Foreign Investors – E-1 vs. E-2 visas, which one should I pursue?
Despite the wreckage that the COVID-19 pandemic has had on international travel, both investor and trade visas remain powerful options for foreign nationals seeking to immigrate to the United States.
The United States is the world’s largest recipient of foreign direct investment (FDI’s). In the year 2020, the United States received more than $156 billion through FDI’s. As a result, U.S. policymakers have always been keen to promote business travel to facilitate foreign trade and investments. The specific visas available for foreign investment and trade are the E-2 and E-1 visas, respectively. This article will explore the benefits and trade offs of each of these visas and discuss the eligibility requirements for each of them.
Who is Eligible for E-2 Visas?
E-2 Visas are issued to investors who are nationals of a “Treaty Country”. A Treaty Country is a country that has signed a treaty of commerce and navigation or a qualifying international agreement with the United States. In some cases, a country may be designated as a treaty country by legislation. Currently, the United States has a treaty of commerce and navigation with 136 countries, out of which the investors from 81 countries are eligible for E-2 Visas.
Does that mean that all nationals from Qualified Treaty Countries are eligible for E-2 Visas? No. E-2 Visas are provided to those investors who have invested or are in the process of investing a “substantial amount of capital” in a legal U.S. business. These investors are known as “Treaty Investors” and such business is known as the “Investment Enterprise”.
A Treaty Investor must be the 50% (or more) owner of the investment enterprise. If such an investor does not own at least 50% of the business then they must possess the operational control of such business.
What is the meaning of the term “Substantial Amount of Capital”? This is a relative term and there is no predefined dollar amount! Whether or not an investment is substantial will be determined on a case-by-case basis. Different businesses require different levels of capital. Hence, the amount of substantial capital for any business will depend upon the nature of such business.
The law provides that an investment must be substantial having regards to the total cost of either purchasing an already running business or establishing a new business. In other words, the investment must be proportionately higher than the cost of acquiring or establishing a business. Also, such investment must be sufficient for the smooth running of the business.
Does investing in a Non-Profit Organization make one eligible for an E-2 Visa? No, the E-2 Visa is provided to investors who have invested or who are in the process of investing money in a business producing goods or services for profit. Also, such business must be active, legal, and bonafide.
Does investing money in an entity operating at a loss mean I’m not eligible for an E-2 Visa? Not necessarily. As a general rule, the business in which the foreign national is investing money must have sufficient current and future earning capacity to generate income in excess of the reasonable living expenses of the investor and their dependents. In other words, if the investment enterprise is simply marginal—only generating income for the investor and their family— then the investor may not be eligible for E-2 classification.
But it is a known fact that most businesses require some time to generate sufficient income to start payments to their owners. The law provides that the investor may be eligible for E-2 classification if such business is at least capable of generating sufficient income within a period of five (5) years. If you have any questions about this point, please consult with an experienced immigration attorney.
What is the Difference between Treaty Investor and Treaty Trader?
Both treaty investors and treaty traders must be nationals of a designated treaty country as previously discussed. The treaty trader, classified under the E-1 visa, is for foreign nationals who enter, work, and stay in the United States with the sole purpose of engaging in “substantial international trade”. Unlike E-2 treaty investors, E-1 treaty traders do not invest a substantial amount of capital in a U.S. business.