Why is Puerto Rico different from moving to another country?

Puerto Rico is US soil, so moving there does not touch your citizenship or your passport. But under Internal Revenue Code Section 933, Puerto Rico-sourced income earned by a bona fide resident of Puerto Rico is excluded from federal gross income. Puerto Rico then sets its own tax rate on that income, and under Act 60 that rate can be 0% or 4%. It is the only place a US citizen can substantially exit the federal income tax without giving up the passport.

Which countries have territorial taxation?

A territorial system taxes only income sourced inside the country and ignores foreign income. Singapore, the UAE, Panama, Paraguay, Georgia, Costa Rica and Malaysia all operate broadly territorial regimes, though the details and the anti-avoidance rules vary considerably. For non-Americans, moving tax residence to one of these is usually enough on its own.

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Q: Can Americans stop paying US tax by moving abroad?

No. The United States taxes its citizens on worldwide income regardless of where they live. Moving to Dubai or Singapore does not end your US filing obligation. The Foreign Earned Income Exclusion shelters up to $132,900 of earned income in 2026 and nothing at all on capital gains, dividends or interest. The only two genuine exits for a US citizen are becoming a bona fide resident of Puerto Rico, or renouncing citizenship.

Legally stop paying income tax.

Every discussion about “moving somewhere with no taxes” skips the question that actually decides your options.

It is not where you want to live. It is which passport you hold.

Two tax systems

Almost every country on earth taxes you on residence. Live there, pay there. Leave properly — cut your ties, break residency under that country’s rules, and establish a tax home somewhere else — and the obligation ends. For most of the world, “exiting the tax system” is a logistics problem.

The United States is one of two countries that taxes on citizenship instead. (The other is Eritrea.) A US citizen owes US tax on worldwide income from anywhere on the planet, forever, until they stop being a US citizen. Moving to Dubai does not end it. Living in Singapore for twenty years does not end it.

This single distinction splits everyone reading this into two groups with completely different playbooks.

If you don’t hold a US passport

Change your tax residence and you are largely done. The work is in doing it properly: genuinely leaving the old country under its own departure rules, establishing real substance in the new one, and understanding that most jurisdictions have exit taxes, deemed-disposal rules and “centre of vital interests” tests designed to catch people who move on paper only.

Singapore is the flagship option — a genuine first-world jurisdiction that exempts foreign-sourced income for resident individuals and levies no capital gains tax at all. It is not the cheapest option and the visa is the hard part. Other jurisdictions trade off differently: the UAE is easier to get into, Georgia and Paraguay are cheaper, Monaco and Italy are for people optimising a large balance sheet rather than a salary.

If you do hold a US passport

Understand what does not work first. The Foreign Earned Income Exclusion shelters up to $132,900 of earned income in 2026. It does nothing for capital gains, dividends, interest, or most distributions from your own company — which is to say it does nothing for the income that most people reading this actually care about. You can live in a 0% country and still owe the IRS a full long-term capital gains bill on every share you sell.

That leaves exactly two real exits.

Renounce. Genuine, permanent, and expensive. If your net worth is $2 million or more, or your average annual US income tax over the last five years exceeded roughly $211,000, or you cannot certify five years of tax compliance, you are a “covered expatriate”: the IRS treats you as having sold every asset you own the day before you leave and taxes the gain above an exclusion of $910,000 for 2026. You also need somewhere else to be a citizen first.

Puerto Rico. The subject of this site’s main page. You keep the passport, you stay on US soil, you stay in the dollar, and you can still get to 0–4% on the income that matters. It exists because Puerto Rico is a US territory rather than a US state, and Section 933 of the tax code excludes Puerto Rico-sourced income of bona fide Puerto Rico residents from federal gross income.

Time-sensitive — deadline 31 December 2026

Act 38-2026, signed on 20 March 2026, extended Puerto Rico’s resident investor programme from 2035 out to 2055 — but it also closed the 0% rate to new entrants. Apply for a decree on or before 31 December 2026 and you lock the current terms: 0% on interest and dividends, 0% on capital gains that accrue after you move. Apply from 1 January 2027 and the same items are taxed at 4%. Full breakdown →

The honest part

Nobody moves country for a spreadsheet. The tax rate is the reason people start looking and almost never the reason they stay. Puerto Rico has an unreliable power grid and a serious gap between the San Juan expat bubble and the rest of the island. Singapore is one of the most expensive cities on earth and the visa is genuinely difficult. Dubai is unbearable for four months a year. Every one of these places asks for something real in return — a house you have to buy, 183 days a year you have to physically be there, a business you have to actually run.

The pages below are the specifics: what the law says, what it costs, what the requirements are, and what nobody puts in the brochure.

Degen Island is an independent research site. Everything here is general information, not tax, legal or immigration advice, and tax law changes constantly. Verify against primary sources and retain a qualified adviser in both your current and target jurisdiction before you move money or file anything. Last reviewed August 2026.