Puerto Rico Crypto Laws Tax Haven?
How the IRS taxes crypto
It’s important to understand the fundamentals of how crypto taxes work in the US before discussing this strategy. The IRS treats cryptocurrency as property. The gains are subject to capital gains taxes. Short-term capital gain tax rates range from 10% - 37%, while long-term capital gains are subject to either 0%, 15%, or 20% rates. If you are a high-net-worth individual, you also have to pay an additional 3.8% Net Investment Income tax (NIIT) on top of your capital gain tax rate.
Further, unlike other countries, the US taxes on your worldwide income. This means, if you are a US resident or a citizen, you have to pay US income taxes on your worldwide income even if you work and/or live outside the US. However, Puerto Rico is exempted from this rule because it’s a US territory as opposed to a separate country or a US state. This is ensured by Act 60-2019 (formerly known as Act 22).
To be excluded from the above taxes imposed by the US on cryptocurrency gains, you need to be a “bona fide resident” of Puerto Rico for the entire taxable year and meet some other time-based qualifications.
Cryptocurrency Leaders and Blockchain Legends Meet in Puerto Rico to Address the Future of the Internet and the Global Economy November 16
November 12, 2020 12:46 ET | Source: Crypto Mondays San Juan