Getting Started With The E-2 Treaty Investor Application

Davis & Associates is a Trusted Advisor for E-2 Treaty Investor applications. The vast majority of our cases are successful, which demonstrates that we have to tools, knowledge and experience to help you maximize your chances for success.

Below is a brief summary of the E-2 application process and types of documentation that is needed.

A. Proof of Citizenship

You must be a Citizen of an E-2 Treaty Country. For a list of countries with an E-2 treaty with the U.S. Click Here.

B. Proof you are an investor and the source of investment funds

Financial documentation to prove you are an investor could include:

1. Proof of real estate ownership in your name, anywhere in the world.
2. Personal bank account statements, anywhere in the world.
3. Proof of business ownership, however small the interest, anywhere in the world, with documentation relating to the success of the business (i.e. employee records, financial statements, photos of premises, lease agreements/property ownership documents, etc.).
4. Proof of any other assets, such as retirement accounts, vested pensions, or stock, bond or other paper asset ownership

You will need to provide proof of where the money came from for the E-2 investment. Whatever funds you will be investing to qualify for the E-2 must be documented back to the source. This means that all real estate transactions, bank statements, business financials, etc. will need to be provided.

C. Start-up Capital and Marginality

The start-up capital investment amount must be at least $100,000 to work with Davis & Associates. But that should not be your entire net worth. You will need to also show that you have other sources of income to provide for your living such that the US business operation is a true investment rather than just an income stream. If you are considering how much income you will take out of the E-2 business operation, you may find it difficult to be successful with the application. You should think of it in terms of a return on investment.

The reason this matters is you must prove your E-2 business is more than a “marginal” business. That means the expected returns must exceed a living wage, or it must be one additional piece to an already productive investment portfolio of assets throughout the world. You must be able to show either that the returns you expect from your E-2 investment will far exceed your normal living expenses, or that you have other sources of income to provide for your living. This could include, for example, additional cash not expected to be invested in the E-2 business, income-producing assets, such as a business or real estate, or pension payments. We will need documentation to prove the availability of other income streams or resources to provide for you and your family’s living while in the US as an E-2 investor.

D. Formation of a legal entity here in the U.S. and Tax ID

Before we can file the E-2 application, you must form a company here in the U.S. The most common options are a corporation (Inc.) and a limited liability company (LLC). Either works fine for E-2. You must speak with a CPA to determine which option works better for you and your business plan.

Davis & Associates also recommends that you own at least 51% of the E-2 business entity. The law states that the ownership can be 50% to qualify, but then there is an argument you don’t need to be here to run the business. The reason why is because there is someone else or a collection of other owners who have the same authority as you, so you don’t need to be here. With 51% ownership or more, control is not an issue and you can easily justify your need to be in the US to manage and control the business to success.

We can connect you with our trusted providers for business formation and tax ID services if you don’t already have someone that can help you.

E. Open a U.S. bank account for the business

After the company is formed and tax ID is obtained, you will now need to open a U.S. corporate bank account for the company.

F. Identify the business you plan to build or buy

The business operation itself can be anything you would like, as long as the start-up capital investment is at least $100,000. It can be a franchise, a free-standing business operation, or your own idea you are planning to build from scratch. Some businesses our clients have successfully pursued in the past are:

• Food service – fast food, fast-casual, restaurant, snack shops
• Convenience Stores/Gas Stations
• Print shops
• Car dealerships
• Retail stores and mall kiosks – including jewelry, perfumes, beads, handbags, accessories, cell phone accessories, cell phone service, etc.
• Import and wholesale distribution
• Construction
• Franchises of all kinds

You cannot reserve some of the $100,000 investment for operating expenses and/or payroll. The entire $100,000 must be fully invested or in the process of being invested at the time of filing the E-2.

Passive real estate investments do not count. You must open and run a business.

G. Premises

Before we file the case, you must have the premises secured for the business operation. For example, if you are starting a smoothie shop franchise, you must identify and have either a lease or at least a letter of intent with a landlord for a suitable space to operate the business you have in mind.

H. Business plan

The most valuable piece of evidence in the E-2 application submission is the business plan. We have relationships with excellent service providers to help with this requirement. You’re welcome to use whoever you would like to for the business plan, including software programs that can help you do it yourself, but we recommend you work with one of the companies we regularly use for that purpose.

At a minimum, the business plan must include the following:

• An explanation about who you are as an investor
• An overview of the business idea
• Feasibility study for the area in which you intend to operate
• Execution plan, including operations, marketing and administration
• Hiring plan for 5 years – ideally would have at least 2-3 employees in the first two years
• Financial projections for 5 years

As you can see, there is a lot of effort that goes into preparing and submitting an E-2 filing. Documents in addition to those outlined above will also be needed. This baseline summary covers the most important elements of the E-2 process.

Please call us at (214) 997-6851 for our Dallas office or (713) 322-8646 for our Houston office to schedule a free consultation and to discuss your investment options with a Davis & Associates attorney. We look forward to helping you with your E-2 journey.