The U.S. territory of Puerto Rico is seeing renewed interest among crypto investors drawn to the fact that it does not charge federal income tax and that eligible investors can pay zero tax on their crypto earnings.
Under Local Law 22, those who live in Puerto Rico for at least half of the year are exempt from taxes on interest, dividends, and capital gains, meaning they can keep most or all profits from crypto or other investments without having to relinquish residence in the United States.
The territory’s popularity as a crypto tax haven was highlighted when news revealed that Frances Haugen, the Facebook whistleblower, had moved to Puerto Rico in March. But it’s been a haven for cryptos for years, including Bitcoin billionaire Puerto Rico who owns a nine-bedroom mansion there.
Logan Paul, social media personality and founder of Cryptozoo, moved to the island earlier this year where he rents a mansion for $ 55,000 per month. Paul told Time Magazine that the island’s tax-exempt status was a big part of the appeal:
“In Puerto Rico, you are motivated to do more and make more money because of the implications that come with it.”
Crypto-related firms that have moved to Puerto Rico in recent years include New York City hedge fund Pantera Capital and Silicon Valley NFT SuperRare Marketplace. More traditional types of finance like the legendary hedge fund manager John Paulson have also become residents.
The Puerto Rico Blockchain Trade Association (PRBTA) recently announced the inaugural Puerto Rico Blockchain Week for December 2021, which aims to attract more crypto-millionaires and investments to the island.
“We seek to connect entrepreneurs with communities in Puerto Rico and educate them on the multiple benefits available in the crypto age,” said Keiko Yoshino, Executive Director of PRBTA.
The migration of capital that crypto brings to Puerto Rico drives economic growth, but has drawbacks for locals. Projects like Puertopia, which is a crypto-utopian community in San Juan, are accused of causing housing prices to skyrocket.
Puerto Rico isn’t the only place competing for crypto dollars.
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In an effort to attract investors and crypto companies, El Salvador is also offering significant tax breaks on trading Bitcoin with investors exempt from paying capital gains and income tax on Bitcoin.
Other classic tax havens have a favorable environment for cryptocurrencies, including Switzerland, the Cayman Islands, and Malta. Saint Kitts and Nevis, home to “Bitcoin Jesus” Roger Ver, helps crypto savvy investors avoid taxes and offers an investment citizenship program and asset protection benefits to millionaires and businesses alike. cryptography.
In Portugal, crypto traders and miners are exempt from income tax and in April the country approved the digital transition action plan that will promote the creation of dedicated economic zones to encourage blockchain-based businesses. .