There is a significant buzz about E-2 visas in the media lately, particularly for nationals of India. Let me cut through the marketing hype and break this option down into practical terms.
What Is The E-2 Visa?
The E-2 visa program is for a foreign national to make a business investment in the U.S. A person from a country with whom the U.S. has a qualifying treaty can invest a “substantial” amount of money in a business operation that is not “marginal.” These terms are not specifically defined, making it somewhat challenging to predict the outcome of E-2 investor visa applications.
In our experience, it is advisable that the start-up capital investment into the U.S. business operation be at least $100,000 cash, but there is no specific amount or rule guiding the analysis. Additionally, a marginal business is generally one that only provides a living income to the investor. If the investor thinks of the investment as providing a $40,000 annual income as opposed to a 40% annual return on investment, there is a risk that the investment may be considered marginal.
Another way of looking at it is that the business may be marginal if the investor is investing 100% of his or her net worth into the business, such that there are no other sources of income to provide for his or her living. Other sources of income may be additional cash over what is being committed to the E-2 business, investment accounts, real estate with net equity, or other income-producing assets such as tenanted real estate or other business ownership interests.
The E-2 investment cannot be passive, such as in a home in which the investor would live. It must be an investment in an active business operation. This can include an existing business that is purchased, a business plan that is developed from the ground up, or a franchise. There is a ton of flexibility in what kind of business qualifies for E-2.
The key for maximum chances for success is that there is at least $100,000 in start-up capital investment, the amount that we strongly recommend. This means that setting up a low start-up capital business could be challenging, such as a consulting firm, professional services firm, or something similar.
Who Is Eligible for the E-2 Visa?
Here is the official list of countries with which the U.S. has a qualifying treaty for E-2 investment purposes:
As long as the investor is from one of these countries, he or she can try for the E-2. There are two ways to apply – within the US as a change of status, or at the US consulate through a nonimmigrant visa application. One thing to note is that a change of status is not available to someone who entered the US on a passport that is not from a treaty country, even if the person has nationality or citizenship from a qualifying country. The investor must enter the US on the passport from the E-2 country for a change of status to be an option.
There is no need for any approval from the US before applying for an E-2 visa at the US consulate. In fact, any approval from the US will not be considered by the US consulate. Also, note that there is no way to obtain an E-2 visa in the investor’s passport while in the US. Visas can only be obtained outside the US at a US consulate, and the visa is required when returning from international travel.
Dependent family members can also obtain E-2 visas with the primary investor. This would include a spouse and any unmarried children under age 21. The spouse obtains general work authorization. The children do not, and will have to find some other status to remain in the US once reaching age 21.
How Can Indian or Chinese Nationals Get The E-2 Visa?
The question is, how can Indian or Chinese nationals obtain an E-2 visa if there is no qualifying treaty? They would have to obtain nationality from some other country that is on the list, such as Granada, Turkey or Montenegro before having the option available. If a non-treaty country member obtains citizenship from a treaty country, we can then use that citizenship to try for an E-2 visa.
Before trying for an E-2 visa, the following steps must be completed. The investor must form a separate entity in the US, such as a limited liability company or a corporation, and obtain a Federal Employer Identification Number. The company then must open a bank account in the US, receive the transferred funds from the investor, and identify the specific business the investor wishes to build or buy. Finally, the company will need to find a suitable location to operate the business. At home businesses generally will not work. Once these items are complete, the immigration lawyer can start work on the change of status to E-2 or the E-2 visa application.
Many people ask about where the money for an investment can come from. First of all, every dollar invested in the E-2 business will have to be 100% above board. The US will not risk being used for money laundering purposes, so we have to be able to show how every dollar in the investment capital pool was earned. It could be through the sale of real estate in the investor’s name, as long as the financial transaction was legitimate and title legally transferred to the buyer. It could be through savings from income through a job, but we would need to be able to show the money was all legitimately earned over time. It could also be through profit distributions from a business. We would have to show that the E-2 investor owns some percentage of the business, and that the money was reported to tax authorities as part of the legal distribution process.
Gifted funds are an option potentially. For example, if a parent or sibling wants to gift $150,000 to an E-2 hopeful, we must be able to show that the funds are not a loan and that there is no expectation of repayment. That can be very difficult to prove, and therein lies the risk in this approach. We can try it, but we must have legally binding documentation, such as a formal contract or affidavit, showing that it is a gift, why the gift is being given, and that there is absolutely no expectation of repaying. If the consulate or USCIS is not satisfied that the funds are a gift, they could deny the case.
USCIS or the US consulates must be satisfied that the investor is committed to the investment plan. One way to prove that is to invest the money and then apply for the E-2, but that approach adds to the risk – if they reject the application, then the money is invested and may be difficult to pull back out of the E-2 enterprise. The law permits the E-2 hopeful to be in the process of investing. From USCIS and the consulate’s perspective, that means putting the money in escrow or otherwise irrevocably earmarking the investment capital into the project as it is described to them in the application.
At the end of the day, the US government provides E-2 as an option for two main purposes. One is to import cash into the US. The other is to import the brain that allowed someone to amass a substantial sum of capital from outside the US. Generally a person who has been able to be successful from a business or financial perspective outside the US has a good chance of being successful here. It is the combination of the cash and the knowledge that the US law is trying to capture with E-2 and makes an E-2 hopeful attractive to the US.
In short, to qualify for E-2, the investor must be a national of a treaty country. He or she must have the capital to invest, and it must be well documented as the investor’s. The investment must be substantial and more than marginal. The funds must be committed into a plan that is well defined, including location. When all of these requirements align, there is a very good chance the E-2 will be approved.
How Can Someone Get Permanent Residency in the U.S. On an E-2 Visa?
The last question I will explain is how does the E-2 lead to permanent residence in the US. The bad news is, it doesn’t on its own. There also is no maximum time limit an E-2 can be in the US owning and growing the business. Many E-2s are here for their entire working lives, obtaining new visas or extensions as necessary to remain in the US in legal status.
For those who wish to adjust status to permanent resident, the typical approach is for the E-2 spouse to obtain a job with the general work authorization, and have that employer file for permanent residence through a process called Labor Certification. The E-2 investor can have another business offer a labor certification as well, but that can be challenging. The E-2 may wind up married to a US citizen or have another family member file a petition for permanent residence. Lastly, if there is enough cash for an investment, EB-5 may be an option. Generally we use E-2 to get the person here, then we use EB-5 for permanent residence when there is enough cash to qualify.
E-2 is a very flexible option. For most investors we consult with, it is the right answer as long as we have the qualifying treaty. If you have additional questions about E-2 or would like to discuss whether you might qualify, please contact our office.
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About Davis & Associates:
Davis & Associates is the immigration law firm of choice in Houston & North Texas including Dallas, Fort Worth, Plano, Frisco, McKinney and surrounding areas. Their attorneys provide expert legal counsel for all aspects of immigration law, including deportation defense, writs of habeas corpus and mandamus, family-sponsored immigration, employment-sponsored immigration, investment immigration, employer compliance, temporary visas for work and college, permanent residence, naturalization, consular visa processing, waivers, and appeals. Attorney Garry L. Davis is Board Certified in Immigration and Nationality Law by the Texas Board of Legal Specialization.