Puerto Rico Company Formation & Registration

Can a Foreigner Really Own a Company in Puerto Rico?

Yes — and you don't need a US passport to do it. Puerto Rico sits 1,000 miles southeast of Florida, uses the US dollar, runs on US banking rails, and lets you incorporate in Puerto Rico with a single owner who lives anywhere on earth. Qualifying export businesses pay a flat 4% corporate tax under an Act 60 decree. Filings are in English. You can file online in days, not months. If you want a US-adjacent structure without US federal corporate tax on Puerto Rico-source income, this is one of the shortest routes there is.

What Makes a Puerto Rico Business Worth Forming?

Puerto Rico is an unincorporated territory of the United States, which gives it something no US state has: the power to set its own income tax rates. The Puerto Rico government has used that power hard to pull in outside capital.

• 4% corporate tax on export income. A business holding an Act 60 export services decree pays a flat 4% Puerto Rico income tax on qualifying income — against standard rates that reach 37.5%.
• No federal corporate income tax on Puerto Rico-source income. Because the island is a territory, locally sourced income of a bona fide Puerto Rico business falls outside the ordinary US federal net under IRC §933.
• One owner is enough. A single person can be the sole director and sole shareholder. There is no nationality or residency requirement.
• No minimum capital. No authorised share capital floor, and no paid-up minimum.
• English throughout. English and Spanish are both official. Every statute and corporate document is available in English.
• The US dollar. No currency conversion, no exchange controls.

Go deeper on the tax side at our Puerto Rico tax incentives and Puerto Rico tax haven pages.

Business Entities: Should You Pick a Corporation or LLC?

This is the first real decision, and it changes your tax bill. Puerto Rico registers several kinds of business entities, but two carry almost all the traffic.

A Puerto Rico corporation is a separate legal person. It owns property, signs contracts, sues and is sued in its own name, and pays tax on its own income. Shareholders risk only what they put in.

A Puerto Rico limited liability company — in Spanish a Compañía de Responsabilidad Limitada — gives the same liability shield with lighter internal machinery. LLC members can customize their capital contributions and their shares of profits and losses in a written agreement, instead of being locked into rigid share classes.

One warning that catches people out: Puerto Rican LLCs are taxed as corporations by default. If you expected automatic pass-through treatment, check that first.

Fees and the LLC annual-fee treatment confirmed against the Puerto Rico Department of State Registry of Corporations and Entities, which states that limited liability companies are not required to file an Annual Report and pay only the US$150 annual fee on or before 15 April.

How Do You Incorporate in Puerto Rico?

Puerto Rico incorporation runs on one statute and one registry. The statute is Act 164-2009, the General Corporation Law. The registry is the Puerto Rico Department of State. Here is the full sequence to form a Puerto Rico corporation.

1. Clear your name. It must be unique and must carry Corporation, Corporación, Incorporated, Incorporado, Corp. or Inc. Search the Department of State's Corporations Search first. You can hold a name for 120 days by filing an Application for Reservation of Corporate Name and paying US$10.
2. Appoint a resident agent. Every corporation must keep one. See the next section.
3. File the Certificate of Incorporation. Online, by mail, or in person. US$150. The company exists the moment it is filed.
4. Get an EIN. Your federal tax identification number, issued free by the IRS.
5. Adopt bylaws. Internal rules on meetings, stock, officers, finances and records.
6. Hold the organisational meeting. Minimum two days' notice, waivable in writing. It does not have to be held on the island.
7. Open a corporate bank account. Bring the Certificate of Incorporation, the bylaws and the EIN.
8. Handle registration and licensing. Register with the Departamento de Hacienda through SURI and obtain a Merchant's Registration Certificate before you start trading.

The Certificate of Incorporation asks for the corporate name, the designated office address, the resident agent and address, the business purpose, authorised shares and their par value, share rights, the incorporator, the initial directors, the term of existence, the effective date, and an email address.

Be clear about what that puts on the record, because Puerto Rico is not a nominee-and-secrecy jurisdiction. The certificate of incorporation is open to public inspection under Article 1.01 of Act 164-2009, and Article 1.02 requires it to carry the name and address of every incorporator — and, where the incorporators' powers end when the certificate is filed, the names and addresses of the people who will serve as directors until the first annual meeting. The annual report then names at least two serving officers each year, with their mailing addresses and the expiry dates of their terms.

Shareholders are the exception. No filing with the Department of State asks who owns the stock, so ownership stays off the public register while the people running the company do not. If privacy is the whole reason you are looking at this structure, that distinction should shape the decision.

Forming an LLC in Puerto Rico

Forming an LLC takes fewer moving parts. Four steps and you are trading.

1. Pick your LLC name. Your LLC name must include Limited Liability Company, Compañía de Responsabilidad Limitada, LLC, CRL, L.L.C. or C.R.L., and must not already be taken.
2. Appoint your registered agent. They must have a registered office — a real street address on the island, not a PO box.
3. File the Certificate of Formation. US$250 to the Department of State. You can download the form or file through the Registry of Corporations and Entities.
4. Set up your business operations. Write the operating agreement, get the EIN, open a dedicated account, and get licensed.

The Certificate of Formation needs the company name, principal office (a street address), mailing address (PO boxes accepted here), business purpose, registered agent, the name and mailing address of each authorised person, term of existence, effective date, signature and email.

Skip the operating agreement and your LLC in Puerto Rico falls back on default statutory rules — which means less control, not more.

Who Can Be Your Puerto Rico Registered Agent?

Every company on the register needs one. Puerto Rico also calls them resident agents, and the requirement covers domestic and foreign entities alike.

Your Puerto Rico registered agent can be an individual or company. Either way they must:

• Hold a physical Puerto Rico address — never a PO box
• Keep normal business hours at it
• Accept service of process and forward your important legal documents without delay

You may act as your own agent. The cost is that your name and address go on the public record, and you have to physically be there during business hours to take a summons. Most owners hire a registered agent service instead and let the provider's address appear on the filing.

Changing agent later costs US$60 for a corporation and US$80 for an LLC, filed in person at the Department of State or online through the Registry. There is no postal option.

Key Corporate Features

What Does It Cost to Form Your Puerto Rico Company?

Two numbers matter: what the government charges, and what your agent charges.

Government fees are fixed and published by the Department of State. US$150 to file a Certificate of Incorporation, US$250 for a Certificate of Formation, US$5 for a non-profit corporation, US$10 to reserve a name for 120 days, US$150 for a trade name, US$150 a year to stay on the register. Expedited processing is available on top: US$150 for a guaranteed 24-hour turnaround, and a same-day option for larger jobs.

Our incorporation package is a complete, ready-to-operate business setup, not a bare registration. Pricing for our Puerto Rico company formation service starts from US$1,450, with an annual renewal from US$950 covering your registered agent, registered office, secretarial maintenance and the US$150 government annual fee.

Incorporation Package Includes

1. Government Registration Fee (first year)
2. Registered Office Address (first year)
3. Registered Agent Services (first year)
4. Company Secretarial Maintenance
5. Certificate of Incorporation
6. Memorandum & Articles of Incorporation
7. Appointment of 1st Directors
8. Consent Actions of the Board
9. Share Certificates
10. Register of Directors, Officers and Shareholders
11. Free phone and email consultations

How Is a Puerto Rico Business Taxed?

Here is the correction that matters most on this page.

Act 20 and Act 22 no longer exist as application routes. Act 60-2019, the Puerto Rico Incentives Code, consolidated them — and dozens of other decrees — into a single statute effective 1 January 2020. Every new incentive application since then is filed under Act 60 through the Department of Economic Development and Commerce (DDEC). Anyone still selling you "an Act 20 company" is describing a programme you cannot apply to.

Without a decree, a Puerto Rico corporation pays a normal tax of 18.5% plus a graduated surtax, for a maximum nominal rate of nearly 37.5% on income above US$275,000. That is the number the decree is designed to replace, and it is why the decree, not the company, is the thing that actually saves you money.

What an Act 60 Chapter 3 export services decree delivers:

• 4% flat income tax on qualifying export services income — and 2% for the first five years where annual business volume is under US$3 million
• 100% exemption on distributions of that income to Puerto Rico resident owners
• 75% exemption on real and personal property taxes, and 50% on municipal licence taxes
• A decree that functions as a contract with the government, granted for 15 years and extendable by a further 15, so later amendments generally do not reach decrees already issued

The decree is the whole game, and it is not a mailbox product. Chapter 3 requires a bona fide office or establishment in Puerto Rico, services performed on the island for clients with no Puerto Rico nexus, and — once total revenue passes US$3 million — at least one full-time employee, who may be the owner. A decree application fee applies, and once the decree is granted you file an exempt annual report with the DDEC's Office of Incentives.

Both run through the Office of Incentives portal, where the applicable filing fee is paid online. The DDEC has set the exempt annual report deadline for Act 60 grant holders at the fifteenth day of the eleventh month following the close of the tax year, and has said it is strictly enforcing compliance with those filings. Fee amounts are published on the portal at the point of filing; we quote them from there rather than from secondary summaries, which disagree with each other.

Read the statute at the Office of Management and Budget's official English text of Act 60-2019, as amended.

Sales and use tax on the island runs at 11.5% — 10.5% commonwealth plus 1% municipal. Municipal licence tax (patente municipal) typically runs 0.2% to 0.5% of gross receipts depending on the municipality and activity.

Two statutes govern your company between them. Act 164-2009 controls how the entity is formed, run and kept on the register. The Puerto Rico Internal Revenue Code of 2011 controls what it owes. Act 60 sits on top of both, and only where you hold a decree.

Staying Compliant After You Set Up Your Business

Formation is the easy part. Staying registered is where companies quietly die.

Under Chapter 15 of Act 164-2009, every corporation must file an annual report with the registry of legal entities by 15 April each year. It must carry the registration number, designated office and mailing address, resident agent details, at least two officers with their addresses and term expiry dates, and a statement of financial condition for the prior year. Cross US$3 million in turnover and that statement must be audited by a CPA licensed in the Commonwealth of Puerto Rico.

LLCs get off lighter. Per the Department of State, limited liability companies do not file an annual report at all — they simply pay an annual fee of US$150 by the same 15 April deadline.

Miss it and a for-profit corporation faces fines running from US$750 to US$2,000 at the Secretary's discretion. Miss the annual report for two consecutive years and the Secretary is authorised to revoke your Certificate of Incorporation — at which point the entity loses the capacity to sue, contract or defend itself until it is reinstated with back fees and penalties paid.

Already operating in Puerto Rico through a company formed elsewhere? You need an authorization to do business instead of a new formation — which means filing a recent certificate of existence from your home jurisdiction, naming a resident agent, and disclosing assets, liabilities, purpose and directors. The filing fee is US$150 for a corporation and US$250 for an LLC.

How Is Puerto Rico Company Formation Changing in 2026?

The development. On 10 March 2026, Governor Jenniffer González-Colón signed Act 38-2026, amending Act 60's Individual Resident Investor programme. It extends the programme's sunset from 31 December 2035 to 31 December 2055, and for decree applications filed on or after 1 January 2027 it replaces the 0% rate on interest, dividends and post-residency capital gains with a 4% rate. A six-year prior non-residency test now applies to those later applicants. Reported by Grant Thornton Puerto Rico, 20 March 2026 and DLA Piper, March 2026.

The deadline nobody should miss. The rate that applies is fixed by the date the application is filed — not the date you relocate, and not the date the decree is approved. An Individual Resident Investor application filed on or before 31 December 2026 is grandfathered into the 0% structure through 2035. One filed on 1 January 2027 is not. If the personal decree is part of your plan, that is roughly four months from the date of this page.

The corporate side did not move. Act 38-2026 amended sections 1020.02, 2022.01, 2022.02, 6020.03 and 6020.10 of Act 60 — the Chapter 2 individual investor provisions. The Chapter 3 export services decree, the 4% corporate rate and the distribution exemption were left intact. If someone has told you Puerto Rico raised taxes on companies, they have read the wrong half of the statute.

What 25 years of formation work tells us. The headlines read "Puerto Rico raises taxes." They are describing the wrong half of the structure. What changed is the personal decree of the owner who receives the distributions, not the company that generates them. We have watched clients build the entity beautifully and then discover the extraction route was the constraint all along. On this island the entity and the owner are two separate applications, governed by two separate chapters, and only one of them moved.

Enforcement is the real 2026 story. A GAO report published in December 2025 pressed the IRS to improve oversight of taxpayers claiming the federal exemption, noting Hacienda's projection that Puerto Rico will forgo US$4.4 billion through the resident investor incentive between 2020 and 2026. The IRS has an active Large Business & International campaign on Act 60, and in April 2026 the Senate Finance Committee referred concerns about opinion letters used to support Act 60 positions. On the island, the DDEC's incentives office has been auditing decree holders and issuing automatic fines for late annual reports. None of this touches the legality of forming a Puerto Rico company — it touches whether a decree survives scrutiny. Build the substance, or do not build at all.

A hedged prediction. A 4% rate locked in for thirty years is a more durable proposition than a 0% rate expiring in nine, and legislatures rarely reverse a rate they have just defended. We would expect the post-2027 terms to hold, and expect residency and substance testing to keep tightening rather than loosen. That is a reading of the trend, not a guarantee — decree terms are political, and this one is only months old.

One status point worth knowing. Act 38-2026 took effect on enactment under its Article 8, but the professional commentary published at the time — DLA Piper and Procopio, both in March 2026 — recorded that it was still awaiting final endorsement from the Financial Oversight and Management Board for Puerto Rico. As at August 2026 we have found no published confirmation that the endorsement has been issued. None of this reaches the corporate side of this page, which Act 38-2026 did not amend. If an individual decree application against the 31 December 2026 deadline is part of your plan, have your Puerto Rico counsel check the Board's current position before you file.

Frequently Asked Questions

• Can a foreigner start a business in Puerto Rico?

  Yes. There is no citizenship or residency requirement to own or direct a Puerto Rico company. One person can be the sole director and sole shareholder, and that person can live anywhere. You will need a Puerto Rico registered agent with a physical island address, and an EIN from the IRS. Note that a US Social Security number makes the EIN application easier — without one you file a paper application rather than applying online.

• Is a Puerto Rico company an offshore company or an IBC?

  Neither, strictly. Puerto Rico has no International Business Company statute and no separate offshore companies law. What you form is a domestic Puerto Rico corporation or LLC under the General Corporations Act, Act 164-2009 — the same entity a San Juan business uses. What makes it work for non-residents is the tax position: Puerto Rico sets its own income tax rates as a US territory, and an Act 60 export services decree brings qualifying income down to 4%.

• How much does it cost to form and renew a Puerto Rico company?

  Government filing is US$150 for a corporation and US$250 for an LLC. Non-profit corporations file for US$5, name reservation is US$10, and a trade name is US$150. Renewal is US$150 a year for both entity types, due 15 April. Our incorporation package starts from US$1,450 and includes the first-year government fee, registered office, registered agent, secretarial maintenance and the full corporate record book, with annual renewal from US$950.

• How long does Puerto Rico company formation take?

  A corporation exists the moment its Certificate of Incorporation is filed. Online filing typically clears in two to five business days once the name is approved and documents are correct, and the Department of State offers a guaranteed 24-hour turnaround for an additional fee. Budget longer for the full operating setup — the EIN, Hacienda registration and Merchant's Registration Certificate add weeks after the entity itself exists.

• Can I reserve a company name before I file?

  Yes. File an Application for Reservation of Corporate Name with the Department of State and pay US$10. That holds the name for 120 days while you prepare the rest of your paperwork.

• Can I be my own registered agent?

  You can. The trade-off is that your name and street address become public record, and you must be physically present at that address during business hours to accept service of process. Most owners use a registered agent service so the provider's address appears on the filing instead.

• How do I change my registered agent later?

  File a Certificate of Change of Resident Agent in person at the Department of State, or file the amendment online through the Registry. There is no postal option. The fee is US$60 for a corporation and US$80 for an LLC.

• Do I need bylaws for a Puerto Rico corporation?

  The statute permits bylaws to be adopted by the incorporators or initial directors but does not strictly compel them. In practice almost every corporation adopts them, because banks and lenders ask to see them and because they settle in advance how meetings, stock, officers, finances and amendments are handled. Bylaws are internal — they are not filed with the Department of State.

• Do Puerto Rico LLCs pay tax?

  Yes. Puerto Rico LLCs are taxed as corporations by default, which surprises owners expecting automatic pass-through treatment. Local Puerto Rico taxes apply regardless of entity type. If you live on the island full time and the business is based there, Puerto Rico-source income sits outside the ordinary US federal net — but the local liability remains.

• What is the difference between an INC and an LLC?

  Both shield owners from business debts. The differences are tax treatment and internal machinery. A corporation is a separately taxable entity and issues shares. An LLC uses membership interests and a limited liability company agreement, letting members set capital contributions and profit shares to suit themselves. On the island the default tax treatment converges, so pick on governance and investor expectations rather than tax alone. The LLC also files no annual report — just the annual fee.

• What tax rate does a Puerto Rico company actually pay?

  Without a decree, a normal tax of 18.5% plus a graduated surtax, reaching a maximum nominal rate of nearly 37.5% on income above US$275,000. With an Act 60 Chapter 3 export services decree, a flat 4% on qualifying export income, dropping to 2% for the first five years where annual business volume is under US$3 million, plus a 100% exemption on distributions to Puerto Rico resident owners. The decree is what creates the saving, not the company — and it requires a bona fide office and real activity on the island.

• What licences do I need before trading?

  Register with the Departamento de Hacienda through the SURI portal and obtain a Merchant's Registration Certificate — apply at least 30 days before you begin operations. Municipal permits and a municipal licence tax (patente municipal) may also apply, typically 0.2% to 0.5% of gross receipts, and some professions require a separate licence. You need your EIN before you can register with Hacienda.

• Did Act 38-2026 change anything for my company?

  Not on the corporate side. Act 38-2026, signed 10 March 2026, amended the Chapter 2 Individual Resident Investor provisions: it extended that programme to 31 December 2055 and replaced the 0% rate on interest, dividends and post-residency capital gains with 4% for applications filed on or after 1 January 2027. The Chapter 3 export services decree, the 4% corporate rate and the distribution exemption were untouched. If the personal decree matters to you, note that applications filed on or before 31 December 2026 keep the 0% terms.

Ready to Form Your Puerto Rico Company?

A Puerto Rico corporation or LLC gives you a US-dollar structure with one owner, no minimum capital, English-language filings, and a route to a flat 4% corporate rate through an Act 60 export services decree. Government costs are modest and the annual burden is light. The rules changed in 2026, the individual-decree window closes on 31 December, and enforcement is tightening on both sides of the water. Talk to us before you file, and we will build the structure around where you actually want to end up.