The E-2 visa continues to be an attractive choice for entrepreneurs seeking to live and work in the United States who are nationals of a “treaty country,” i.e., a country that has signed a reciprocal treaty with the U.S. to provide for the exchange of investment activities between the two countries.
The E-2 visa is available to nationals of these treaty countries who “invest” a “substantial amount” of funds into a new or existing enterprise in the U.S. of which the individual owns 50% or above, and is coming to the U.S. to “develop and direct” that company. To properly understand and take advantage of this category, it is important to know that the term “investment” takes on special meaning in the context of this visa. Here are several important ways in which “investment” is understood in this context.
1. “Investment” is in large part money actually spent
In contrast with the conventional understanding of “investment,” which involves purchasing shares of a company or a mutual fund and passively receiving income by dividends or capital gains, “investment” in the E-2 visa context in large part means money actually spent. This is because one of the requirements for E-2 visa adjudication is that an investor’s personal funds are placed “at risk.” The adjudicator is looking for signs that the E-2 visa applicant is sufficiently committed to the success of the enterprise, in the form of making expenditures that he or she will recoup if and when the business actually takes off the ground and becomes operational.
Along this vein, although it is permissible to allocate part of your total “investment” as working capital in your company bank account, a significant part of your “investment” must consist of money actually spent to get the company ready for operation, such as company set-up fees, including legal fees, licensing fees, incorporation fees, costs in setting up a website, marketing costs, leasing an office, purchasing equipment, paying salary to employees, etc.
For E-2 investors who take the approach of buying an existing business and entering the U.S. to develop and direct this enterprise, the “investment” consists of the funds actually spent to purchase that business. Note that it is a possible strategy to place the funds in escrow pending approval of the visa.
2. Your “investment” must serve an active business and cannot be a passive investment
A common question we get from potential clients is whether a real estate holding company could qualify for E-2 visa purposes. This is another area where “investment” in the E-2 context diverges from how we normally understand “investment” in real life. Even if you are forming a corporation to purchase a house or building for the purpose of “flipping” it and generating a profit, this will likely not qualify as an “enterprise” for E-2 visa purposes.
A useful framework to understand the “active business” requirement is by considering the enterprise’s ability to hire full-time employees. It is recommended that your business be of a scale and type to be able to hire and support at least 3-5 full-time employees at a minimum within the first five years of operations. A restaurant could easily meet this number, as well as a clinic, accounting firm, grocery store, or a trucking company operating a fleet of vehicles.
3. The minimum amount of “investment” is flexible based on the strengths of your case and what is needed to get the business up and running
Many clients are surprised to hear that there is no official minimum dollar amount of investment to be eligible for a E-2 visa. $100,000 is frequently cited as a benchmark number, but we have guided many successful cases with an investment amount lower than that.
Certain types of business, for example service-oriented firms such as clinics, consulting firms, and law firms, may typically involve smaller start-up costs. For smaller enterprises of this nature, if you can say “I’ve spent everything necessary to start up the business,” you may well qualify for an E-2 even if the actual amount of money spent is significantly less than $100,000.
However, in cases where the dollar amount of your investment is on the lower end of the spectrum, it is recommended to strengthen other aspects of your E-2 petition. With a smaller investment it may be more difficult to convince the officer that your enterprise meet the marginality requirement, which means that the enterprise must generate enough revenue to support more than the living of the investor and his or her immediate family – a real potential to hire multiple employees must be on the horizon.
If you are considering establishing your own company in the U.S. on an E-2 visa and are unsure if your investment will meet the requirements, be sure to consult the guidance and experience of Scott Legal’s team of E-2 experts.
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