STAFF NEWS & ANALYSIS
A good reason NOT to move to Puerto Rico
By Joe Jarvis - February 26, 2020

It cost me $57 to get a new license in Puerto Rico.

I would have gladly paid double, triple, or even five times that amount if all it took was a few simple clicks online.

But the government bureaucracy doesn’t make it that easy.

I went down to CESCO, the local Puerto Rican version of the DMV, to get my license switched over.

It was the first thing in the morning, just after 8AM. I asked one of the “expediters” out front to help me out. You can pay these people to allegedly make sure you have the right documents, and help you through the process.

She walked me over to a different building to get my medical certificate. It was basically just some bureaucrat who asked, “You got anything wrong with you?”

“Um, no?”

It was actually quick and easy.

I returned to the CESCO building and took a ticket. An hour and a half later I did the math, and realized it would be at least another five hours before my ticket was called.

That’s when I went to Turnospr.com which I had read about hidden in the comments of a random blog about how to get a PR license. After creating an account and choosing the right department and location, you can actually watch in real-time which tickets are being called.

You’d think they would advertise this in big letters wherever you look.

As I left my “expediter” asked me why I didn’t just make an appointment… Probably because I didn’t know that was an option. What did I pay this lady for?

I came back around 4pm, waited another hour and a half, and then was asked if I took the alcohol course.

I hadn’t. It’s a new requirement.

I thought it was the expediter’s job to tell me I had everything I needed… but she was long gone.

But the woman working graciously offered to get the instructor to give me an abbreviated private alcohol class the next morning.

So I came back the next day, and listened for five minutes about all the terrible consequences of driving drunk in Puerto Rico.

Finally, when I presented all my various documents, I was told I had to go next door to the bank to buy another sticker if I wanted the “Real ID” required to board planes.

Then the process was quickly wrapped up, I had my new license. But I should have checked closer.

The license had me four inches shorter than my actual height, and weighing 0 pounds. So I went back again, and they corrected the issue and gave me a new ID.

Altogether, it took about a day and a half to get a Puerto Rican drivers’ license.

All said, this isn’t THAT much different than what you go through on the mainland at the DMV. 

But in Puerto Rico, everyone I dealt with was actually pretty pleasant. They weren’t rude or dismissive. The issue isn’t really the individuals. It’s the bureaucracy.

I’m sure if I had been nasty and combative out of frustration they could have made my life much more difficult.

Unfortunately, this is a reality that we all have to deal with. Government bureaucracy is unavoidable. And Puerto Rico is somewhere in the middle on the scale of how bad it is to deal with the government.

The big payoff in Puerto Rico is paying a 4% tax rate, and NO TAXES on most investment income.

As a US territory, Puerto Rico gets to make its own tax laws. This gives American citizens a rare opportunity to legally avoid paying US federal taxes on their worldwide income.

Act 20, the Export Services Act, allows businesses that move to the island, and export their services– like consulting, telemedicine, remote work, technical support, and so much more– to pay just 4% in corporate taxes, and take distributions tax-free. 

Act 22, the Individual Investors Act, allows you to pay no taxes at all on most capital gains, dividends, and Puerto Rico sourced investment income.

Plus in Puerto Rico, at least I can follow up a frustrating day of bureaucracy by sipping a margarita on the beach.

It seems daunting to move, to get a new license, to figure out which taxes you owe, to set up a new company.

And if the thought of learning a little Spanish and embarrassing yourself when you can’t communicate with the gas station clerk is just too horrible to fathom, Puerto Rico probably isn’t the right option for you.

You have to be willing to put up with a little bit of uncertainty. You can’t mind the occasional power outage, and the adventure of making your way through an intersection while the traffic lights are out, dodging crater-like potholes.

But to me, to NOT start my business, or NOT take advantage of ultra-low taxes, or  NOT move to a beautiful island paradise where I really want to live would be admitting defeat.

I’d feel like I was letting the system beat me, surrendering to the bureaucrats to make due with an easier, but less fulfilling, lifestyle.

So I put up with a little hassle, and now I work from my roof deck overlooking the water. Sometimes I even take a quick snorkel-break after lunch.

If you’re interested in joining me here and paying 4% corporate and 0% capital gains tax rates, check out Sovereign Man’s free in-depth article on Puerto Rico’s tax incentives, just updated for 2020.

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