The St. Regis Bahia Beach Resort in Puerto Rico boasts a golf course and oceanfront residences in a 483-acre nature reserve, set along azure waters and lush rainforest. But what’s perhaps most appealing to those who are now rushing to this property is the section on its website explaining tax benefits for island residents.

That was the case for Anthony Emtman, who left Los Angeles behind and bought a condo at the resort in March. The chief executive officer of Ikigai Asset Management is now a part of a burgeoning crypto community along Puerto Rico’s north shore, where the tropical weather is just a bonus.

Emtman and his crypto peers are taking a page out of hedge funds’ books and seeking residence on the island to reap huge tax savings. High-earning investors in the U.S. pay up to 20% in capital gains tax and as much as 37% on short-term gains. In Puerto Rico, they pay nothing. And companies based on the American mainland pay 21% in federal corporate tax plus an individual state tax, compared to just 4% on the island. That makes the move a no-brainer for some investors, especially as the crypto market’s meteoric growth continues and Democrats push for higher taxes on the rich. 

The presence of digital currency enthusiasts is already palpable on the small island, where chance encounters and networking opportunities abound: Run-ins at taco stands; spontaneous drinks and dinner at luxury condos; “Crypto Mondays” gatherings at hotels and restaurants across San Juan.

Crypto funds Pantera Capital and Redwood City Ventures are among those that have established offices on the island. Facebook product manager-turned-whistleblower Frances Haugen recently told the New York Times she's living in Puerto Rico in part to be with her “crypto friends.” New York City’s mayor-elect, Eric Adams, even flew there in November with crypto-billionaire Brock Pierce for dinner with Puerto Rico’s Governor Pedro Pierluisi.

Now, “it’s not just, ‘Move to Puerto Rico to save tax,’” said Giovanni Mendez, a corporate and tax attorney advising those who relocate. “It’s, ‘Move to Puerto Rico because everybody is there.’”

The Puerto Rican government created the tax breaks in 2012 with the hopes of infusing the island’s struggling economy with cash and diversifying its job pool. Hedge funds gradually began seeking a toehold on the island, but what’s really supercharged the flurry of arrivals is the pandemic—which drove a shift away from big cities and popularized remote work—and the recent explosion in crypto markets.

Proponents of the tax breaks describe it as not only a boost for an island that’s been mired in bankruptcy for more than four years—prolonged by hurricanes, earthquakes, a political scandal and the pandemic—but an opportunity for reinvention. Still, the idea has its detractors: Some of the laws only apply to new residents, so lifelong islanders are ineligible. It’s made some hesitant to welcome the new crop of wealthy denizens, fearful that the flow of income will exacerbate inequality and create social tension. As is, real estate prices are already rocketing to “absurd” levels.

During the last big crypto bull run in 2017, many investors tried to move to Puerto Rico before the market peaked and then collapsed, said Mendez. So far this year, Puerto Rico has received more than 1,200 applications—a record—through its Individual Investors Act, which exempts new residents from paying taxes on capital gains, according to the island’s Department of Economic Development and Commerce. The number of U.S. mainlanders seeking Puerto Rico’s tax breaks has tripled this year.

Another 274 corporations, LLCs, partnerships and other entities were approved for the Exports Services Act, which provides a 4% corporate tax rate and a 100% exemption on dividends. Both fall under Puerto Rico’s Act 60, a group of tax breaks that were packaged together in 2019 to attract investment not just from crypto, but finance, tech and other industries.

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