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Professionals With Difficult Recruitment
Tax incentive for professionals in occupations with recruitment challenges who become Puerto Rico residents, offering preferential treatment on employment income.
11 min
•
Section Code:
2021.04
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Purpose:
Individuals — Section 2021.02
Overview
The Professionals With Difficult Recruitment designation under Section 2021.04 of Act 60-2019, as amended, provides preferential tax treatment for professionals in occupations that face recruitment challenges in Puerto Rico. This designation addresses workforce shortages by making Puerto Rico more attractive to professionals in high-demand fields.
Qualifying professionals may receive preferential Puerto Rico tax treatment on employment income from their professional activities, combined with the broader benefits of Puerto Rico residency. The program attracts professionals in occupations designated as having difficult recruitment, which may include specialized technical roles, certain healthcare professions, engineering disciplines, or other fields where Puerto Rico faces talent shortages.
The key distinction of this designation is its flexibility to address specific workforce needs. Rather than targeting a single profession, the designation can be applied to various occupations identified as having recruitment challenges, allowing the program to adapt to evolving labor market needs.
Puerto Rico benefits from incentives that help address workforce gaps in critical occupations. The program supports economic development by ensuring availability of professional talent in fields essential to key industries.
Key Benefits
Preferential Tax Rate on Professional Income
Professionals in difficult recruitment occupations may receive preferential Puerto Rico tax treatment on employment income from their professional activities in Puerto Rico. The specific rate depends on decree terms and occupation.
For professionals in high-demand fields, the preferential treatment can result in substantial tax savings compared to standard Puerto Rico individual income tax rates.
Exemption from U.S. Federal Tax on Puerto Rico Source Income
As bona fide Puerto Rico residents, professionals are generally exempt from U.S. federal income tax on income sourced to Puerto Rico, including professional employment income earned from Puerto Rico employers.
Career Opportunity Enhancement
The incentive enhances the attractiveness of Puerto Rico professional opportunities, helping address recruitment challenges in critical occupations.
Workforce Development Support
Professionals contribute needed skills and expertise to Puerto Rico's workforce while benefiting from the incentive, supporting economic development objectives.
Long-Term Decree Terms
Decrees typically provide benefits for extended periods, supporting career development and retention of professionals in Puerto Rico.
Requirements & Obligations
Bona Fide Residency Requirement
Professionals must establish and maintain bona fide Puerto Rico residency under both Puerto Rico law and Section 937 of the U.S. Internal Revenue Code. Standard residency requirements including presence tests and closer connection demonstrations apply.
Qualifying Occupation
Professionals must work in occupations designated as having difficult recruitment in Puerto Rico. The specific occupations eligible may be defined in regulations or determined based on labor market analysis demonstrating recruitment challenges.
Professional Employment in Puerto Rico
Professionals must be employed in their qualifying occupation by Puerto Rico employers or practice their profession serving Puerto Rico clients. The professional activities must be conducted in Puerto Rico.
Professional Credentials
Professionals must possess appropriate credentials, licenses, or qualifications for their occupation. This may include professional licenses, certifications, degrees, or demonstrated professional experience.
Recruitment Difficulty Demonstration
The occupation must genuinely face recruitment challenges in Puerto Rico. This may be demonstrated through labor market data, employer attestations, or workforce shortage analyses.
Annual Charitable Contribution
Professionals must make annual donations to qualifying Puerto Rico charitable organizations, typically five thousand dollars ($5,000) to ten thousand dollars ($10,000) annually.
Annual Report Filing
Professionals must file annual reports certifying continued compliance with residency requirements, professional employment, and other decree conditions.
Maintaining Qualifying Status
Benefits apply to income from qualifying professional employment. Professionals must maintain employment in the designated occupation and residency throughout the decree term.
How to Apply
The application process for Professionals With Difficult Recruitment incentives typically requires four (4) to six (6) months from initial application to decree issuance.
The process begins with confirming occupation eligibility. Professionals should verify that their occupation is designated as having difficult recruitment or gather evidence of recruitment challenges. Securing a professional position with a Puerto Rico employer supports the application.
Before or during application, professionals should begin establishing Puerto Rico presence including obtaining housing, planning relocation, and demonstrating commitment to residency.
The formal application is submitted to the designated agency and includes detailed information about the professional occupation, employer, professional credentials, evidence of recruitment difficulty, Puerto Rico ties, and residency plans. Documentation of professional qualifications should be included. Application fees apply.
The agency reviews the application, evaluates whether the occupation qualifies as having difficult recruitment, and assesses professional qualifications. Additional information may be requested. Upon approval, a tax decree is issued specifying benefits, obligations, and term.
After decree issuance, the professional must complete relocation, establish full bona fide residency, and begin professional employment. The first annual compliance report is due following the first full calendar year.
Throughout the decree term, professionals must maintain residency, employment in the qualifying occupation, and compliance with all decree conditions.
This information is educational and should not be considered legal or tax advice. Applicants should consult with qualified legal and tax professionals familiar with Puerto Rico incentive programs before making any business decisions or submitting applications.
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