The E-2 visa is among the best options for foreign nationals of certain countries to live and work in the United States. The E-2 classification permits investors to purchase or start up a company that hires or will ultimately hire US workers, and come to the United States to develop and direct the business. The E-2 visa can be issued for up to five years, depending on the reciprocity schedule of the treaty country, and may be renewed indefinitely as long as the business remains in operation and E-2 compliant. E-2 businesses come in many shapes and sizes, and our firm has successfully filed for a variety of businesses, such as law firms, gyms, personal training companies, and restaurants.
The full set of E-2 visa requirements can be obtained by clicking here.
In order to qualify for the E-2 business, an investor must spend a “substantial amount” of capital to establish the E-2 enterprise. The investor may contribute cash or other capital assets, as well as goods or equipment that relate to the E-2 enterprise (such as inventory for a retail shop or computing equipment for a consultancy firm). The law also permits the inclusion of intangible or intellectual property as part of the E-2 investment. The Foreign Affairs Manual states as follows:
Rights to intangible or intellectual property may also be considered capital assets to the extent to which their value can reasonably be determined. Where no market value is available for a copyright or patent, the value of current publishing or manufacturing contracts generated by the asset may be used. If none exist, the opinions of experts in the particular field in question may be submitted for consideration and acceptance.
The inclusion of Intellectual property may be a valuable addition to the E-2 enterprise, especially to a software companies and other start-ups. However, the inclusion of intellectual property as the primary or sole source of the investor’s capital contribution raises a few potential issues with an E-2 application, and a prospective investor should work closely with qualified immigration counsel to position their case in the best light possible. This blog will discuss some of the major obstacles investors may face when including IP as the primary source of the E-2 investment.
Substantiality: How much is the IP worth?
In order to include intellectual property as part of the E-2 investment, the investor will first need to quantify its value in a dollar amount. Intellectual property is intangible and thus difficult to value without demonstrable evidence of its worth. The best forms of evidence are offers or contracts to purchase or license the IP, as this is an efficient way to demonstrate the IP’s market value. You may also use the value of current contracts or subscriptions for the use of the IP to determine its market value. Its important to note that letters on intent to license the software, or other speculative contracts that are based on a future contingency does not establish the IP’s worth for immigration purposes.
The Foreign Affairs Manual also states that an expert opinion in the IP’s particular field may be submitted as evidence of the IP’s market value. It is important to secure an opinion from a credible source, and that the opinion be based on objective evidence. An examiner may question the valuation of a report or opinion based on information provided solely by the applicant, for example.
To qualify for an E-2 visa, the investor must demonstrate that the funds or assets committed to the E-2 enterprise are at risk in the commercial sense, meaning the assets must be subject to partial or total loss if the business were to fail. Some consular officers have determined that investment comprised solely of intellectual property is not “at-risk” in the commercial sense, as intellectual property is intangible and not “lost” in the traditional business sense (such as the capital loss of a business failure). Patents and copyrights are still valid despite a business venture collapse; thus the risk of loss may be minimal.
When including intellectual property as part of the E-2 investment, the investor should still make additional capital expenditures to include in the total investment. The amount of expenditures an applicant should make depend on the type of company he or she is setting up. To learn more about what makes an investment substantial for E2 purposes, please click here.
To find out more about the new rules or other investor visas, contact Scott Legal, P.C.
Ian E. Scott, Esq. is the Founder of Scott Legal, P.C. He can be reached at 212-223-2964 or by email at firstname.lastname@example.org.
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