Don’t Expatriate from the U.S. to Avoid the PFIC or GILTI and Subpart F Regimes- Keep Your U.S. Citizenship and Become a Resident of Puerto Rico Instead
By Anthony Diosdi U.S. shareholders of controlled foreign corporations (“CFCs”) or passive foreign investment company stock or (“PFICs”) stocks use various planning options to reduce or defer U.S. taxation on foreign source income. Few of these investors understand that they can relocate to a tax haven to avoid the taxes associated with being a CFC or PFIC shareholder. So, just where is this tax haven? The tax haven is Puerto Rico.Puerto Rico is an unincorporated U.S. territory. Since Puerto Rico is an unincorporated U.S. territory, Internal Revenue Code Section 933(1) excludes U.S. federal income tax income derived from sources within Puerto Rico. After enduring economic hardship, Puerto Rico enacted Act 60 which provides some U.S. citizens a 100 percent exclusion from Puerto Rican income tax for all interest, dividends, and…