Establishing New Legal Entity for Business Operations in Puerto Rico

When establishing a business in Puerto Rico, the business owners have an array of choices for when selecting the appropriate business type for their operations.  These include: Business Trusts, Cooperatives, Corporations, International Banking Entities, Insurance Companies, Joint Ventures, Limited Liability Company, Partnership, Public Private Partnerships, Real Estate Investment Trusts, Registered Investment Company, Sole Proprietorship.  When selecting a business model please be aware that each has its own set of rules for qualification, and each has distinct implications from the perspective of tax, insurance, and liability.  The facts and circumstances of a business owners operations are important in determining the appropriate type of business.

There are more rules and this post contains simplifications and is not comprehensive. Additionally, as always, a professional should be consulted and be presented with specific information.


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Disclaimer
The information on this website is general information and is for educational use and has not been verified for accuracy nor completeness. You, the reader, should further research your specific individual situation. In addition you should contact your accounting professional for professional advice derived from specific details from your structure and financial position.

Reminder: Puerto Rico Residency Rules for Personal Taxation

An individual is considered a a resident of Puerto Rico if he or she is considered domiciled on the island.  This usually means that a person must be present in Puerto Rico for at least 180 days per calendar year.  In addition for a person to be considered a bona fide resident of the island, one must not claim partial year residency in another local (in addition to other tests). The facts and circumstances are important in determining residency status.

There are more rules and this post contains simplifications and is not comprehensive. Additionally, as always, a professional should be consulted and be presented with specific information.


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Disclaimer
The information on this website is general information and is for educational use and has not been verified for accuracy nor completeness. You, the reader, should further research your specific individual situation. In addition you should contact your accounting professional for professional advice derived from specific details from your structure and financial position.

Amnesty (Relevo) Departamento de Estado - Deadline April 15, 2014

Departamento de Estado has approved an Amnesty. 

This is a great opportunity to pay any overdue Annual Fees and file any old Annual Reports. Late fees will be eliminated if filings are done before the April 15th deadline. 

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Disclaimer
The information on this website is general information and is for educational use and has not been verified for accuracy nor completeness. You, the reader, should further research your specific individual situation. In addition you should contact your accounting professional for professional advice derived from specific details from your structure and financial position.

Source Of Income Rules

The source of income is important in determining if the income may be excluded under section 933 of the Internal Revenue Code. Below are the general rules for determining the source of your income:

Example Of Source Of Income Rules

Item of Income: Salaries and other compensation  -  Factor Determining Source: Where the service is performed

Item of Income: Pensions Contributions  -  Factor Determining Source: Where services were performed that earned the pension

Item of Income: Pensions Investment earnings  -  Factor Determining Source: Where pension trust is located

Item of Income: Interest  -   Factor Determining Source: Residence of the payer

Item of Income: Dividends  -  Factor Determining Source: Location of payer

Item of Income: Rents  -  Factor Determining Source: Location of property

Item of Income: Royalties Natural resources  -  Factor Determining Source:  Location of property

Item of Income: Royalties Patents, copyrights, etc  -   Factor Determining Source: Where the property is used

Item of Income: Sale of real property  -  Factor Determining Source: Location of property

Item of Income: Sale of personal property  -  Factor Determining Source: *Seller’s tax home (but see Special Rules for Gains From Dispositions of Certain Property for exceptions)

 

 

*Caution: There are special rules for gains from dispositions of certain investment property (for example, stocks, bonds, debt instruments, diamonds, and gold) owned by a U.S. citizen or resident alien prior to becoming a bona fide resident of a possession. You

are subject to these special rules if you meet both of the following conditions:

• For the tax year for which the source of gain must be determined, you are a bona fide resident of Puerto Rico.

• For any of the 10 years preceding that year, you were a citizen or resident alien of the United States (other than a bona fide resident

of Puerto Rico).

• If you meet these conditions, gains from the disposition of this property will not be treated as income from sources within the relevant

possession for purposes of the Internal Revenue Code.

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Disclaimer
The information on this website is general information and is for educational use and has not been verified for accuracy nor completeness. You, the reader, should further research your specific individual situation. In addition you should contact your accounting professional for professional advice derived from specific details from your structure and financial position.

Quick Q & A

We receive the following question quite often and  below is the answer:

Q: Cual es la diferencia a la hora de rendir, tener un formulario 480.6A en vez del 480.6B?

A: En términos generales: 

El formulario 480.6B es la "Declaración Informativa - Ingresos Sujetos a Retención". El formulario contiene el campo "Cantidad Retenida". El contribuyente que recibe pagos debe someter una copia de la 480.6B (el triplicado) al rendir su planilla de contribución sobre ingresos.

El formulario 480.6A es una "Declaración Informativa - Ingresos no Sujetos a Retención"

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Disclaimer
The information on this website is general information and is for educational use and has not been verified for accuracy nor completeness. You, the reader, should further research your specific individual situation. In addition you should contact your accounting professional for professional advice derived from specific details from your structure and financial position.

Reminder: Taxation of Internet Sales

On June 30, 2013 - Act 42-2013 clarified rules on Sales and Use Tax in regard to the internet.  It defines the term "Merchant" to better address internet and remote sales.  There are additional regulations associated with this amended definition.

There are more rules and this post contains simplifications and is not comprehensive. Additionally, as always, a professional should be consulted and be presented with specific information.


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Disclaimer
The information on this website is general information and is for educational use and has not been verified for accuracy nor completeness. You, the reader, should further research your specific individual situation. In addition you should contact your accounting professional for professional advice derived from specific details from your structure and financial position.

Income Tax Workshop for Individuals and Corporations

Our weekend was as productive as any day during the week. We participated in the "Income Tax Workshop for Individuals and Corporations" organized by the San Juan Chapter of the Puerto Rico Society of CPA. 

We had a great overview of the income tax filing provisions applicable for 2013 for corporations and individuals. Also participated in the discussion related to the changes brought by Acts 40 and 117, including the alternative minimum tax calculation changes. 

"Sources of income" rules was another important topic discussed.

Wine and cheese at the end was an added benefit at the end after a weekend spent working.

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Disclaimer
The information on this website is general information and is for educational use and has not been verified for accuracy nor completeness. You, the reader, should further research your specific individual situation. In addition you should contact your accounting professional for professional advice derived from specific details from your structure and financial position.