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Foreign Investors and Entrepreneurs: The E-2 Treaty Investor Visa May Be the Right Fit for You.

Posted by attorney Evelyn Ginossi

Many entrepreneurs and investors look to invest in the US market for any number of reasons. Some become discouraged about moving to the US as a pipe dream; seeing it as a possibility available only to very large companies or high net worth individuals. However, there is an option available to entrepreneurs, startups and investors which require substantially less capital than the $1 million required under the EB-5 green card investor visa.

The E-2 Treaty Investor Visa is available to entrepreneurs, investors and business owners of treaty countries who seek to live in the U.S. to develop and direct the operations of a business. The business can be large or small, so long as applicants meet the specific requirements outlined in this article.

While the E-2 Visa Treaty Investor Visa does not grant an Investor or his family members eligibility for permanent residency (green card), this two-year visa option can be renewed indefinitely, for generally less than a $200,000 USD investment (depending on the type of business).

This post gives an overview of the requirements of the E-2 Treaty Investor Visa, as well as investment requirements for the E-2 Treaty Investor Visa.

OVERVIEW OF REQUIREMENTS

1. Individual Must Be a National of a Treaty Country

The E-2 Investor Trader Visa is available only to people from the countries under an existing treaty with the U.S. Most common western countries are on the list (the UK, Ireland, Germany, Australia), as well as many countries from Asia (Thailand, the Philippines) and South America (Chile, Paraguay), to name a few. Israel was also recently added to the list. For a complete list of countries, please see this link:

http://travel.state.gov/visa/fees/fees_3726.html

2. Individual Must Have Invested or Be Actively Investing

This requirement can be broken down into three (3) essential components:

i)Investor Must Show Legitimate Possession and Control of Funds

The Investor applying for the E-2 Visa must invest funds that have been obtained by lawful means. While comprehensive accounting is not required, there are various forms of proof that will satisfy this requirement. Evidence includes tax returns, tax-related documents used in preparation of returns, bank statements, investment account statements and certificates of ownership.

ii)Investor’s Funds Must be “At Risk" & Irrevocably Committed

The investor’s assets must be subject to the risk of loss, which often means that an Investor must enter into contractual obligations or make a capital expenditure prior to the issuance of the E-2 Visa. Examples of such “At Risk" and irrevocably committed assets would include entering into a lease to secure office space. While an investor may not have taken possession of the premises, there is the risk that by not taking possession, the Investor would still be responsible for the rent due under the terms of the lease.

“At risk" money does not include credit card debt or other unsecured debt or loans. Any debt must be secured by business assets or made in the company name.

iii)Investor Must Be Close to Starting Business

While an Investor cannot accept money from clients or otherwise actively manage his investment until the E-2 Visa is approved, the Investor must be close to starting business. In other words, the Investor must be committed to starting and doing business in the U.S. While the meaning of this depends on the business or type of investment, examples of being ready to start business include signing a lease for space, having a business bank account set up, an online presence established, and/or equipment purchases made. An Investor must demonstrate that he has made the purchases or entered into the contractual obligations necessary to start business.

3. Investor Must Be in a Position to “Develop & Direct" the Business with the Relevant Skills

The Investor must be the person who is going to direct and run the business. It is essential that the Investor have the appropriate skill set and experience to manage the investment. This requirement generally calls for an Investor to show evidence of his education and career experience. For instance, having a proven track record as a successful restaurateur or property developer in your home country would be demonstrated through a detailed CV or resume, as well as letters of reference, reviews in newspapers or industry periodicals, to name a few.

4. Investor’s Investment Must Be Substantial

According to the E-2 Visa rules, an investor’s investment amount in the U.S. must be “substantial", which inevitably leads to the question: “How much money is “substantial" to qualify for the E-2 Visa?" Unfortunately (and fortunately) there is no predetermined amount which will be considered “substantial". This also means that technically there is no minimum and no maximum amount. However, do keep in mind that the investment amount is based in part on the type of business at issue, and it is vital that any investor must keep detailed records of all expenditures for purposes of satisfying this requirement. The U.S. Government uses a proportionality test, which looks at the total amount required to start up a business and then applies the standard of “substantial" investment by looking at the amount spent in relation to the total expenditure needed to set up the business in the U.S.

By way of example, a tech startup seeking to launch a web application may require less of an investment than a business manufacturing aerospace components. A marketing or other service-based business would also require less of a capital expenditure than building out a new restaurant.

What expenditures may be included? Generally, only one month of rent/lease payments may be included in the investment amount, as well as office furniture and equipment. Trade-specific furniture, fixtures and equipment may also be included. Note that idle cash in a bank account is not considered an investment, but the State Department and USCIS will consider a reasonable amount of working capital as part of an investment. As such, simply showing a bank account with without any other capital outlay is not sufficient to qualify for the E-2. Intangible assets can be included in the investment amount as long as the value can be substantiated. Needless to say, the more money spent the better.

5. Investor’s Investment & Business Cannot Be Marginal

As a general guideline, this requirement means that the business cannot be set up for the sole purpose of providing a means of living for the investor and his family. This can be particularly tricky when smaller investment amounts (hovering the $50,000 mark) are involved. Evidence that a business is not marginal includes a substantial business plan showing growth over a 5-year period and the intent to hire employees.

While petitions of amounts around $50,000 can be approved, essentially it comes down to the consular officer or USCIS official reviewing your petition. As such, stronger petitions do tend to occur around the $200,000 investment mark, but as we have noted above, there are more factors at play than just showing a bank statement containing a magic number.

6. Investor Must Have the Intent to Return Home (cannot seek permanent residency)

Demonstrating the intent to return home is essential under the E-2 Visa, as the E-2 Visa is classified as a non-immigrant visa. This means that an investor on an E-2 Visa is ineligible to apply for permanent residency (a green card). However, as mentioned earlier, an investor will be able to renew his E-2 Visa indefinitely for so long as he meets the E-2 visa requirements.

Showing evidence of this requirement entails signing a document indicating an intent to return home upon the expiration of the visa. Unlike other visa categories such as the E-3 Visa (Australian Specialty Occupation), an investor is not required to show ties (family, accounts, property) to his home country.

CONCLUSION

Like other visa categories, E-2 Treaty Investor Visa regulations are complicated and must be proven to the State Department that all legal requirements have been met, including a substantial investment. In addition to compiling the documentation required to build your case, an attorney will also draft an extensive legal brief linking all evidence and requirements of an investor’s case.

If you are interested in applying for this visa class and would like to speak to an attorney regarding the requirements, please contact Evelyn@IBVAdvisoryGroup.com or call 310.746.3837.

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