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Researchers or Scientists
Tax incentive for researchers and scientists who become Puerto Rico residents, offering preferential treatment on employment income from research activities.
12 min
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Section Code:
2021.02
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Purpose:
Individuals — Section 2021.04
Overview
The Researchers or Scientists designation under Section 2021.02 of Act 60-2019, as amended, provides preferential tax treatment for researchers and scientists who establish bona fide residency in Puerto Rico and work in research, scientific, or academic positions. This designation supports Puerto Rico's efforts to attract scientific talent and strengthen research capabilities.
Qualifying researchers and scientists may receive preferential Puerto Rico tax treatment on employment income derived from research and scientific activities, combined with the broader benefits of Puerto Rico residency. The program attracts researchers from universities, research institutions, pharmaceutical companies, biotechnology firms, and other organizations conducting research in Puerto Rico.
The key distinction of this designation compared to other individual incentives is its focus on researchers and scientists as a specific professional category. While the Individual Investors program addresses passive investment income, this designation provides benefits for active professional employment income earned by researchers and scientists.
Puerto Rico has significant research activity, particularly in life sciences, pharmaceuticals, and biotechnology. The incentive helps attract and retain research talent by reducing the tax burden on research professionals who relocate to Puerto Rico for research positions.
Key Benefits
Preferential Tax Rate on Research Income
Researchers and scientists under this designation may receive preferential Puerto Rico tax treatment on employment income derived from qualifying research and scientific activities. The specific rate depends on decree terms, but significant savings compared to standard Puerto Rico individual income tax rates are available.
For highly compensated researchers, the preferential treatment can result in substantial annual tax savings compared to standard progressive rates that can reach thirty-three percent (33%) at the highest brackets.
Exemption from U.S. Federal Tax on Puerto Rico Source Income
As bona fide Puerto Rico residents, researchers and scientists are generally exempt from U.S. federal income tax on income sourced to Puerto Rico, including research employment income earned from Puerto Rico employers. This creates the potential for substantial combined savings from both Puerto Rico and federal tax benefits.
Research Career Development
The incentive supports research career development in Puerto Rico by making research positions more financially attractive. This can help Puerto Rico research institutions and companies compete for research talent.
Long-Term Decree Terms
Researcher and scientist decrees typically provide benefits for extended periods, supporting career development and long-term research program participation.
Academic and Research Community
Researchers benefit from Puerto Rico's research community, including universities, research institutions, and industry research facilities, particularly in life sciences and related fields.
Requirements & Obligations
Bona Fide Residency Requirement
The fundamental requirement is establishing and maintaining bona fide Puerto Rico residency under both Puerto Rico law and Section 937 of the U.S. Internal Revenue Code. This requires satisfying presence tests, typically one hundred eighty-three (183) days annually, demonstrating closer connection to Puerto Rico than any other jurisdiction, and establishing Puerto Rico as the tax home.
Residency must be genuine and permanent in character, not merely temporary relocation for tax purposes. Researchers must make Puerto Rico their actual home.
Qualifying Research Employment
Researchers must be employed in qualifying research, scientific, or academic positions. This typically includes research scientists, principal investigators, research professors, and other positions substantially engaged in research activities. The research must be conducted in Puerto Rico for Puerto Rico-based employers.
Professional Credentials
Researchers typically must demonstrate appropriate professional credentials for research positions, such as advanced degrees (Ph.D., M.D., or equivalent), research publications, or significant research experience. The credential requirements support the designation's focus on professional researchers.
Puerto Rico Research Employer
Researchers must be employed by qualifying Puerto Rico research employers such as universities, research institutions, pharmaceutical companies, biotechnology firms, or other organizations conducting research in Puerto Rico.
Annual Charitable Contribution
Similar to other individual incentive programs, researchers under this designation 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
Researchers must file annual reports with the designated agency certifying continued compliance with residency requirements, research employment, and other decree conditions.
Maintaining Qualifying Status
Benefits apply only to income from qualifying research employment. Researchers must maintain research positions and residency throughout the decree term to continue receiving benefits.
How to Apply
The application process for Researchers or Scientists incentives typically requires four (4) to six (6) months from initial application to decree issuance.
The process begins with securing a qualifying research position in Puerto Rico. Researchers should identify research opportunities with Puerto Rico universities, research institutions, or companies, apply for positions, and secure employment offers. The research position must be established before or concurrent with the decree application.
Before or during the application process, researchers should begin establishing Puerto Rico presence. This includes obtaining housing, planning relocation, and taking steps to demonstrate commitment to Puerto Rico residency.
The formal application is submitted to the designated agency and includes detailed information about the research position, employer, professional credentials, Puerto Rico ties, and proposed residency plans. Documentation of advanced degrees, research publications, or significant research experience should be included. Application fees typically apply.
The agency reviews the application and may request additional information about research qualifications or residency plans. Upon approval, a tax decree is issued specifying benefits, obligations, and decree term.
After decree issuance, the researcher must complete relocation to Puerto Rico, establish full bona fide residency, and begin the research position. The first annual compliance report is due following the first full calendar year under the decree.
Throughout the decree term, researchers must maintain bona fide residency, continue research employment, file required reports, and comply 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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