- The Bahia Beach Resort in Puerto Rico has a comfortable golf course and resort on the beach, in a nearly 200-hectare natural reserve surrounded by lush tropical jungle.
- But those who can live there are not so much interested in the paradisiacal nature, but in the nature of the tax benefits that come with permanent foreign residence on the island..
Anthony Emtman left Los Angeles and bought an apartment at St. Mary’s Beach Resort. Regis Bahia. The director of Ikigai Asset Management is now part of the growing cryptocurrency community on the north coast of Puerto Rico.
Wealthy investors pay up to 20% tax on capital gains and up to 37% income tax on short-term gains in the continental United States. In Puerto Rico, they pay nothing. Businesses located in the continental United States pay 21% corporation tax and various levels of federal income tax. In Puerto Rico, in total, they pay 4%. For crypto investors, there is no question that this is a clear question. The cryptocurrency market continues to grow exorbitantly and Washington ruling Democrats are forcing the rich to pay more taxes.
Frances Haugen, a Facebook whistleblower recently told the New York Times that she lives in Puerto Rico to be with her «crypto friends,» and New York Mayor Eric Adams even flew with crypto millionaire Brock Pierce to a dinner with New Governor York. Puerto Rico, Pedro Pierluisi, in November. «It’s no longer: ‘Go to Puerto Rico to save taxes,’ says tax attorney Giovanni Méndez, who advises clients looking to relocate there,» but it’s: ‘Go to Puerto Rico because that’s where everyone is going ‘».
The Puerto Rico government created the tax breaks in 2012 with the hope of pumping money into the struggling economy and creating jobs. They pulled out of it, but basically hedge funds made their way onto the island. But the Covid 19 pandemic prompted a novel verifiable flood – and the cryptocurrency industry.
Here are all the most common disadvantages in similar regions of the world: Many of the beneficial laws only apply to foreign residents, leaving locals who have spent their lives on the island since birth empty. Unsurprisingly, therefore, many are reluctant – to say the least – to accept the newcomers coming, fearing that income streams will exacerbate inequality and cause social tensions. . House prices are already absurd.
This year, Puerto Rico received more than 1,200 applications for permanent residence, a new record. The number of continental US citizens seeking Puerto Rico tax benefits has tripled this year. 274 corporations, limited liability companies, associations and other entities are authorized by the island’s Export Services Law, which offers companies a 4% tax rate and a 100% tax exemption for dividends.
Giovanni Méndez, a business and tax attorney, says he’s no longer: «Go to Puerto Rico to save taxes.» «Go to Puerto Rico because everyone goes there.»
The cryptocurrency community is particularly biased towards three coastal areas. There are remote routes like Bahia and Ritz-Carlton Dorado Beach Resort. Those looking to live in the city stay in Condado, an upscale neighborhood and commercial district in the capital, San Juan.
“There are restaurants, cafes and a shopping center; this is like a miami mini. I felt it was much better to come here, do my job and stay connected to the financial world than Hawaii or Mexico, «says Brent Johnson, managing director of asset manager Santiago Capital, which moved to Condado from San Francisco in May 2021.
The real estate boom
The influx of newcomers is making waves in the real estate market, especially in tourist areas. Dorado is growing the most, with prices almost tripling, says Priscilla Ferrer, a real estate agent in Puerto Rico.
Francisco Fournier, founding partner of Luxury Real Estate Collection, says it is now common to sell property for more than $ 20 million. «Now we’re selling a house in Dorado Beach for $ 27 million and another for $ 29 million.»
In Bahia, prices per square foot have almost doubled, says Blanca López, founder of the Gramercy Real Estate Group. Priscilla Ferrer, a real estate agent from Puerto Rico, confirms;
It’s stupid. These luxury properties are being bought at an emotional price, not an economical price.
Prices exceed $ 32,000 per square meter in some cases for luxury estates, and high-end homes in the County range from $ 15,000 to $ 16,000 per square meter, an increase of about 35% on last year. And there are not enough inventories to meet the demand, because buyers are flying to the island faster than high-end homes can be built.
«All of this is undermining the housing and employment prospects of the islanders,» says Raúl Santiago-Bartolomei, an associate professor in the School of Graduate Planning at the University of Puerto Rico. «These places are now out of bounds for low-income workers and families who should be living close to these high-opportunity areas.»
Nevertheless, jobs are created – most of them in call centers, followed by consultancy, advertising, public relations, and tax and accounting services. But the majority of Puerto Ricans born in the country do not qualify for it, because the world is not perfect.
“As long as the jobs keep coming, the doors are open to the cryptocurrency community,” says Carlos Fontán, head of the Ministry of Economic Development and Commerce department. Everything is fine there.