PPLI in Puerto Rico

A unique jurisdiction for enhanced privacy

With the increased pressure on privacy issues in international tax planning, advisors now frequently ask me to assist them with clients who wish to protect their privacy, but also wish to be compliant with The Common Reporting Standard (CRS), and the Financial Foreign Account Tax Compliance Act (FATCA)
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Our firm now has such a structure which involves structuring Private Placement Life Insurance (PPLI) issued in Puerto Rico.

At  Advanced Financial Solutions Inc., we are now resolved to use this structure for clients who have a legitimate need for privacy while in all other respects are compliant in relation to FATCA and CRS, clients that would pass Anti money laundering (AML), Know your customer (KYC) and other forms of due diligence that are necessary to corroborate this fact.

This white paper is an attempt to give the basic elements of this structure, and why our firm thinks it is a useful tool in preserving a legitimate right to privacy. In Article 12 of The United Nations’ Universal Declaration of Human Ri ghts it states:

“No one shall besubjected to arbitrary interference with his privacy, family, home or correspondence, nor
to attacks upon his honour and reputation. Everyone has the right to the protection of
the law against such interference or attacks.”

Why Puerto Rico?

The Commonwealth of Puerto Rico is a territory of the United States. Under FATCA the Intergovernmental Agreements (IGA’s) definition of the United States excludes the territories. Therefore, US territories do not reciprocate the Automatic Exchange of  Information (AEI).

“Territory Financial Institutions” in the FACTA regulations also have a special status which exempts them from reporting.
The fact that Puerto Rico is statutorily excluded from existing and future IGAs is significant. This fact gives Puerto Rico a very marked advantage for structuring over no state tax jurisdictions in the US like Delaware, North Dakota, and Nevada.

Download full PDF document

 

by Michael Malloy, CLU TEP, @ Advanced Financial Solutions, Inc