As a physician or medical professional, whether you’re a radiologist, a tele‑medicine therapist, a consulting doctor, or a specialist in private practice, the idea of relocating to Puerto Rico may have crossed your mind.
You’ve likely heard about Act 60’s headline incentives — the 4% corporate rate, the 0% capital gains rate, the possibility of dramatically lowering U.S. federal tax liability. But what does Act 60 really mean for physicians and medical‑industry professionals?
I’ll walk you through how the law applies to your profession, what qualifying steps matter, what opportunities exist (including for tele‑health, remote therapy, radiology services, specialist consulting), and how to make sure you meet the compliance criteria and benefit fully.
1. Why physicians are a strategic fit for Act 60
Act 60 (the Puerto Rico Incentives Code) was designed to encourage growth of high‑value industries to the island, including service export operations — and physicians can fit squarely in that mold. According to the law, eligible export service activities include consulting and professional services rendered to clients outside Puerto Rico. Because physicians and medical professionals often operate on a global, national, or remote‑service basis, the model dovetails well with the Export Services provisions.
Currently thousands of doctors are utilizing the 4% tax rate as part of Puerto Rico’s physician‑incentive programs designed to retain or attract medical professionals. For specialists like radiologists working remotely, tele‑therapists offering online counseling to clients abroad, or physicians consulting from Puerto Rico to U.S. markets, the incentive structure holds real promise.
2. What physicians should understand about the relevant incentives
Export Services Incentive
Under Act 60 (specifically Chapter 3, Subtitle B, Section 2031.01 of the Incentives Code), businesses that establish a bona‑fide office in Puerto Rico, perform eligible services, and derive income from customers located outside the island may qualify for a 4% fixed net income tax rate. For a medical practice providing tele‑health or remote diagnostic services to U.S. or international patients, this can be an extraordinary benefit if properly structured.
Capital Gains / Individual‑Investor Incentive
For physician‑investors or medical‑practice owners with investment portfolios, Act 60’s Individual Resident Investor incentives (Chapter 2) may apply: bona‑fide residents may receive exemption or reduction of Puerto Rico tax on certain capital gains, interest and dividends.
3. How your medical practice might qualify — practical considerations
A) Establishing a bona‑fide Puerto Rico entity
As a physician, you might establish a Puerto Rico‑incorporated professional services firm (e.g., tele‑medicine practice, remote diagnostics, consulting) that qualifies under Export Services. That entity must have a bona‑fide establishment in Puerto Rico, and your income must derive from non‑Puerto‑Rico clients or patients.
B) Residency and personal qualification
You must become a bona‑fide resident of Puerto Rico under U.S. tax‑code tests: physical presence, tax home, and closer‑connection tests. The medical practitioner scenario may be especially relevant because you may be spending time on the island and serving patients remotely elsewhere. But you must meet established criteria.
C) Service delivery model
Radiologists working remotely, online therapists, medical consultants and international‑patient physicians may all satisfy the requirement that services be “exported” (i.e., delivered to clients outside Puerto Rico, with no connection to Puerto Rico). Eligible professional services and tele‑health fall under Act 60 if delivered to non‑Puerto‑Rico clients or patients.
D) Compliance and substance
Beyond setting up the entity, you need documentation: contracts with non‑Puerto‑Rico clients, bank statements showing payments, Puerto Rico payroll (if required), office or virtual office in Puerto Rico (with the necessary permits) and clear proof of residency. Especially for a medical practice, you’ll need to prove that your tax home shifted to Puerto Rico and that decision‑making and substantial management occur on the island.
4. What do doctors and medical professionals gain?
Reduced tax burden on practice income
If you establish your practice correctly, you may qualify for the 4% net income tax rate on your Puerto Rico‑based corporation. That’s a significant reduction compared to U.S. federal + state tax rates for many physicians.
Capital‑gains and dividend benefits
If you qualify as a resident investor (or you invest personally), gains realized after your residency may be exempt or greatly reduced — an opportunity often overlooked by physician‑investors or multi‑discipline medical entrepreneurs.
Lifestyle and geography advantages
For many physicians, relocating offers not just tax relief but improved quality of life: shorter commutes, easier work‑life balance, access to Caribbean nature and culture, and the ability to practice tele‑medicine from an environment with U.S. legal protections and infrastructure. This is particularly appealing in specialties where remote work, digital diagnostics, tele‑therapy, and consulting across borders are feasible.
5. Challenges and what to watch out for
Enforcement and audit risk
The IRS and Puerto Rico authorities have increasingly scrutinized Act 60, especially the bona‑fide‑residence rules and sourcing of income. We help you ensure that both residency and sourcing tests are met and documented.
Residency drift or tele‑commuting confusion
If you continue significant U.S.–based practice, spend many days in the U.S., or your decision‑making remains onshore, you risk failing the tax‑home or closer‑connection tests. Physicians must be especially mindful if they maintain U.S. operations simultaneously.
Virtual/remote practice still requires substance
Even if your services are remote, you still need a bona‑fide Puerto Rico establishment, legal licensing if required, local payroll (in some cases), and valid documentation of your business’s operational substance on the island.
Timing of capital gains
If you are a physician who owns investments (practice sale, equity in medical startups, real estate, etc.), the date you become resident matters. Gains incurred before residency may remain taxable; the rules governing “split‑holding period” and source rules can be complex.
6. Steps for physicians considering the move
Step 1: Evaluate your practice model. Are you providing services to clients/patients outside Puerto Rico? Is your business remotely deliverable?
Step 2: Establish your Puerto Rico entity and assess whether medical services fall under eligible Export Services or the physician‑incentive categories.
Step 3: Plan your move. Track days on the island, shift your tax home, relocate key decision‑making to Puerto Rico.
Step 4: Document everything. Contracts, invoices, service records, payroll (if applicable), residency records.
Step 5: Apply for the Act 60 decree (for the business and individual investor if applicable) and ensure you meet the personal‑residency tests. We can help you submit your application with all the required documentation.
Step 6: Manage ongoing compliance. Annual reporting, audit‑ready documentation, monitor any changes in law or IRS enforcement. Our team also assists with maintaining airtight compliance for both Puerto Rico matters with Hacienda and other government agencies, as well as U.S.-compliance with the IRS.
7. Why you need professional guidance
As a physician, your situation is unique. You deal with licensure, clinical practice obligations, tele‑medicine regulations, patient confidentiality, and cross‑border services. A qualified CPA familiar with both U.S. and Puerto Rico tax regimes (like my team at Delerme CPA) will help you navigate corporate structure, residency planning, licensing implications and audit risk.
We guide clients through:
- Assessing eligibility for your medical specialty
- Structuring remote or export‑service practice models (radiology, tele‑therapy, consulting)
- Applying for both the Act 60 business decree and setting up residency
- Ensuring compliance, documenting services, and preparing for audits
Final Thoughts
For physicians, moving to Puerto Rico under Act 60 can be more than a tax strategy, it can be a strategic life decision. By aligning your practice, residency, and earning model with Puerto Rico’s legislation, you open the door to meaningful tax efficiencies and a more attractive lifestyle.
But the key is clear, this isn’t plug‑and‑play. It demands structure, documentation, residency commitments, and expert guidance. If you manage it properly, though, the benefits, financial and personal, are very real.