The Commonwealth of Puerto Rico, as a territory of the United States, is a unique ‘hybrid’ jurisdiction. For tax purposes it is treated as international and non-US; but it is US regulated and compliant for legal, banking, insurance and most other purposes. Accordingly, unlike other international insurers operating in perceived ‘tax havens’, USCL in Puerto Rico is fully US licensed, supported and compliant.
Along with the Insurance Commissioners of the 50 US States, the Puerto Rico Insurance Commissioner is a member of the NAIC and operates sophisticated US compliant insurance regulation; while Puerto Rico also enjoys the stability of the US legal and banking system.
All Puerto Rico citizens are also US citizens and Puerto Rico enjoys the full support of the United States in its financial and business activities.
Importantly for US connected matters, USCL does not fall foul of the ever-changing special laws and reporting requirements for US persons with non-US financial accounts. For example, the US ‘FBAR’ annual report of foreign bank and financial accounts is, expressly by law, not applicable to financial accounts and relationships maintained in Puerto Rico. Similarly, Puerto Rico financial institutions and accounts (such as USCL and its policies) are statutorily exempt from the new FATCA requirements and provisions applicable to ‘Foreign Financial Institutions’.
A substantial additional insurance benefit in Puerto Rico is the statutory asset protection provided to a USCL policy owner and beneficiary. In the absence of limited exceptions (the most important being a fraudulent conveyance into the policy) the benefits provided by a USCL policy are protected from any claims against the policy owner or beneficiaries.
Furthermore, Puerto Rico law clearly provides that in respect of a policy issued by USCL, as a Puerto Rico international insurer, neither the investment reserves nor the policy benefits are subject to Puerto Rico taxation.