E-2 TREATY INVESTOR VISA
The E-2 category visa is useful for individuals who will live in the United States for extended periods of time to oversee an enterprise that represents a major investment in the United States. The “E” category was established to give effect to treaties between the United States and foreign countries that provide for reciprocal benefits to nationals of each country who invest in the other country, or who conduct trade between the two countries.
Persons who are citizens of a country with such a treaty who make a substantial investment in the United States are classified as E-2 treaty investors. Multiple investors of the same nationality can qualify for E-2 status based upon investments in the same enterprise. Treaty nationals must own at least 50% of the enterprise. Some of the special benefits available to treaty investors that are not available to other non-immigrants are:
Duration Of Stay. Although an initial period of stay of one year is granted to persons coming to the U.S. in the “E” category, this period can be extended almost indefinitely, usually in five-year increments.
Application Process. The application for “E” status can be made directly to a U.S. Consulate and no separate or additional application must be made to the U.S. Citizenship and Immigration Services (USCIS).
Special Conditions. “E” visa holders are not required to maintain a foreign residence to which they intend to return, as long as it is their intention to leave the United States at some time in the future when their period of stay expires.
In addition to holding citizenship within a treaty country, applicants for a treaty investor E-2 visa must satisfy the following requirements:
Active Investment. The investor must make a commitment of funds that represents an actual, active investment. Moreover, the investor’s money must be “at risk”, and not merely available.
Substantial Investment. The investment must be substantial, taking into account only those financial transactions in which the investor’s own resources are at risk. Although there is no minimum amount to qualify for E-2 status, to satisfy the “substantial” requirement, the Department of State uses a “relative proportionality” test. The test is:
- the amount invested weighted against the total cost of purchasing or creating the enterprise;
- the amount normally considered sufficient to ensure successful operation of the enterprise;
- the magnitude of the investment.
The lower the cost of the enterprise, the higher,proportionally, the investment must be to be considered substantial. At the same time, a million dollar investment may be insufficient, for example, if the enterprise is extremely large, such as a steel mill.
Marginality. The investment cannot be marginal in nature; that is, one that will only support the investor and his or her family. The investment either must create job opportunities for U.S. workers, or the investor must have funds beyond those needed for his or her investment.
Essential Role In Enterprise. The treaty investor must fill a key role in the company, either as a person who has developed and will direct the day to day investment, as a qualified manager, or as a specially trained and highly qualified employee necessary for the development of the investment. Also, the treaty investor must “control” the company, i.e., he or she must own at least 50% of the company.
Uncommitted funds in a bank account, even a business account, never represent an “active” investment, unless enough other evidence of business activities exists to show the funds are used in the routine operation of the business (e.g.,payment of bills and payroll, purchase of inventories or equipment, etc.).
Passive or speculative investments held for potential appreciation in value are not considered active investments. The source of such qualifying investments may include loans secured by the investor’s personal assets; unsecured loans granted on the basis of the investor’s signature; cash reserves placed in a business account at the disposal of the business; and, the value of purchased equipment and property. Non-qualifying investments include mortgage debt; loans for which a lending institution has recourse against a guarantor; cash not held in reserve by the corporation; and rental payments, inventory purchases, and other recurring costs beyond the start-up of the enterprise as such costs are assumed to be paid out of income generated by the enterprise and are not part of the investment attributable to the investor.
The amount of funds required to qualify for E-2 status depends on the nature of the enterprise. The “substantial amount of capital” standard has been defined as an amount that is substantial in the proportional sense, that is, in relationship to the total cost of either purchasing an established enterprise or establishing a new enterprise of the same nature. The USCIS and the Department of State utilize a “proportionality test” to determine if the amount invested will qualify as “substantial.” The test is generally that the lower the cost of the enterprise, the higher, proportionately, the initial investment must be. Thus, for example, if the investment is less than $100,000, the investor must control 75% or more of the enterprise.
The types of supporting documents that are generally submitted with an E-2 visa application include, but are not limited to, the following:
- articles of incorporation or partnership agreement;
- business brochures or a detailed business plan;
- balance sheets/statements of operation;
- leases for the business premises;
- contracts with prospective clients;
- invoices/bills of lading and letters of credit;
- business correspondence;
- bank statements;
- telephone and facsimile records;
- tax returns;
- evidence of nationality of stockholders;
- applicant’s stock certificates;
- evidence that the applicant’s own funds have been invested and are at risk;
- evidence that the applicant has the skill/experience necessary to successfully manage the U.S. investment;
- affidavits from the attorney of the business (i.e., regarding the business’ existence, operation, personnel, and composition of the owners); and from the business’ accountant (i.e., regarding financial matters).
The E-2 applicant’s spouse and unmarried children under 21 also are entitled to E-2 status. E-2 spouses are eligible for work authorization. Work authorization is normally issued within 90 days of application. Significantly, executives and supervisors of an E-2 employer who have the same nationality also can qualify for E-2 status. Please let us know if you have any questions or require further information about E-2 visas.
E-2 TREATY COUNTRIES
Treaties or equivalent arrangement providing for E-2 treaty investor status are in effect with the following countries:
- China (Taiwan)
- Congo (Dem. Rep. of)
- Congo (Rep. of)
- Costa Rica
- Czech Republic
- Sri Lanka
- Trinidad & Tobago
- United Kingdom
If you are an investor, or are considering investing in a business operated in the San Francisco area, call Gordon Law Group PC at (415) 284-1601 to discuss your unique needs.