A new law in Puerto Rico, Act No. 27-2024 (Act 27), makes it easier for foreign employers to hire employees to work from within Puerto Rico, and for persons to relocate to work remotely within Puerto Rico for employers that do not maintain a presence on the island.
Enacted on January 17, 2024, with Puerto Rico Governor Pedro Pierluisi’s endorsement of House of Representatives’ Bill 1745, Act 27 establishes that covered private employers are not required to comply with Puerto Rican employment legislation and that the employment relationship will only be subject to the employment contract, with minimal exceptions.
Act 27, which is effective immediately and governs over any conflicting law, applies if the employee is an executive, administrator, or professional, as defined in the Fair Labor Standards Act (FLSA); is domiciled in Puerto Rico; and works remotely for an employer who is not dedicated to business or the sale of taxable goods in Puerto Rico. The “dedicated to business” criterion is analyzed pursuant to the Puerto Rico Internal Revenues Code of 2011 and the regulations and interpretations of the Puerto Rico Department of Treasury, and relates to location of the employer’s offices, clients, and economic nexus.
In 2022, Act No. 52-2022 made more flexible the definition of an “entity dedicated to business in Puerto Rico” in the Puerto Rico Tax Code by excluding from certain local tax requirements qualified employers that did not have operations on the island, but had employees working remotely from Puerto Rico.
