Legal Entities in Puerto Rico

By: Robert A. Fleming- Business Attorney Puerto Rico

Investors in Puerto Rico have a variety of options for managing & optimizing  liability  and tax issues.  A business can operate under  a wide range of legal structures, from basic sole proprietorships and general partnerships to special purpose corporations and limited liability companies.  The most typical forms are limited partnerships, general corporations, non-profit, closed corporations, professional corporations and limited liability corporations. Puerto Rico’s corporate law is based on Delaware’s.Regulations on limited liability corporations are very similar to other jurisdictions.  Closed corporations that meets certain criteria can elect to not to be taxed at the corporate level, and the corporation’s income and losses are passed through to its shareholders.

For U.S. income tax purposes, Puerto Rico corporations are treated as foreign corporations.

All corporations are overseen by the State Department of Puerto Rico.  Those that are not organized under Puerto Rico law are considered foreign corporations and must register to do business with the  Department of State.  Courts can  require  a foreign corporation to cease all business activities in the Island  until  registered.  The fees  to process and issue the certificate of registration were  $110 as of 2011.

Legal process against the corporation may be served on its resident agent, who can be either a natural or judicial  resident of Puerto Rico, but cannot be an officer,  director or stockholderof the corporation.