If you need to open a secure corporate account in Puerto Rico remotely, our Offshore Pro Group experts can recommend the right banks and render the customized set-up services for a reasonable fee starting from 3999 EUR.
Puerto Rico provides many incentives for non-resident and resident customers who wish to start, extend or diversify their businesses, secure their funds, trade, invest assets, and grow wealth in this jurisdiction. The menu of choices is quite attractive.
To simplify your search for information and help you acknowledge the benefits of such a worthy opportunity, our experts invite you to read this article and contact them at info@offshore-pro.info.
What is Puerto Rico’s status?
Puerto Rico’s dualism and incentives
Puerto Rico is a U.S. territory. However, it is not incorporated in the U.S.A. In other words, the Commonwealth of Puerto Rico is neither a sovereign country nor a state.
It has been discussed as a potential 51st state of the United States of America, although there are still some challenging issues to resolve.
It is supervised by the U.S. government and is subject to the U.S. federal jurisdiction. But Puerto Rico has a constitution of its own and is self-governing with the classical division of power into three branches: the Executive (led by the Gobernador), the Legislative (by the two-chamber Asamblea Legislativa ), and the Judiciary (whose highest authority is the Chief Justice of the Tribunal Supremo of Puerto Rico).
Puerto Ricans are citizens of the United States by birth and support statehood. However, they do not count in U.S. presidential elections and do not have voting representation in Congress.
Puerto Rico is part of the U.S. monetary union and does not have its own currency or central bank. Nevertheless, it is a tax haven from the Federal government since 2017.
Because Puerto Rico has a special status within the United States, companies who take advantage of Puerto Rico’s dualism and new incentive programs can move their business to Puerto Rico and enjoy huge exemptions on federal income tax and reduce their tax rate by as much as 90% (even with completely tax-free dividends paid out for the period of the company’s operation on this island). But to qualify for the benefits, such businesses need to prove that they export services from the island nation and contribute to the local economy . Owners need to move such businesses to Puerto Rico (without the need to actually live outside the United States, or give up US citizenship).
An impressive list of new tax incentives was introduced in 2018 (with some amendments in 2019). These incentives are available in 2020 to a variety of local and foreign businesses with qualifying types of activities.
There is a legal and administrative framework designed for the application, evaluation, and grant or denial of the tax incentive benefits by the government of Puerto Rico.
As usual, the devil is in details, so we recommend you to look at the existing requirements one by one – to be sure you can qualify for the attractive corporate tax rate. Just contact our experts at info@offshore-pro.info, discuss your specific questions and opportunities in Puerto Rico, and make sure you can take advantage of holding a corporate account with the right bank.
The Island of Enchantment
The Commonwealth of Puerto Rico is a popular tropical tourism destination covering over 143 islands, cays, islets, and atolls in the Caribbean Sea. Puerto Rico is its main and very beautiful island, the smallest one of the Greater Antilles.
Tourism (as well as pharmaceuticals) is an important component of Puerto Rico’s economy. This Island of Enchantment is world-famous and particularly popular with US holiday-makers because of the white sandy beaches, diving and snorkeling spots, exciting tourist sights, cultural attractions, delightful cuisine, comfortable accommodation, easy access by air and by sea, state-of-the-art medical facilities.
The Island of Opportunities
Puerto Rico is also often called the Island of Opportunities in terms of business development and investment.
Its advantages include the best business climate in the Caribbean, the generous tax incentives, the superb privacy policy in banking, the technically advanced financial and banking products and services, the high-speed internet and fiber optic cable, the top quality personnel, the well-developed network of highways, the availability of seaports and air hubs, the modern schools, the public health care standards, and the high-quality private medical facilities.
Moreover, the cost of living in Puerto Rico is considerably lower than in the USA.
Puerto Rico’s banks are particularly popular with U.S. citizens and U.S. companies developing offshore services and benefiting from holding bank accounts in Puerto Rico.
Puerto Rico’s resilience
The immediate proximity to the U.S. border and historical ties have had a tangible positive impact on Puerto Rico’s national economy, infrastructure, healthcare, and education.
The US assistance has helped the recovery of the Puerto Rican economy from the default in 2016 and after the devastating hurricanes in 2017.
The unlimited access to U.S. assets and the issue of highly marketable bonds allowed the government to cover damages, so in 2019 the economy, the GNP per capita, and the trade balance featured modest growth.
After contracting in FY 2020 due to the Covid-19 pandemic and earthquakes, the economy is expected to continue to slowly yet steadily recover in FY 2021.
Why are Puerto Rican banks considered US banks?
The Puerto Rico banking system has its distinctions associated with the fact that there is no Central Bank in the country. Instead, its function is performed by the Reserve Bank. It acts as a regulator and determines the loan rates for credit and financial institutions.
The banking system in Puerto Rico is generally considered reliable because the payment of bank deposits (up to $100,000, though) is guaranteed by the American Federal Deposit Insurance Corporation – FDIC.
The US dollar is the main though not the only currency at all Puerto Rico banks.
Thus, a corporate bank account set up in Puerto Rico is part of the American banking system, which is a great advantage. However, it is subject to the Puerto Rican legislation, which is also a great benefit. For example, Puerto Rico banks are not required to share clients’ account information with foreign governments, including the USA bodies (which makes the Puerto Rico bank accounts ideal for financial privacy). This incentive is due to the Puerto Rico policy of welcoming international businesses and investors to open accounts and invest in this jurisdiction.
Puerto Rico banks provide all kinds of banking services, including electronic banking. The competition between them is quite strong, so customers can choose quite interesting terms of service. Almost all banking institutions issue credit and debit cards. Customers can cash out through a network of ATMs (called locally ATNs).
The development of electronic financial services and internet-based applications has been advancing in Puerto Rico for several years. The current lockdown measures in most parts of the work hit by the coronavirus pandemic have prompted many banks in the region to invest even more in the modern technologies of Internet banking, Electronic Funds and Transfer (EFT), Mobile banking, E-Cheques, Telebanking.
How can a non-resident company benefit from opening an offshore account with a Puerto Rican bank?
A non-resident bank account in Puerto Rico provides an opportunity for an offshore company to easily make payments in US dollars without being charged by correspondent banks.
If you open a company in Puerto Rico and hire local staff (5 or more people), you can save a lot on taxes. At the same time, the level of salaries, the costs of doing business, and the living cost on this island are significantly lower than in many other low-tax jurisdictions.
Please note that most Puerto Rico bankers prefer to get to know their clients in person. Not every bank will agree to open an account in Puerto Rico remotely. However, such services are still available at some banks.
A holder of a bank account opened in Puerto Rico for investment purposes is entitled to considerable tax-saving incentives. Besides, the financial institutions dealing with these investments will enjoy the right to pay a reduced tax (the 4% fixed income tax rate, and property and municipal exemptions), as they are, as a rule, exempt from FATCA.
Industries such as scientific research and development, manufacturing operations, export services, financial and insurance services, recycling businesses, technology, film, agriculture, hospital facilities, hotels, tourist activities are eligible for full or partial exemption from income, property, municipal, and other taxes. You are welcome to refer to our experts for specific details of all ext current incentives introduced since 2018 and enhanced in 2020.
Another important bonus is that Puerto Rico bankers do not collect information about their foreign clients unless they are tax residents of the United States. That is, the service here is beneficial not only in terms of low taxes but also in terms of banking confidentiality.
Who is allowed to open an account and who is not allowed to do so in Puerto Rico?
Since this jurisdiction has a fairly close relationship with the United States, it is technically quite easy for a US citizen or resident to open an offshore company account in Puerto Rico. After all, neither visas nor permission to cross the border will be required, it is sufficient just to buy a ticket for the plane and arrange a meeting at a bank.
For foreigners who are not US residents or citizens, it is also not difficult to set up and use a non-resident bank account in Puerto Rico. Due to Puerto Rico’s special status as an island state, its banking institutions are exempt from the international customer information exchange commitments (adopted and signed by the United States).
For an alien to open a corporate account with a Puerto Rico bank, it is very important to clearly state the purpose. It can be the company’s plans to develop any business activity, including the provision of brokerage, financial, trust, and other services, wherever this company is formally incorporated.
However, there are certain restrictions by country and by the type of business activity. Every potential client needs to be aware of them before the submission of the application.
Restrictions by country
US federal government’s restrictions on doing business with certain countries apply in Puerto Rico. Otherwise, any company, regardless of where it is incorporated, can open a non-resident bank account in Puerto Rico. Its origin would not matter at all, even if it is registered in other offshore jurisdictions such as Panama, Belize, etc.
Puerto Rico banks guarantee full confidentiality to their clients. However, there are a few exceptions. If it is a U.S. company with income or residency in the United States, the Puerto Rico banks will be required to provide information about it to the U.S. tax authorities upon request.
Local bankers maintain international relations and services. That is why multilingual consultants are available at each bank. For foreign clients, service can be provided in any of the popular languages: English, French, Spanish, German, Portuguese, Italian, and Russian.
Latin Americans are the key clients – their customer expectations and customer experience are of particular importance to Puerto Rico banks. This is due to the region’s proximity and close trade and economic ties.
Restrictions by activity type
Industry-specific regulations established by the federal government also apply to foreign investment in Puerto Rico.
Puerto Ricans and their government do not favor foreign banking institutions and companies. The local financial institutions offer a wide range of banking and financial services to corporations, insurance companies, trust funds, as well as family offices and independent investment advisors.
Other restrictions may apply to companies engaged in any type of business with a questionable source of income. For example, banks’ business relations can be built with companies engaged in cryptocurrencies, although the permission for cooperation is granted on a case-by-case basis individually after a long Due Diligence check.
Offshore companies can open an account in any of the banks of Puerto Rico, but each time the beneficiary’s data will be verified.
Which types of non-resident corporate accounts are available at Puerto Rican banks?
Puerto Rico financial institutions provide traditional cash and settlement services, issue bank cards, and provide various types of financial services. In particular, customers can deposit and sell securities. Bank consultants are always ready to assist in starting a new company, conducting a portfolio spread, and gaining access to a depositary.
All clients are offered the following services:
- postal services
- issuance of debit cards in Puerto Rico by the issuing bank with an international status
- maintenance of a multi-currency account
- assistance in precious metals bullion and currency trading
- support in the capacity of a trustee, registrar, executor, custodian, agent, trustee in securities transactions
- possibility to withdraw cash from ATMs in the well-developed ATM network.
The Puerto Rico banks provide customers with remote access to accounts through online and mobile banking solutions.
Currencies for opening an account and making transfers:
The US dollar (USD) is the main currency at all Puerto Rico banks. It is also possible to open a multi-currency account in major European and world currencies, including Russian rubles.
To open an account with a bank in Puerto Rico, a foreign company needs to contribute a minimum deposit and maintain a balance of at least USD 500,000.
Types of accounts:
- corporate (in USD)
- corporate multicurrency
- deposit
- trading
- investment.
Types of bank cards:
- debit cards
- credit.
Tariffs
Tariffs for services are different in different Puerto Rico banks. Given below are the rates of one local bank which is popular with foreigners holding accounts in Puerto Rico (in USD or another currency):
- commission for opening an account – $5,000
- service fee – 0.75% per month (at least $900 per quarter)
- maintenance of fiduciary account – 2%
- mail forwarding to one address – $30
- postal services – $375 per quarter
- certification, audit service – $300 per certificate
- Internet banking – $200 per month
- provisions for external asset managers – $600 per month
- debit card maintenance – $250 per quarter, excluding issuing costs
- currency exchange – up to 2% (minimum $200), plus transaction fee – up to 1% and third party services
- account closing fee – 0.25% per annum of the total portfolio value (minimum $2,500).
Fees for money transactions:
– outgoing payment – $250
– incoming payment – $
It is possible to make a time deposit, including a deposit by transferring from a third-party bank the amount of $100,000 or more. Fees for the services of investment and securities safekeeping and trading are bank-specific. Please note that there are mandatory and optional charges.
How to open a corporate account with a Puerto Rican bank?
Since each Puerto Rico bank has its terms of cooperation, and because many banks prefer to open accounts for non-residents in person, we recommend and offer our professional mediation. If you use our services, your involvement in the application process will be minimal, and your expenses will be significantly reduced. When the bank insists on personal communication with you, you will be able to choose from a list of several places where it would be most convenient for you to meet their representative.
Procedure for opening a corporate account with a Puerto Rico bank:
- To request our services in helping you open a non-resident corporate account remotely, please contact us at info@offshore-pro.info
- Sign an agreement with us and pay our set-up services fee starting at 3999 EUR. We accept payments by any of the methods: WebMoney, payment card, bank transfer, PayPal, or Western Union.
- Prepare the necessary documents in English according to the list given below, fill in the bank forms. Send us their electronic copies by email. We will first study them thoroughly and give our feedback with professional recommendations. If the bank agrees to consider your application remotely we will let you know. Then you will need to get your copies notarized and apostilled.
Documents to be submitted when applying for a non-resident corporate account with a Puerto Rico bank
Banks in Puerto Rico pay great attention to information about beneficiaries and the origin of the client’s assets.
The client will need to provide corporate documents, as well as all requested information about shareholders/beneficiaries. There are no one-size-fits-all requirements, so the set of documents listed below is for your general information only. Please discuss your particular case with our experts to get the relevant customized list drawn specifically for you.
Portfolio of documents:
- For each authorized SIGNATORY, BENEFICIAL OWNER and DIRECTOR of the account:
- legible copy of passport
- any other ID (insurance card, voter ID, social security card, work pass, etc.)
- proof of address (not older than 3 months)
- The bank-specific FORMS:
- client’s questionnaire
- communication mode – directly or via an authorized representative
- source of income and origin of funds (employment, wages, inheritance, investments, etc.)
- Mandatory BANK FORMs filled in
- For an AUTHORIZED REPRESENTATIVE – if the documents are executed by the client’s representative or agent: the list of documents to be submitted about this person is similar to the list mentioned hereby in item 1 above, plus a Power of Attorney or another confirmation of his/her authority.
- CORPORATE DOCUMENTS:
- Certificate of Incorporation
- Memorandum & Articles of Association/By-Laws
- Shareholders’ (Participants’) Registry
- Directors Registry
- passport, another ID, Proof of Address – for every director
- the Share Declaration (if there are bearer shares).
- For an INVESTMENT FUND:
- License copy
- List of investors (if there are investors who will not participate as the account signatories, they will still need to submit copies of their passport, utility bill in their name, proof of funds / livelihood)
- The Resolution on behalf of the Fund regarding the account.
- For a TRUST:
- trust agreement
- information about the first protector
- information about trustees
- Letter of Wishes mentioning the beneficiary’s data
- trustees’ copies of passports, second IDs, and the confirmation statement about the passport data.
Timelines for opening a non-resident corporate account with a Puerto Rico bank
A Puerto Rico bank’s decision about opening a non-resident corporate account for an applicant is usually available within 2-3 weeks after the submission of the application portfolio. To expedite the process, please submit to us as soon as possible the scanned copies of your documents and the completed mandatory bank forms.
To find out more specific details about particular Puerto Rico banks and terms of opening corporate accounts in Puerto Rico, please consult our expert team by writing to info@offshore-pro.info.
