An L-1 visa is a great visa for an employee or owner of a company abroad who wants to transfer to a U.S. office or open an office in the United States. For these visa applications there are always two work sites involved (although not always two legal entities), as the company must be operating both abroad and in the U.S. to sponsor employees for this type of visa.
What is a “qualifying relationship” in the context of an L-1 visa?
A company is considered to have a qualifying relationship sufficient to sponsor an L-1 visa when the company is either a parent, branch, affiliate or subsidiary of a foreign firm operating abroad. This means that it is not always necessary to incorporate a U.S. company to qualify for the L-1 visa, as a foreign company may send employees to work at a branch office located in the U.S. Each type of entity is described briefly below, along with examples of situations that would satisfy the L-1 requirement.
Parent: A parent company is a legal entity that has controlling ownership in other companies, which are called subsidiaries. For example, if a foreign pharmaceuticals company owned 70% of a food distribution company in the U.S. and controlled company operations, this would constitute a qualifying relationship for L-1 purposes. One thing that this scenario also illustrates is that the company abroad and the U.S. company do not need to be engaged in the same line of work for a qualifying relationship to exist.
Subsidiary: A subsidiary is a legal entity that is directly or indirectly owned and controlled by another legal entity, called a parent. Usually for there to be a parent-subsidiary relationship, the subsidiary must be owned at least 50% by the parent company and controlled by the parent, or owned 50% in a joint venture with one other company where they have equal control. However, if the parent owns less than 50% of the subsidiary there may still be a qualifying relationship for L-1 purposes as long as the parent can demonstrate that it actually controls the subsidiary, despite owning less than 50%.
Branch: A branch refers to an office of a company that is in a different location than other operating divisions of the company. A branch is not a separate business entity, so if a foreign corporation wanted to open a branch in the U.S, they would not have to incorporate a U.S. entity, although the foreign company would need to register in the state where the branch office will operate.
Affiliate: Companies are affiliates if they are owned and controlled by the same parent company or by the same individual or group of individuals. When a group of individuals owns the companies, they are considered affiliates if, within the group, each person owns and controls about the same proportion of each company. For example, if four friends jointly owned Company A, with each person owning 25%, and jointly owned Company B, with each person owning 25%, these two companies would be affiliates.
For immigration purposes, the regulations also allow certain companies offering accounting, managerial and/or consulting services under an internationally recognized name to be considered affiliates of accounting companies outside the U.S. that use the same internationally recognized name, where both companies have agreements with the same worldwide coordinating organization partnership that is owned and controlled by member accounting firms.
Identifying a qualifying relationship is an important and fundamental step in an L-1 application, as this relationship must exist (and continue to exist) in order for an L-1 applicant to remain in the United States. The L-1 visa has several other requirements, which you can learn about by clicking here.
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