocate to the island. The two key provisions were Act 20 (Export Services Act) and Act 22 (Individual Investors Act). Act 20 sets a maximum income tax rate of four percent on the net profits of any business exporting services from Puerto Rico to companies or individuals outside the island. Act 22 exempts from income tax all passive income derived by bona fide residents of Puerto Rico. When taken in combination, these provisions create tax incentives virtually unmatched by any foreign jurisdiction for tax savings without causing individuals to incur the expropriation tax.
Listen as our expert panel provides a practical guide to the tax opportunities and challenges of relocating to Puerto Rico and handling potential IRS audits.
Presented By
Mr. Carrasquillo has been providing strategic guidance and advice to clients in a variety of complex and sophisticated legal transactions for over 20 years. He advises domestic and foreign companies, multinationals, and entrepreneurs on their business activities and investment considerations in the United States and throughout Latin America, Asia, and Europe, including in cross-border transactions.
Mr. Leeds focuses his practice on the tax consequences of a variety of financial products and strategies, including digital assets, private funds, exchange-traded funds, litigation finance, life settlement, banking and insurance. His experience includes both exchange-traded and over-the-counter derivative transactions, and strategies for the efficient utilization of tax attributes—such as net-operating losses. Mr. Leeds regularly works with financial institutions on developing products and the related tax reporting considerations. He also advises businesses and individuals in establishing operations and relocating to Puerto Rico and has a substantial practice in private credit transactions. Mr. Leeds is well-known for his extensive writings on capital markets tax issues.
Mr. López-Zambrana ("Nolin") represents clients in a variety of industries such as financial, mutual funds, manufacturing, not for-profit, insurance airline transportation, maritime transportation and telecommunications industries. His expertise is highly sought after in all stages of tax controversies. Mr. Lopez-Zambrana is considered by Chambers and Partners publication as a "standout tax practitioner who receives glowing recommendations from sources as one of the leading lawyers in the field." He also advises clients on complex US federal and PR income tax matters and assists them with obtaining PR tax incentives for manufacturing and IP licensing activities, qualified energy activities, export services and foreign trade activities, individual resident investors, among others.
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
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Date + Time
- event
Tuesday, November 11, 2025
- schedule
1:00 p.m. ET./10:00 a.m. PT
I. Overview of Puerto Rico Act 60
II. IRC provisions specific to Puerto Rico and certain U.S. territories and possessions
A. Section 933
B. Section 937 special residency rules
C. IRS notice requirements
III. Establishing residence
IV. Determining the limits of Puerto Rico-source income
V. Likely areas of audit and disagreement
VI. Caveats
The panel will review these and other relevant topics:
- The impact and focus of the IRS audit campaign for Puerto Rico Act 60 grantees
- How Internal Revenue Code provisions and Puerto Rico local tax statutes provide an alternative tax haven to expatriation for certain high net worth taxpayers
- Specifics of Puerto Rico's Act 20 (Export Services Act) and Act 22 (Individual Investors Act) as vehicles for attracting U.S. mainland-based taxpayers to relocate to Puerto Rico
- Timing, notice, and qualification requirements to claim tax benefits
- Best practices to avoid or minimize the chances of being subject to IRS examination
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