Are Puerto Ricans US Citizens?

Puerto Rico is known for many things, including colonial-era buildings, El Yunque National Forest and mofongo. 

Oh, and also its unique legal standing as an unincorporated US territory, which leads many people to ask, ‘Are Puerto Ricans US citizens?’ 

The answer is yes but with a twist. To truly understand, we need to unravel Puerto Rico’s complex history, its ties to the US and what that means for its people today.

For US citizens, Puerto Rico is more than just a nearby tropical escape – it’s a destination with significant tax benefits, which is why it has become so attractive to expats. 

From tax incentives to lifestyle advantages, Puerto Rico has carved out a unique spot for those considering offshore living.

Are you a US citizen looking to move offshore? Nomad Capitalist can help. We assist high-net-worth individuals in assessing the best offshore options to find which suits them best.

Perhaps that’s Puerto Rico, or perhaps that’s further afield – but if you’re serious about offshore living and legal tax reduction, talk to us today.

Puerto Rico and US Citizenship

The citizenship status of Puerto Ricans has been the cause of much confusion due to the island’s status as an unincorporated territory. 

This means the country has its own local government but ultimately is under the control of the US Congress, with the US president as head of state.

Those born in Puerto Rico automatically receive US citizenship, though they do not have the same rights as Americans. For example, they cannot vote in presidential elections.

In addition to locally born Puerto Ricans, Puerto Rico has a large number of American expats, most notably entrepreneurs and investors who want to take advantage of the island’s lucrative tax breaks.

Why American Expats Move to Puerto Rico

It’s not just US citizens – plenty of other expats move to Puerto Rico for more than its beaches and Boricua culture.

Located just 1,014 miles from the US mainland, this unincorporated US territory sits east of the Dominican Republic and offers the perfect blend of familiarity and adventure. 

Home to two official languages (English and Spanish), Puerto Rico is a bilingual paradise where culture and convenience meet. With a population of around 3.05 million, it’s not just home to locals – it also attracts expats, especially US citizens, who find its blend of tropical charm and strategic advantages hard to resist.

Economically, Puerto Rico leans heavily on its services industry, particularly banking and financial services. Real estate and tourism are also large revenue streams for the island territory, while agriculture plays a smaller role. 

Unfortunately, the island’s small size and limited natural resources mean it has faced its share of challenges. The devastation of Hurricane Maria in 2017, which claimed thousands of lives and caused over US$94 billion in damages, left a lasting impact. 

Recovery was further hindered by the economic hit of the 2020 pandemic, exacerbating financial difficulties.

Yet, Puerto Rico isn’t just defined by its hardships; it’s also a land of opportunity. To revitalise the economy and attract investment, the island offers substantial tax incentives to US citizens who prefer to avoid the IRS’s grip without renouncing their citizenship. 

For many, Puerto Rico’s unique status as a US territory creates a perfect middle ground – lower taxes yet not lose American citizenship.

That said, exploring options is always key. 

While many Americans consider Puerto Rico, some ultimately decide to renounce US citizenship for even greater tax savings and freedoms. 

The choice isn’t simple – whether it’s Puerto Rico or a second citizenship elsewhere, it’s about finding what truly aligns with your goals. 

Puerto Ricans Are US Citizens

Puerto Rican citizenship status is a somewhat confusing topic for several reasons.

Firstly, although it has its own constitution, Puerto Rico is not a sovereign state; it is a US territory, which means everyone born in Puerto Rico is a US citizen but doesn’t have full citizenship rights, such as the right to vote in US elections.

So, although Puerto Rico may exist as a country and its people share a unique Puerto Rican identity, one cannot technically be a citizen of Puerto Rico.

As per US law and the Supreme Court, people born on the island of Puerto Rico automatically become citizens of the United States.

So, discussions about Puerto Rican nationality or citizenship can cause confusion – as noted above, while Puerto Ricans are classed as US citizens, they cannot vote in US elections.

Puerto Rico’s Territorial Status

To understand Puerto Rico’s current territorial status, you must first understand its past, so here’s a brief history.

The island of Puerto Rico was originally a Spanish colony until the Spanish-American War of 1898.

Following the war, which resulted in a US victory and crushing humiliation for Spain, Puerto Rico and other Spanish territories were ceded to the US under the Treaty of Paris.

Puerto Rico’s status was updated in 1917 with a piece of legislation known as the Jones-Shafroth Act (more frequently referred to as the Jones Act).

This conferred a new political status on Puerto Rico, including the right to US citizenship. Still, it wasn’t until 1952 that a new act was introduced, extending US citizenship to all people born on Puerto Rican soil.

Puerto Rico has its own local government, so although all people born in Puerto Rico are US citizens by default, they cannot vote in US elections, only local ones.

Future Status of Puerto Rico

Civil rights activists in Puerto Rico have long been calling for more autonomy, in particular, due to the disparity in rights between Puerto Ricans and other US citizens and the resulting lack of political representation.

Recent tragedies like the 2017 hurricane, the pandemic and the slow response to both have intensified anger. According to a recent referendum, the majority of Puerto Ricans support a ‘51st state’ solution.

However, an increasing number of Puerto Ricans would prefer that Puerto Rico become an independent sovereign state completely independent of the United States.

That’s hardly surprising.

The allure of US citizenship is no longer what it once was, especially with a rising debt ceiling, crumbling infrastructure, and multiple challenges to the pre-eminence of the US dollar and American power globally.

So, if more and more Puerto Ricans start to feel like Uncle Sam has become more hassle than he’s worth, perhaps they will stop their pursuit of enhanced US citizenship status and push harder for independence instead.

The potential addition of a new small, independent island into the Caribbean offshore system, conferring a new nationality, a new passport, and a new set of tax incentives for investors certainly excites us, but don’t expect that to happen any time soon.

Puerto Rican Citizenship: FAQs

Want To Explore Your Options?

Living in Puerto Rico is an attractive option for many high-net-worth individuals, and it’s easily one of the most expat-friendly destinations for Americans. 

It’s just like home since it technically still is home, yet this territory has its own unique flavour that’s quite unlike any of the 50 states.

As a Puerto Rican resident, you can enjoy lower taxes without renouncing your US citizenship, though there are still some important considerations you need to be aware of.

At the end of the day, it’s all about finding the best solution for your precise needs, and that’s why you need expert advice you can rely on. 

Talk to Nomad Capitalist today if you’re looking for offshore living and legal tax reduction solutions.