Cryptocurrency billionaires are flocking to the Caribbean island of Puerto Rico to enjoy the perks of the United States territory’s tax advantages and luxurious island lifestyle.
Billionaires From Bitcoin are Relocating to Puerto Rico
According to a CNBC article, cryptocurrency millionaires are migrating to Puerto Rico because of the country’s cryptocurrency-friendly rules, which include significant tax reductions for residents that spend around 183 days on the island yearly. Occupants of the area are permitted to keep their U.S. passports while evading paying capital profits taxes.
David Johnston, a cryptocurrency enthusiast since 2012, relocated his family members from Austin to Puerto Rico in March 2021, describing the relocation as a “no-brainer.” Johnston said that the majority of his pals had made the same choice. He said to CNBC, all of my friends were gathered there.
I don’t have anybody left in NYC, and perhaps the pandemic must have hastened this, but they’ve all relocated to Puerto Rico. Johnston highlighted analogies with Puerto Rico and Austin, comparing the remote island region to the Texas capital before its transformation into a scientific center in the United States.
Notwithstanding the enthusiasm and flood of cryptocurrency companies, some people appear dissatisfied with the newcomers. Puerto Ricans, particularly, decry the capital gains tax exemption, which exclusively applies to non-residents. The influx of wealthy newcomers has also pushed up real estate values, outpaced the living costs, and fueled anger.
The Advantages of Living on an Island
Puerto Rico has quickly established itself as a new hotspot for the cryptocurrency community. Frances Haugen, an F.B. insider who told the N.Y. she purchased cryptocurrency at the appropriate time, moved from San Francisco to Puerto Rico in 2021, partly to hang out with her cryptocurrency buddies on the island.
Logan Paul, a YouTube sensation and Non-fungible token investor, as well as cryptocurrency billionaire Brock Pierce, a young actor, turned 2020 indie presidential contender, started operating there. However, Johnston claims that startups and cryptocurrency firms are taking up his entire office block.
On the 5th floor, you have Pantera Capital, and the 6th floor has a co-functioning space. DLTx occupied the 8th floor, while NFT.com occupied the 12th floor. According to CNBC Johnston, this occurred within the last twelve months.
Redwood City Ventures, a firm known for investing in BTC and blockchain startups, has also established a presence in the United States. The main attraction to the island is Act 60, which provides significant tax benefits to qualified inhabitants.
In the United States, short-term capital gains are taxed at about 37 percent, and long-term capital gains are taxed at about 20 percent, which extends to bitcoin and other investments held for over one year. Assuming some conditions are met, one of Act 60’s tax advantages, the Individual Investors Act, reduces that tax obligation to zero. This is particularly significant for businesses and cryptocurrency traders.
There’s still a significant tax advantage for businesses to establish themselves in Puerto Rico. Mainland businesses must pay a federal corporate tax of 21 percent of the total additional state tax that differs. A company that exports its assistance outside Puerto Rico, to the United States, or elsewhere, pays a 4 percent corporate tax rate.
Whatever profits made prior to the landing in Puerto Rico are now under the usual capital profits tax rates on the mainland, according to CPA Shehan Chandrasekera. The profits made upon being a Puerto Rican occupant are the only tax-free ones. That is the aspect that no one is speaking about, explained Chandrasekera, CoinTracker.io’s head of tax strategy. There’s, however, a solution.
Assuming an investor successfully made a profit, they could relocate to Puerto Rico, obtain residency, sell their investment, and then repurchase it as another role. They prevent clutching at straws by bringing over any benefits from the United States in this manner.