In recent months, many world media have written about Puerto Rico as a new tax haven, which not only offers tax breaks, but also beautiful beaches, rich nature, and comfortable life.
In March 2021, cryptocurrency owner and investor David Johnston decided to move with his family, as well as move his company to Puerto Rico.
The 36-year-old, who has been dealing with cryptocurrencies since 2012, says the decision to move from Austin was in some ways an easy one.
No tax, if they spend six months on the island
In addition to the fact that Puerto Rico offers a tropical climate all year round with beautiful beaches, there are also tax breaks for those who spend at least 183 days on the island each year.
Namely, according to Article 22 of the local law, the inhabitants of the island are exempt from paying taxes on additional earnings, interest, and shares.
The only condition for that is that they spend half a year in Puerto Rico, that is, 183 days.
Residents can keep their American passports while not having to pay capital gains tax at the same time.
That certainly helped Johnston decide to take this step.
«All my friends are there. I don't have any friends in New York, and maybe the pandemic accelerated all that, each of them moved to Puerto Rico,» he said, adding that many of his friends from California also made a similar move.
Johnston told CNBC that, after his friends moved, he went to see what it was about and what it was like to live there.
«I said, 'Wow, all right, I get it now,'» Johnston recalls of his first impression when he set foot on the territory of a small island, the extent of which can be exceeded in half a day.
«The island has three million people… That's enough space to build a technology center,» he said.
Many have moved their cryptocurrency businesses there
Johnston says Puerto Rico reminds him a lot of Austin from 2012 before Tesla, Samsung, and Apple helped turn the capital of Texas into one of the strongest technology centers in the country.
Many have moved their cryptocurrency business to Puerto Rico.
Controversial YouTube star and NFT investor Logan Paul started a business there, as well as crypto-rich Brock Pierce.
Johnston says that now, after almost a year, the entire business building in which his company is located is full of newly established crypto companies.
In the United States, high-earning investors pay up to 20 percent in capital gains tax and as much as 37 percent in short-term gains. They don't pay anything in Puerto Rico.
Additionally, companies located on the American mainland pay 21 percent of the federal profit tax plus individual state tax, compared to only four percent of what awaits them on this beautiful, exotic island.
The tax liability can be reduced to zero if certain qualifications are met.
This is especially important for entrepreneurs and crypto merchants.
There is also a large tax incentive for business owners based in Puerto Rico.
The goal was to bring in investment
Puerto Rico's tax rules, which are almost too good to be true, as many say, were designed a decade ago to help bring in people and investment.
During the last few years, they have faced numerous disasters on this island, from earthquakes and hurricanes, but there have also been problems with years of bankruptcy and the inevitable pandemic.
Investors are coming in increasing numbers
Thanks to great relief, investors are now coming at record speeds.
Corporate and tax attorney Giovanni Mendez is helping the new Puerto Ricans board.
He told CNBC that almost half of his clients are currently either crypto companies or crypto investors and that their number has increased significantly in the last six years.