Questions about relocating to Puerto Rico

grc1947 wrote:

An associate told me it is possible to become a resident of Puerto Rico, obtain a driver's license, start a business employing 3 people and obtain an exemption for US capital gains taxes. Is this true? If so, is there a government website which lists the current requirements for so doing?

GENERALLY SPEAKING FOR EDUCATIONAL PURPOSES ONLY (AND NOT AS TAX OR LEGAL ADVICE), PR IS A SEPARATE TAX JURISDICTION. THAT MEANS YOU PAY PR TAX ON PR-SOURCE INCOME AND NOT THE FEDS IF YOU ARE A BONA FIDE TAX RESIDENT OF PR. NOT SURE HOW YOU MAKE CAPITAL GAINS ON RUNNING A TYPICAL BUSINESS THOUGH - WOULDN'T THAT BE REGULAR INCOME?

Would you describe Puerto Rico as safe?

NO

What programs are offered to attract retirees 65 and over?

DON'T KNOW

Is the electrical grid in PR the same as the US or does one need an adapter for appliances?

SAME AS US

I understand the driest part of the island is the South coast. True?

YES

Is there a good website for cost of living data? I'm especially interested in rental housing costs?

http://www.expatistan.com/cost-of-living IS ONE BUT UNSURE IF IT'S ANY GOOD

How would you describe cell phone and internet service?

INTERNET SERVICE IS OK EXCEPT WHEN YOU NEED SOMEONE TO COME OUT TO YOUR PLACE. THIS IS WHEN THERE ARE FREQUENT DELAYS.

Transportation: Where is there good public transportation? Is it possible to function without a car?

PUBLIC TRANSPORTATION IS NOT GOOD. I WOULD HIGHLY RECOMMEND A CAR UNLESS YOU LIVE IN OLD SAN JUAN

Is it possible to buy fresh, organic fruits and veggies grown on the island or are these items imported?

YES

Are there small towns, within 60 minutes of a large city, with public transportation and close proximity to the water?

CLOSE PROXIMITY TO WATER: YES; RELIABLE PUBLIC TRANSPORTATION: NO

How would you describe the expat community?

I NEVER NOTICED AN EXPAT COMMUNITY BUT I'M SURE THERE ARE OTHER PEOPLE WHO HAVE TAKEN PART IN ONE

Are there insect problems? Mosquitos? Fleas? Flys?

MOSQUITOES CARRYING DENGUE

Can you drink the water right out of the tap or is bottled water necessary?

WATER IS SAFE TO DRINK BUT DOESN'T TASTE VERY GOOD. MOST PUERTO RICANS BUY BOTTLED WATER, IN MY EXPERIENCE

Are the sewerage treatment facilities adequate?

SEEM TO BE

Thank you.

Rob Christie

A couple more answers:

grc1947 wrote:

An associate told me it is possible to become a resident of Puerto Rico, obtain a driver's license

Yes, if you are a US citizen or permanent resident. If not you need a green card or special visa.

grc1947 wrote:

Is the electrical grid in PR the same as the US or does one need an adapter for appliances?

It's 120V 60Hz but it's not reliable. Especially outside cites it's recommended to have a generator and a UPS for your computer is no luxury. Also electricity is very expensive compared to the US. Be prepared to pay at least twice as much for the same usage.

grc1947 wrote:

Transportation: Where is there good public transportation? Is it possible to function without a car?

Public transport only exists in the Metro are of San Juan. You need to have a lot of time if you want to use it.
Outside the Metro area you need a car.

I live in Rincon, northwest coast, so my info is based on my experience there and what I hear. If you want to be a resident of PR you are suppose to live there half the year + 1day or more and fill out the appropriate paperwork. You do not have to be a resident of PR to obtain a PR driver's license and you can do so using one of two procedures (1) turn in your US driver's license in exchange for a PR license, or (2) go through the procedure for a new license including lessons and test. In either way you can manage to keep your US license if you report it missing in your state and get a replacement.

I haven't had any safety issues in Rincon but that doesn't mean there is no crime. In my areas mostly people stealing this to buy drugs. I'll give some examples. (1) two ladies sitting on beach kid runs buy and grabs a hand bag; (2) house broken into an four surf boards stolen; condo on the ocean broke into while couple there, the man resists and is stabbed to death (only murder I've heard of in Rincon and I believe the culprit got 135 years). The police are occasionally useful. They are getting big on giving out tickets, I got one fort $150 for parking in the wrong direction.

As mentioned above same same plug and voltage as the US. As an aside electricity is expensive in PR 29 cents per kilowatt hour. Also I experience outages on occasion, hasn't been bad during the year.

Cost of living in Rincon. Housing is cheap (decent place $500/month, could be less, I pay $300 utilieis included), food can be expensive, depends on what you eat. I am vegan and it can be expensive (meat is cheap). There seems to be more and more small farmers growing quality produce. In Rincon they come to the Sunday open market in the town square. I also discovered a wholesale company where anyone can buy produce and they sometimes have things I can't buy in the local markets.

How well cell phones and internet work, or even availability varies greatly. Good thing to check out in the specific neighborhood you plan on making home. I have very good internet service with Choice (which costs $40/month; installation  went smoothly.some people call it No Choice). Cell phone reception at my place is not great but works, we have Verizon and I hear that AT&T is better.

There is virtually no public transportation. They built a bus station in town and a whole bunch of bus stops but then decided not to have buses. Folks use the bus stops now to sit and drink beer. You'll need a car.

Rincon is 20 minutes from a large mall having Home Depot, Sam's Club, movie theatre, Pep Boys, and other stores. 20 minutes down the road from there is a bigger mall containing Sears, Marshals, and many other stores. My point is that you can be in paradise (Rincon) and drive 20 minutes to buy a ladder, tool, or even watch a shitty movie. By the way Netflix is available, both streaming and CD by mail.

In Rincon there is a substantial, close knit ex-pat community that includes North American's and people from around the world (Israel, Portugal, Columbia, South Africa to name a few). There are also a lot of activities particularly during the Winter months, when there are also a substantial number of snow birds around.

Affirmative about insect and plant problems. During the dry season (Winter) a plant named Pica Pica (literally "Itch Itch") sheds tiny filaments into the air that cause itching. As mentioned above you can get Dengue from mosquitoes and get very sick (it is not uncommon, I know a whole bunch of people who had it). I myself have had an infected insect bite that had to be treated with antibiotics.

While we are on the subject of getting medical treatment PR health is very bad. In fact it is the only thing that makes me think twice of spending my golden years there. There is a thread about health care in PR, search to find it. And if you think you are too young and healthy to consider it a factor think again. You can have an accident or get a disease.

As mentioned above water is save to drink, a lot of people don't like the way it tastes. I use a Brita. However the problem with the water is not enough of it for all the homes and condo built. It goes out frequently. sometimes for days. Since Rincon is very laid back it's not a problem to skip a shower for a few days.

Sewage management facilities? Are they adequate? Water is tested every week at all the beaches in the Rincon and Aguadilla area and rated for bacteria. Sometimes it's high, sometimes not. During the rainy season it can get high because of run off. The construction of septic systems are regulated but I've been told that 95% of these were built before this and may not conform to regulations (think waste pipe depositing sewage over the hill).

Oh and about starting a business and taxation. As mentioned above PR has it's own tax system although it is part of the Social Security system - all employees (and employers I presume) pay into it. Aside from SS businesses and individuals do not file Fed or US state for income earned in PR. By the way the PR government makes it very hard to start a business (intentionally or not). Many hoops to jump through, many frustrations. The shortest time I know of is 6 weeks and he was fluent in Spanish and literally spent every day on it. For others it takes months and months. Also PR just imposed a 7% tax on wholesale goods meaning your supplier collects 7% and then you collect 7% from the retail customer. In Rincon the police are starting to crack down on businesses - for example one place was fined $1,000 for having lights on and people inside (their staff cleaning up) after midnight because they are supposed to be closed at midnight.

If you are planning to start a business I can put you in touch with people who have so you can get an idea of what you'll go through. Just message me.

Very good points by VictorLGlass and Gary above.

I've written elsewhere in this forum on the specifics to starting a business in PR. Here is a link to one such discussion: https://www.expat.com/forum/viewtopic.php?id=240853 and here is just what I wrote (please note some specifics of my post below may be dated, e.g. references to the Fortuño administration, and some procedures may have changed since I originally posted this):

"I write about this for educational purposes only. It's not legal advice. If you need legal advice, I recommend Lic. Yuannie Arrollo Casillas in Ocean Park: 787-258-5566; licyac [at ] gmail.com. I've used her before and she's good.

To register an LLC or LLP (which are the company types I imagine you would want to use), you should register and pay online. This service wasn't available when I did my last incorporation so I'm not sure if it's reliable or not. Either way, you pay and you get a receipt so it would just be a matter of following up. Here is a link to the PR SOS Corporations Division: https://prcorpfiling.f1hst.com/Creation  lity.aspx.

If you're having problems using the online system, here is a link to the company organization forms that you can use to submit your paperwork the old-fashioned way:  http://www2.pr.gov/agencias/estado/Page  Corp.aspx. If you go this route, I would not mail-in your paperwork. Take it personally to the PR SOS. The Secretary of State's Corporations Division is in Old San Juan. Go early in the morning. When I lived there, you'd notice a short line forming before the office even opens. This was/is because the "public servants" would stop accepting applications for forming a business after an hour or so, or a set limit of applications (like 15 or something ridiculously low). I don't know if Fortuño's administration was able to stop that practice or not. If not, I hope the new administration deals with it.

You'll quickly notice one of the many ways the PR government treats business owners and entrepreneurs like a vampire treats its victims: When you submit your paperwork, you have to choose one of I believe are three payment options for them to process your Certificate of Incorporation. The cheapest is $160 or thereabouts for what is supposed to take a few weeks, the next cheapest, if I recall correctly, is approximately $400 for a quicker turn-around, and then I believe there is even a more expensive option for two day incorporation. It's a shake-down. If you only pay the $100, they could sit on your application for as long as seven months, so make sure you go down there again. Don't just call - it would be a miracle if anyone actually answered the phone but as you may know, in PR it's all about face-to-face interaction if you want anything to get done.

You need your Certificate of Organization if you want to set up a business bank account (this is thanks to the Patriot Act). You'll also need to have your municipal business license in order to set up the bank account. I think Banco Santander PR has a list of exactly what you'll need on their website.

In addition, don't forget to register on the Compulsory Business Registry by July 15 of each year. This is handled by the Puerto Rico Trade and Export Company.

I'm very pessimistic about business ventures in PR. The government disdains business owners and punishes them as much as possible. They're viewed as cash-cows, not as risky enterprises that should be encouraged. Puerto Rico is where many good small businesses go to die. Then again, I'm a commercial bankruptcy attorney so perhaps I've simply seen too many failures."

It's a tropical island. They have just about every insect and creepy crawling thing you can think of. Plus some nasty parasites and diseases. I think only mosquitoes have been mentioned so far. There are the flying cockroaches (in addition to the standard German variety) that are almost big enough to kick your ass. Then there are my favorites, the centipededes. They are the creepiest and hard to kill In addition there are scorpions, tarantulas, ants of all types including fire ants. I hated that there are so many rats. They also carry a fatal disease called leptospirosis. Of course there are the various parasites that live in the fresh water where people swim. If I've missed any please chime in. But then there is the cool stuff like my favorite, the coqui. I miss their song so much. Other tree frogs abound. Sometimes they will jump on you but they mean no harm. Plenty of bird and butterfly species to look at. The lizards are fun to watch unless they are in your house or one of them crawls across you while you are sleeping. But unfortunately most of the wild life on the island seems to be in the form of stray dogs and cats. If you go there please be kind to them.

Listen to Nomad Lawyer, if anything he is understating the governmental strangle hold on business. Gregg K hits the insects right on the head. The centipede he mentions is venomous, we find them drowned dead in the pool all the time. I have to spray for mosquitoes every week, they are terrible and by the way, some of them carry dengue fever. Rats, bats, a mongoose that is the main carrier of rabies and don't forget the common black racer snake that is slightly venomous. You won't die if bitten, you'll just swell up and have to get pain meds. We have dozens of them around our house. The weather is good, depending where you are. In the south it is dry, we are near the rain forrest and get a lot of rain. In the states we pay 60 dollars a month for electricity for a two story, three bedroom house in the north east. Here we average 175 for a smaller house with no AC. Listen to these folks posting. They have all paid their dues and speak from experience. As for me, I would never start a business here. Oh...no public transportation, you need a car. Plan on paying 5 to 8 percent more as well as triple the registration costs.

After all the comments through this whole thread, I am so proud of all my expat friends in Puerto Rico and elsewhere who have given honest, intelligent and straight forward answers to those who are taking the time and effort to seek information before they make a move to the island. Some of the answers aren't pretty. It ain't pure paradise as some may tell you. But as we all know it has it's wonderful aspects as well. As I have said before, arm yourself with as much knowledge as possible before making that final decision. Moving there will require that you develop a whole new way of thinking, ways of doing and looking at things, how you deal with others and what your expectations are for your wants and needs.  You MUST be willing to be flexible, adaptable and more tolerant, than you realize if you want to find comfort and happiness there. I'm also comforted by the fact that through all of this conversation, no one has been chastised for saying anything that might smack of negativity. I love being part of an honest and genuine conversation where it's OK for people to express how they feel. Victor, sorry to hear about your ticket. But it sounds fishy. I think you may have been a victim of a cop who might have been pissed off by a gringo at one time. I've seen how they park there. I just wish they'd start handing out tickets to those that don't use turn signals. Which is most everyone. I can't say I miss the drivers. I live in Southern Orlando. It's almost like PR here. So they try to drive the same. They just don't get away with it as often. Our cops don't drive around with their lights on all the time so you never quite know where they might be.

Rob,

The tax incentives you are talking about ARE real.  You're referring to Act 20 and Act 22 that was enacted in 2012.

I recommend you get all the details on those incentives (and others) here:
puertoricotaxincentives.com

JohnExplorer wrote:

The tax incentives you are talking about ARE real.

That's some great information, thanks, John!

Thank you for posting this link, JohnExplorer.  A lot of good information there.

I read the web page describing the tax incentives and viewed the video. The incentives for hotels is impressive and could benefit small as well as large hotels. But then I viewed the video (I recommend you all view it too). I then realized that the hotel tax incentives mostly benefit those building substantial luxury accomodations and given their scale and the dollaros involved it is a huge huge incentive. But most of these hotels are part of global chains and bet you that a lot of the money generated leaves PR and goes into corporate coffers. Also the customers are those that afford $$$$ a day rooms (read suites) and $5,000,000 houses and condos. I also realize that these places employ a of of people ad that's good. View the video and be disgusted. Go to a place like Rincon, talk to small busness owners and be further disgusted by the de facto anti-business practices of the government.

Wow, pricey!  I hadn't watched the video when I looked at the site before.  But you are probably correct in that they money will most likely leave the island.  We used to travel to Jamaica often and have seen the same thing there, sadly.  So many foreign investors and the money doesn't go back into the local economy.  They generate jobs in the hospitality industry but the big $$ go elsewhere.

Thanks for all the great info everyone! Victor - I sent you a message.  My husband and father will be in your area from June 5-9 and would love to meet up to talk with you if you have time.

So the 2012 tax acts function like the older tax exemption schemes to attracted so many pharmaceutical companies to PR. The older tax exemptions have to be applied for using expensive lawyers so it's not a process meant for small businesses.