Donor Information

The Requirements for the Act 22 and 60 Donation

Article from relocatepuertorico.com

In addition to establishing bona fide residency in Puerto Rico, one of the requirements of the Act 22 (now Act 60 Individual Resident Investor) program is a yearly donation to a Puerto Rican charity or nonprofit organization. Under Act 22, the required donation amount was $5,000, but this has jumped to $10,000 under the newly enacted Act 60. While investors are more or less free to choose the organization they donate to, there are some rules they have to pay attention to.

Act 22 Investors

Anyone who holds an Act 22 decree must donate $5,000 to a Puerto Rican nonprofit entity of their choice each year to maintain their tax incentives. The organization must be certified under Section 1101.01 (a) (2) of the code Internal Revenue Code of Puerto Rico, and it cannot be controlled by the investor themselves nor by any of their relatives, their spouse, or their partner.

The organization the investor donates to must operate in Puerto Rico. To ensure the entity is compliant with Section 1101.01 (a) (2), it’s recommended that investors request to see their IRS and Hacienda certification (Certificacion de Vigencia de Exencion Contributiva de Entidad sin Fines de Lucro). Another option to verify that your nonprofit organization of choice is properly certified is to contact Hacienda.

Act 22 investors must make their donation before December 31 of each year and must present proof of their donation in the annual report they are required to submit each May.

Act 60 Investors

The above instructions apply to people who have already applied for Puerto Rico tax incentives under Act 22. Going forward, all applicants will be subject to the new Act 60 rules, which are similar but introduce a few important changes.

Act 60 investors are required to donate double the amount that Act 22 decree holders donate, but the donation is split into two parts—a donation of $5,000 to two different organizations is required under Act 60. Like with Act 22 donations, the nonprofit entities must operate in Puerto Rico and not be run by the investor or their family, spouse, or partner. Act 60 investors must also submit their donation before December 31 and present proof in their annual report in May.

The first $5,000 must go to a nonprofit organization listed by Comisión Especial Conjunta de Fondos Legislativos para Impacto Comunitario (CECFL), which publishes an annual list with approved organizations. The list for 2020 has been published and will continue to be updated until December 16.

The second $5,000 can go to any Puerto Rican nonprofit entity of the investor’s choice, as long as it falls under Section 1101.01 of the Puerto Rico Internal Revenue Code. This allows for a broader pool than Act 22’s restriction of donations to Section 1101.01 (a) (2)–certified nonprofits. One point to bear in mind, however, is that the organization cannot be on CECFL’s list.