Puerto Rico Act 60 and Crypto in 2026: Decrees, Residence and Source

Puerto Rico is not an automatic zero-tax destination for anyone who moves there. Act 38-2026 changed the Individual Resident Investor framework: qualifying applications filed by 31 December 2026 can request the existing 0% treatment through 2035, while a 4% option can extend through 2055. A decree, bona fide Puerto Rico residence, Puerto Rico source and the timing of appreciation are separate requirements. Pre-move gains, business income and federal filing duties do not disappear.

Act 38-2026 changed the Act 60 investor decision

Puerto Rico enacted Act 38-2026 on 10 March 2026. DDEC Informative Bulletin 2026-004 says the Office of Incentives will receive Individual Resident Investor applications for total exemption on qualifying net capital gains, interest and dividends through 31 December 2026. Applications timely filed before 1 January 2027 retain the substantive 0% terms in force at filing, even if approved later, and the resulting decree expires on 31 December 2035.

The same bulletin describes an alternative 4% fixed rate with a decree ending 31 December 2055. A pending applicant who chooses that route must expressly waive the 0% option. An existing qualifying decree holder can request an extension, but the 4% rate begins from 1 January of the year in which the extension request is filed and approved under the stated framework. A person cannot simply combine 0% through 2035 with a guaranteed automatic 4% extension.

The three-part bona fide residence framework

Federal territory rules generally require a person to satisfy the presence test, have no tax home outside Puerto Rico and have no closer connection to the United States or another country than to Puerto Rico. The presence test has several alternatives; the familiar 183-day route is only one. Publication 570 explains special travel-day rules, significant connections and the year-of-move exception.

Evidence should show a real relocation: home, days, family, work, banking, licences, voter registration where eligible, charitable and social connections, business management and personal belongings. A Puerto Rico address on an exchange or a short visit does not establish bona fide residence. Maintaining a main office, family home or closer economic life elsewhere can defeat the result.

Form 8898 can be required when a person begins or ends bona fide residence and meets the income threshold in its instructions. The IRS instructions state that failure to file can trigger a USD 1,000 penalty unless reasonable cause applies. Keep the day log and residence evidence with both the US and Puerto Rico returns.

Crypto gains depend on source and when appreciation arose

Section 933 generally excludes qualifying Puerto Rico-source income of a bona fide Puerto Rico resident from US gross income, subject to its rules. Personal-property gains are often sourced by residence, but sections 865 and 937 contain important exceptions. The IRS Chief Counsel memorandum AM 2024-005 explains that bona fide residence does not automatically move all historic appreciation to Puerto Rico.

For certain property owned before becoming a Puerto Rico resident, a ten-year lookback can preserve US-source treatment for pre-move appreciation. Marketable securities have allocation and election rules; other personal property can follow special rules. Whether a crypto asset is a security, commodity, other personal property, inventory or part of a business is therefore material. The memorandum is legal analysis, not a ruling that every token fits one bucket.

Create a defensible value snapshot at the effective move date for every material asset and keep the valuation source, timestamp, units and wallet proof. Later sales should separate pre-move and post-move appreciation under the applicable rule. Do not use the sale price as the move-date value or assume that changing wallet custody creates a new tax basis.

Staking, mining, validator income, lending, consulting, token promotion and an organized trading business require their own source and character analysis. Act 60 investor incentives cover specified passive income and capital gains under the decree; they do not automatically cover service or business receipts.

A decree has ongoing conditions, not just a rate

An applicant must use the Puerto Rico incentives process and obtain a decree. DDEC performs eligibility review and requires supporting information. Bulletin 2026-004 also confirms different prior-residency rules: an application filed before 2027 uses the specified 2006-to-2012 restriction, while an applicant filing after 2026 generally must not have been a Puerto Rico resident during the six years immediately before relocation.

Act 38-2026 also changed the primary-residence commitment for applications filed from 2027. The DDEC bulletin requires qualifying title and registration evidence in the individual, jointly with a spouse or through a qualifying grantor trust. Pre-2027 applications retain the earlier substantive property rules unless a later extension brings the new limitation into play.

Annual reports, fees, charitable contributions, home ownership and other decree terms must be checked against the decree and current regulations. Noncompliance can jeopardize benefits. Use the official incentives portal and keep filing confirmations rather than relying on a promoter's checklist.

Federal and Puerto Rico returns still matter

A bona fide resident who is a US citizen or resident alien generally files a Puerto Rico return reporting worldwide income under Puerto Rico rules and a US return that excludes qualifying Puerto Rico-source income. US-source and other non-excluded income remains on the federal return. Self-employment tax can remain federal even when the related income is Puerto Rico source, subject to the detailed rules.

The taxpayer must reconcile the two returns, information statements and the crypto ledger. Form 1099-DA reporting does not decide source or Act 60 eligibility. Foreign accounts and entities can trigger FBAR, Form 8938 or other federal information returns. Estimated tax and withholding must be allocated to the correct jurisdiction.

A person who is not a bona fide resident generally cannot use section 933 to exclude Puerto Rico-source income in the same way and can face broader federal inclusion. A move-year return may require allocation and special procedures. Publication 570 is the federal starting point; Puerto Rico Hacienda instructions govern the local return.

The US crypto capital-gains guide explains the Form 8949, Schedule D and income categories that remain relevant before applying the territory-source overlay.

Example: Bitcoin bought before the move

Assume an investor buys Bitcoin while living in Florida, moves to Puerto Rico, becomes a bona fide resident and later sells. The full gain is not automatically exempt merely because the sale occurred after the move. The adviser must determine the asset category, move date, move-date fair market value, applicable pre-residency sourcing rule, decree coverage and whether the residence requirements were met for the year.

Now assume the investor buys a separate Bitcoin lot after becoming a bona fide resident and later sells it while compliant with a qualifying decree. That lot can present a stronger case for Puerto Rico-source post-move gain, but business status, decree terms and federal exceptions still require verification. Lot identification and wallet transfers are decisive evidence.

Before relying on Act 60 for crypto

1. Model the US and Puerto Rico residence dates using the full presence test.
2. Confirm eligibility and the 2026 application deadline with current DDEC rules.
3. Choose the 0%-through-2035 or 4%-through-2055 framework deliberately.
4. Inventory every pre-move token, contract and entity interest.
5. Obtain and preserve move-date valuations and lot-level basis.
6. Separate investment gains from staking, mining, services and business income.
7. Map each item to US, Puerto Rico or other source under the actual asset rule.
8. Complete decree, home, donation, annual-report and fee obligations.
9. Reconcile both tax returns and all federal information reporting.
10. Retain residence, source and decree evidence for the limitation periods.

For relocation controls, use the crypto tax moving guide and the records checklist.

Frequently asked questions

Official sources

• DDEC Informative Bulletin 2026-004: Act 38-2026
• Puerto Rico DDEC: Act 60-2019 Incentives Code and incentives office
• IRS Publication 570: US territories
• IRS: Instructions for Form 8898
• IRS Chief Counsel Memorandum AM 2024-005: source of property gains

Reviewed against official sources available on 2 September 2026. Act 60 applications and crypto sourcing should be reviewed by advisers licensed for both US federal and Puerto Rico tax.

Disclaimer: This article is for general informational purposes only and does not constitute tax advice. For individual tax advice, consult a licensed tax professional.