John Paulson, president of Paulson & Co is not moving to Puerto Rico, according to a statement released by the hedge fund in response to reports that the hedge fund manager is considering to set up a permanent residence in the island territory of the United States.
The hedge fund stated that while Paulson “considered real estate investment and has vacationed on the island, he has no plans to move to Puerto Rico and to establish a permanent residence there.”
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A report from Bloomberg News early this week indicated that Paulson had been considering a move to the island due to a new law that would allow his firm to remove taxes on profits from a $9.5 billion investment in his own hedge fund. The media company obtained its information from four individual who discussed with the hedge fund manager regarding a possible relocation to Puerto Rico,
According to Bloomberg, Paulson explored the real estate market in the exclusive neighborhood of Condado in San Juan where an English language private academy, Saint John School was located.
Paulson became popular after he correctly predicted that subprime mortgage market would collapse in 2007. His hedge fund gained $15 billion from his bet and he became one of the richest persons in the world. Paulson’s wealth is approximately $11.2 billion, based on data from Bloomberg Billionaire Index.
However, over the past couple of years, Paulson & Co incurred losses on several investments related to the economic recovery in the United States and the break-up of the euro zone. Paulson’s Advantage Plus Fund posted a decline of 64 percent since 2010. His Gold Fund posted a 26 percent decline due to the weakening of metals after a decade of gains. Paulson’s assets under management dropped from $38 billion to $18 billion.
Puerto Rico implemented its new tax laws to encourage individuals who generate a majority of their income from investments. Under the new tax regulation, any capital gains accumulated would be taxed free if a person moves in Puerto Rico. Dividend and interest income paid by companies in the United States are still subject to U.S. federal taxes, but would not be taxed locally.
According to Alberto Baco Bague, Secretary of Economic Development and Commerce of Puerto Rico, ten wealthy people already moved to Puerto Rico and additional 40 individuals are currently discussing their plans with the government to relocate in the island to take advantage of the new tax laws.