2023 Laws of Puerto Rico › TITLE THIRTEEN - Taxation and Finance (§§ 1 — 33423) › Subtitle 17 - Internal Revenue Code of 2011 (§§ 30001 — 33423) › PART II - Income Taxes (§§ 30041 — 30622) › Chapter 1005 - Computation of Taxable Income (§§ 30101 — 30157) › Subchapter E - Income Source Rules (§§ 30151 — 30157) › § 30151 - Income from sources within Puerto Rico

(a) Gross income from sources within Puerto Rico. — The following items of gross income shall be treated as income from sources within the Puerto Rico:
(1) Interest. — Interest on bonds, notes, or other interest-bearing obligations of resident persons, whether natural or juridical, not including:
(A) Interest on deposits of persons engaged in the banking business paid to persons not engaged in the active conduct of a business in Puerto Rico,
(B) interest on mortgage loans executed before July 1, 1995 that are guaranteed by real property located in Puerto Rico, paid to persons not engaged in the active conduct of a business in Puerto Rico,
(C) interest received from a foreign corporation engaged in the active conduct of a trade or business in Puerto Rico, or a domestic corporation when the payer of the interest is not a person engaged in the commercial banking business and proves to the satisfaction of the Secretary that less than twenty percent (20%) of the payer’s gross income has been derived from sources within Puerto Rico, as determined under the provisions of this section for the three (3) year period ending with the close of the payer’s taxable year preceding the payment of such interest or by such portion of said term that applies,
(D) income derived from the issuance of banker’s acceptances by a foreign central bank,
(E) interest on loans, obligations of originating companies guaranteed by such loans, as well as shares on such loans originated by such companies, made to small businesses provided that these loans are guaranteed by the Government Development Bank for Puerto Rico, the Government Investment Company or the Commercial Development Company, and are paid to a person not engaged in a trade or business in Puerto Rico.
(i) For purposes of this paragraph, “small business” means any business qualified as such under the provisions of the federal law known as the “Small Business Investment Act of 1958”, as amended.
(ii) It shall qualify as an originating company under this subsection:
(I) Any entity created under Section 301-(d)(MESBIC) of the federal law, known as the “Small Business Investment Act of 1958”, as amended, authorized by the Small Business Administration (SBA) to grant loans to small business, as such term is defined in this act, or
(II) any company authorized to grant loans to small business under Section 120-4(a) and (b) of the regulations of the law known as the “Small Business Investment Act of 1958”.
(F) Interests or finance charges on loans made to international banking entities to which a license has been issued under §§ 232 et seq. of Title 7.
(G) Interests on bonds, notes, or other interest-bearing obligation or obligations that accrue interests from individuals who are United States citizens nonresidents of Puerto Rico.
(2) Dividends and earnings. — The amount received as dividends:
(A) From a domestic corporation other than a corporation with less than twenty percent (20%) of its gross income derived from sources within Puerto Rico proved to the satisfaction of the Secretary, as determined under the provisions of this section, for a three (3)-year period ending with the close of its taxable year preceding the declaration of such dividends, or for such part of such period as the corporation has been in existence, or was effectively connected, or
(B) from a foreign corporation unless less than twenty percent (20%) of the gross income of such foreign corporation for the three (3)-year period ending with the close of its taxable year preceding the declaration of such dividends, or for such part of such period as the corporation has been in existence, was effectively connected or treated as effectively connected with the active conduct of a trade or business in Puerto Rico, except for income described in § 30442 of this title, as determined under the provisions of this section, but only in an amount which bears the same ratio to such dividends or benefits as the gross income of the corporation for such period which was effectively connected or treated as effectively connected with the active conduct of a trade or business in Puerto Rico other than income described in § 30442 of this title to its gross income from all sources; but dividends from a foreign corporation shall, for purposes of § 30201 of this title, be treated as income from sources without Puerto Rico.
(3) Personal services. — Compensation for labor or personal services performed in Puerto Rico, but, in the case the labor or services are performed by a nonresident alien individual temporarily present in Puerto Rico for a period or periods not exceeding a total of ninety (90) days during the taxable year (if such compensation does not exceed three thousand dollars ($3,000) in the aggregate), the compensation is for labor or services performed as an employee of or under a contract with, a nonresident alien, foreign partnership, or foreign corporation, not engaged in trade or business within Puerto Rico shall not be deemed to be income from sources within Puerto Rico.
(4) Rentals and royalties. — Rentals or royalties from property located in Puerto Rico or from any interest in such property, including rentals or royalties for the use of or for the privilege of using in Puerto Rico patents, copyrights, secret processes and formulas, good will, trade-marks, trade brands, franchises, broadcasting rights for movies, television and radio programs in Puerto Rico, and other like property.
(5) Sale of real property. — Gains, profits, and income from the sale of real property located in Puerto Rico.
(6) Sale of personal property. — Gains, profits, and income from the sale of personal property shall be subject to the application of the rules provided in §§ 30153, 30154, and 30155 of this title.
(7) Distributions in liquidation. — The amount received as distribution in total or partial liquidation:
(A) From a domestic corporation, or
(B) from a foreign corporation except that less than twenty percent (20%) of the gross income of said foreign corporation for the three (3)-year period ending with the close of its taxable year preceding the distributions in liquidation, or for such part of said period during which the corporation has existed, was effectively connected or treated as effectively connected with the active conduct of a trade or business in Puerto Rico, except for income described in § 30442 of this title, but only in an amount which bears the same ratio to such distributions in liquidation as the gross income of the corporation for such period which was effectively connected or treated as effectively connected with the active conduct of a trade or business in Puerto Rico other than income described in § 30442 of this title, to its gross income from all sources.
(8) Insurance premiums. — Income derived from an insurance contract securing risks located in Puerto Rico, except income on account of premiums paid by life insurance derived by a person not engaged in a trade or business in Puerto Rico.
(b) Net income from sources within Puerto Rico. — Any expense, loss, and other deduction properly apportioned or allocated thereto and a ratable part of any expense, loss or other deduction that may not be definitely allocated to any other item or class of gross income shall be deducted from the gross income items specified in subsection (a) of this section. The remainder, if any, shall be totally included as a net income from sources within Puerto Rico. The deduction of § 30135 of this title shall be treated as deductions attributable to any item of gross income.
History —Jan. 31, 2011, No. 1, § 1035.01, retroactive to Jan. 1, 2011.