Puerto Rico is seeking to turn the corner on a lengthy economic recession with new tax incentives to promote inward migration and investment and a public relations campaign aimed at extolling the benefits of relocating one’s business and residence to the commonwealth. This White Paper prepared by Mark Leeds of Mayer Brown and Gabriel Hernandez of BDO explores certain US federal and Puerto Rican income tax considerations for individuals who may wish to consider making the move. While Puerto Rico’s Law 22 provides a clear tax incentive for investors who may want to consider relocating their personal life and business affairs to Puerto Rico, any inducements under that law must be assessed in the light of existing US rules, which are likely to lessen Law 22’s potential benefits.

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