Is the E-1 trade based on Revenue only? Can trade be based on expense items?

By March 23, 2020October 21st, 2020E-1 Visa, Immigration

Let’s analyze the following scenario: You are manufacturing certain products in the U.S. and selling these products to your U.S. customers. You are importing some of the materials that are necessary for manufacturing the products from your home treaty country. Could you apply for an E-1 visa? Would importing the materials that will represent cost of goods sold (or some other expense) from your home country qualify as trade for E-1 visa purposes? In many E-1 cases, the determination of substantial trade is based on revenue but the question comes up as to whether this can be based on an expense.

The short answer is that the determination of trade can be based on an expense.  The immigration regulations are silent on this point and do not distinguish whether you are importing the materials and selling the materials directly to the U.S. clients or whether you are importing materials, manufacturing products, and then selling these products to the U.S. customers. Therefore, the trade does not have to be necessarily based on the revenue, but could be based on the expense items.

Please note, that the trade activities must still meet all the E-1 requirements:

  1. The trade must be an actual exchange of qualifying commodities (in this case the materials);
  2. The exchange must be traceable and identifiable, must be for a consideration, and must flow between the two countries;
  3. The trade must be between the U.S. and a Treaty Country (the trade must be international) – must flow between the two countries;
  4. Trade must be already in existence.

Please see all the E-1 requirements when you click here.

Please see our blog post discussing whether you need a business plan for an E-1 visa when you click here.

Please see our blog post discussing whether your business in your home country has to continue after you get the E-1 visa when you click here.

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