Why Are Bitcoin Millionaires Moving to Puerto Rico?
- The island offers tax incentives for foreign investors to live and invest their assets, as well as spectacular beaches to warm up for most of the year.
- The crypto investor community has grown in recent months attracting Bitcoin enthusiasts from elsewhere in the US.
- Although not all Puerto Ricans are very happy with the arrival of new residents.
Like Texas and other states in the United States, the island of Puerto Rico has become an attractive place for crypto investors in the last year. The US protectorate not only has friendly laws for foreign investors, but also offers sunny days most of the year and attractive beaches where one can rest.
The fact that residents keep their US passports and won’t have to pay capital gains taxes is a big plus. This is because it has motivated many Americans to move to the Caribbean island and spend at least 6 months a year there.
Living on an island has its advantages over other places due to its climate and warm environment. That is why Puerto Rico has become a fashionable destination for a growing number of crypto investors who have the necessary infrastructure, internet connection and physical office space.
Massive arrival of crypto investors
The arrival of Bitcoin enthusiasts has spurred other people in the industry, family or friends, to move there as well. That was the case of David Johnston, a 36-year-old American who lived in Austin and decided to move with his entire family to the island in March of last year.
“That’s where all my friends are. I don’t have one friend left in New York, and maybe the pandemic accelerated this, but every single one of them has moved to Puerto Rico,”
he told CNBC.
The cryptocurrency entrepreneur and investor, who lives in a suburb of San Juan, said that the building where his company operates is filling up with other cryptocurrency businesses like his.
“Pantera Capital (a cryptocurrency fund) is on the fifth floor and then there is a co-working space on the sixth floor. My company, DLTx, took over the eighth floor and NFT.com took over the twelfth floor. All of that happened in the last 12 months,”
he said.
According to corporate and tax attorney Giovanni Méndez around half of all his current clients are crypto asset companies or cryptocurrency investors. The number of new foreign clients has increased exponentially in the last six years.
Attractive laws for investors
One of the biggest attractions of the island for cryptocurrency investors and miners is the so-called Law 60 or Law of Individual Investors. This legal instrument allows residents to save hundreds or perhaps thousands of dollars in taxes each year, if they qualify for exemptions.
Unlike the rest of the US where investors are required to pay up to 37% on short-term capital gains and around 20% on long-term gains (which applies to crypto assets held for more than a year), in Puerto Rico Law 60 reduces this percentage to zero for certain entrepreneurs and crypto investors.
Another incentive for businessmen who establish themselves on the island is that their companies do not pay the 21% federal corporate tax that is charged to businesses on the mainland. Nor the state taxes that are variable. In Puerto Rico, this tax is only 4% for services provided outside the island.
However, to obtain these tax benefits, companies must be fully established on the island, warns CPA Shehan Chandrasekera, a specialist in cryptocurrency businesses.
"That's the part that people aren't talking about,"
Chandrasekera said. Crypto entrepreneurs must first apply for Puerto Rican residency to enjoy these benefits.
Some investors have chosen to transfer their profits to the island. They invest and after obtaining residency, they sell their stake and then buy it back as if it were a new asset.
In this way they prevent profits from the US from incurring accounting problems.
On the Flipside
- But not everyone in Puerto Rico is happy with the rush of people who have moved to the island. Especially since the tax laws, which were designed to attract foreign capital, do not benefit locals but only foreigners.
- Puerto Ricans must pay up to 15% on capital gains, which has created a very unequal gap.
- The avalanche of crypto investors has also caused a substantial increase in the price of real estate on the island.
Why You Should Care
- The island has been devastated in recent years by hurricanes, earthquakes and financial problems. Added to this was the pandemic crisis that affected the tourism industry.
- But now with the arrival of new investors this US overseas territory is picking up again.
Read more: https://dailycoin.com/why-are-bitcoin-millionaires-moving-to-puerto-rico/
Text source: DailyCoin.com
