2023 Laws of Puerto Rico › TITLE THIRTEEN - Taxation and Finance (§§ 1 — 33423) › Subtitle 15 - Puerto Rico Industrial Incentives Generally (§§ 10001 — 10855) › PART III - Other Tax Incentives (§§ 10401 — 10855) › Chapter 942 - Green Energy Incentives Act of Puerto Rico (§§ 10421 — 10446) › Subchapter II - Green Energy Investment Incentives (§§ 10422 — 10442) › § 10425 - RECs characteristics and acquisition by the Green Energy Fund

(a) The Green Energy Fund may acquire, sell, and otherwise lawfully transfer or use the RECs for any present or future public purpose of commercial, financial, or industrial nature under any state, federal, or international law, as an acquired commodity that can be disposed of.
(b) The RECs to be issued annually pursuant to this chapter shall indicate the total megawatt-hours (MWh) of energy generated from a renewable sustainable or alternative sustainable energy source, the year in which such energy was generated, and the source that generated it. The ownership of each REC issued shall be held by the energy source that generated the electricity until the ownership of each REC is sold, assigned, or otherwise lawfully transferred.
(c) For tax purposes, the purchase, sale, assignment or transfer of RECs shall have the following effects:
(1) Tax base. — The tax base for each REC for a business engaged in green energy production that generates RECs from its operations in Puerto Rico shall be equal to the RECs issue and processing costs, pursuant to § 10426 of this title. The basis of the RECs shall not include production costs of the green energy generated in the operation related to such RECs.
(2) Regular income. — Any income or proceeds derived by a business engaged in the production of green energy from the sale of RECs originating from its operations in Puerto Rico shall be treated as a regular income derived from such operation in Puerto Rico, and as a green energy income for the purposes of this chapter, except that said income or proceed shall be exempt from licenses and other municipal taxes.
(3) Capital gain. — RECs shall be excluded from the definition of capital assets, as provided in Section 1121 of the Internal Revenue Code. However:
(A) They shall be treated as capital gain, and the corresponding provisions of the Internal Revenue Code of Puerto Rico shall apply, regarding the disposal of a capital asset, including the applicable tax rate, basis, and holding period of the RECs, among others, the proceeds derived from the sale of a REC by a person who acquired such REC by purchasing it and subsequently disposed of it in exchange for cash or property.
(B) The income derived from the disposal of a REC by a person who acquired such REC by purchasing it and subsequently disposed of the same shall be exempt from licenses and other municipal taxes.
(C) Any person engaged in the trade or business of purchasing and reselling RECs shall be excluded from this treatment.
(4) Retirement and cancellation of RECs. — Any person who, in conducting such trade or business, to comply with the requirements of the renewable portfolio standard, acquires RECs by means of purchase, assignment or transfer in order to promote green energy sources development, may deduct from his/her regular income the cost of acquisition of the REC or the basis acquired in the assignment or transfer thereof. This deduction shall not be available until the REC is retired or cancelled.
(5) Income from source within Puerto Rico. — The proceeds of the sale or disposal of a REC outside of Puerto Rico, generated in the operation of a green energy project located in Puerto Rico performed by individuals who are not residents of Puerto Rico or by a foreign entity not engaged in a trade or business in Puerto Rico shall not be deemed to be income from sources in Puerto Rico.
(6) RECs shall be exempt from municipal or state property taxes.
History —July 19, 2010, No. 83, § 2.4.