How To Apply For An Offshore Banking License In Puerto Rico

FAS CPA & Consultants

Offshore banking has always been beneficial for people who want to keep their wealth to themselves. Some of the recent leaks and slightly tilted media attention have given a bad name to offshore banking, but this shouldn’t stop you from considering opening an offshore account as part of your tax planning. The main reason for this is that you wouldn’t be doing anything immoral or illegal, on the contrary – it would be quite smart. And if you happen to be a non-U.S. citizen, then you should open an offshore account in Puerto Rico. Keep reading to see why.


What banking model is the PR Banking Commission accepting to grant banking licenses?

Currently the banking commission in PR is mostly accepting regular banking licenses and is the regular business model of banking before they were accepting cryptocurrencies but recently, they have restricted the acceptance of those applications. I know there are some banking licenses from PR that include cryptocurrencies in the business banking model in the project when they are presenting an approve, but not anymore. It will be good idea if the person plans to apply for an international banking license in PR that the application is for a typical banking model of deposits received and loans given. If the cryptocurrency is added to the application is going to find a lot of scrutiny and testing that will increase the amount of work and time for the approval. So, it will be a good idea to start with a traditional banking model with deposits and loans.


If my banking license is based in PR, can I open branches in other US states?

You can but you will need the authorization from the banking commission from PR and also the financial banking services in the state, so you need 2 different authorizations. You can’t go and open an office in another state because it will be a violation of the banking law to open a branch in another state and not have the permits from the financial services in the state where it’s intended to apply the branch.


What are the requirements to apply for an offshore banking license in PR?

Most of the requirements are similar to other offshore jurisdictions it will start with business plan that includes marketing, geography of the clientele, projections for 5 years at least, what is the structure of the services provided, how is capitalized, what kind of credit cards will include, how the bank is going to serve the clients, online channels, software they are going to use, attorneys, auditors, now the application has 2 steps, the first is the creation of the company in PR and then the application for pre-approval it is when the applicant tells the commission in PR that they intend to apply for a banking license, if the commissioner approves that then comes the second step where is the real application starts and the business model in terms of the project, policies and procedures, anti-money laundering and the structure that the bank intends to provide needs to be given in paper for the approval, it takes up to 6 months and the more documents provided according to the application and the requirements the better for the commissioner in the approval of the process.

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Tax Benefits in Puerto Rico

Puerto Rico is a U.S. territory, but has a very relieved tax system. The main tax benefits include:

⇒ 4% income tax.

⇒ Tax-free capital gain.

⇒ Tax-free dividends and investment profits.


These alone are enough to classify Puerto Rico as a tax haven not only for international taxpayers, but even for those who hold a U.S. passport. The issue for some Americans would be that in order to take advantage of these tax benefits, they would have to physically move to Puerto Rico. Good news for the rest of the world, though. Why Open an Offshore Account in Puerto Rico as a Non-U.S. Citizen?.


Puerto Rico has the reputation of the largest and strongest offshore jurisdiction, but there’s a series of other reasons why you should open an offshore bank account in Puerto Rico as a non-U.S. Citizen:

Privacy – Puerto Rico does not comply with the AEoI/CRS reporting requirements. It is one of the very few places in the world where the confidentiality of your financial assets is preserved.

Take your cash out at any time – if you have an offshore account in Puerto Rico you wouldn’t have to worry about the bank lending your money to borrowers. 100% liquidity of all deposited assets is guaranteed.

Variety of services – when you open an offshore account in Puerto Rico you get much more than just that. You can also trade and invest on multiple platforms and all this is done securely online.

Low minimum deposit requirement – opening an offshore account in Puerto Rico is not only for the super rich. In fact, you can create one with only $500/€500 initial deposit. It gets even better – there’s no minimum account balance requirement.

No strings attached – although it would be nice to go on a holiday to Puerto Rico, you don’t actually need to visit the jurisdiction to open an offshore account. You can do it online and it will take up to 7 day to complete the process.


All this sounds like a piece of cake and an opportunity not to be missed. However, as experienced financial and tax planners we suggest you speak to a professional first to ensure that opening an offshore account is in line with your tax plan and would be beneficial to your financial situation.


Puerto Rico wants to boost the economy by attracting more investors, residents and non-residents, to the island. In order to do that, they have made it possible for you to be exempt from both the local income tax, and the federal US tax. As a resident you will use Acts 20 and 22, but even without moving to the island you can take advantage of the laws surrounding the International Banking License also known as International Financial Entities (IFEs).


An IFE has to have:

⇒ Office space.

⇒ 4 or more full-time employees at that office.

⇒ Authorized capital stock of $5 million US or more, at least $250,000 US of that as capital paid into the company when the business license is issued.

⇒ $300,000 US of assets that are unencumbered or deemed as acceptable securities.


The IFE Act requires the maintenance of all of these requirements at all times. All of these can be a lesser amount if they are authorized by the Commissioner.


In order to make an application you will need the following paperwork to be in order.

⇒ Your IFE has to be a corporation, LLC, partnership, or some other legal entity.

⇒ The name of your IFE must include the word “Overseas”, “International,” or “Foreign,” or something like that to show it is from somewhere other than Puerto Rico.

⇒ The principal address of your place of business in Puerto Rico.

⇒The financial details as described previously.


The reason you started your company. This needs to include what type of business operations you offer, and you need to be sure they are authorized under the IFE Act.If you want to apply, you will go through a 2 step application process.

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Step One of the IFE Application Process

After your organization’s documents are all prepared, you file the application for a permit with the Commissioner. You make the application in writing, and swear it in front of a notary public.


Put together the package of papers for your application:

⇒ Drafts of organizational documents proposed to establish your IFE.

⇒ Your business plan.

⇒ The $5,000 US non-refundable application fee.

⇒ The personal history and financial information about every persons who will own or control 10 % or more of the capital in this IFE and the same information about the officers and directors of the company.

⇒ The number of proposed employees.


The Commissioner will then review your application.


Step Two of the IFE Application Process

Step two of the application process starts after the Commissioner approves the initial application and you have received your permit to organize your IFE. Then you must file more papers. The organizational documents a copy of the original permit to organize with the Puerto Rico State Department.


The initial permit is in effect for 6 months. Once you organize your IFE, lease or buy your offices,  and contribute the capital required you can finally file for the final issuance of your IFE license.


The Commissioner grants, conditionally grants or denies final license applications based upon his consideration of your documentation.


The IFE Act gives you and the other shareholders in your IFE several tax breaks.

⇒ A 4 % tax rate on net income through IFE Activities.

⇒ Municipal and property license tax exemption on those activities.

⇒ Exclusion of interest, finance charges and participation in any benefits of partnership.

For shareholders, their tax benefits are:

⇒ A 6 % tax for resident shareholders on distributions of profits or earnings.

⇒ Complete exemption from Puerto Rico income taxes on any distributions to non-resident shareholders.


International Financial Entities in Puerto Rico offer substantial benefits to anyone from the rest of the US and the world who wishes to do business in Puerto Rico. The steps to setting up the entity do require the knowledge and skills of a professional accountant in order to be certain of their acceptance by the Commissioner.


Readers should note that this article is only intended to convey general information on these issues and that FAS CPA & Consultants (FAS) in no way intends for the contents of this article to be construed as accounting, business, financial, investment, legal, tax, or other professional advice or services.  This article cannot serve as a substitute for such professional services or advice.  Any decision or action that may affect the reader’s business should not rely solely on the contents of this article, but should rather be consulted on with a qualified professional adviser. FAS shall not be responsible for any loss sustained by any person who relies on this presentation.  This article is subject to change at any time and for any reason.

Check The Video Version How To Get an Offshore BANKING LICENSE PUERTO RICO

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