Of particular concern to the local immigrants and business communities is learning about and choosing the appropriate category for investment-based travel and immigration to the United States. In this series, we will examine the various options, appropriateness for each particular case and risks associated with each.
We will begin our series with the nonimmigrant E-1/E-2 (Treaty Trader/Investor) visas.
Section 101(a)(15)(E) of the Immigration and Nationality Act describes the "E" visa category as follows:
"an alien entitled to enter the United States under and in pursuance of the provisions of a treaty of commerce and navigation between the United States and the foreign of which he is a national, and the spouse and children of any such alien if accompanying or following to join him:
- Solely to carry on substantial trade, principally between the United States and the foreign state of which he is a national; or
- Has invested, or of an enterprise in which he is actively in the process of investing, a substantial amount of capital . . ."
The United States has signed several Treaties of “Friendship, Commerce and Navigation” with other countries designed to promote trade and investments between the US and the other contracting states, thereby encouraging good relations and peace. In the Middle East, contracting states include Egypt, Oman, Tunisia, Morocco, Turkey, Jordan, Israel and Iran. Nationals (individuals or companies) of countries with such Treaties with the United States can obtain visas to work in the US in order to develop and direct their trade with and/or investment in the US. Such visas are called E-visas and come in two types (E-1 & E-2):
The E-1: Treaty Trader Visa
This type of nonimmigrant visa permits foreign nationals, key managerial and specialist employees with highly specialized skills from treaty courtiers to “develop and direct” import or export, a significant amount of international trade (of goods, services or technology) between their own country and the US. The key is that the volume of such trade must be sufficient and “substantial” to justify the presence of the visa holder in the US for the purpose of managing said trade. There is no set minimum level of trade which is considered “substantial” but at least 50% of the trader's exports/imports must be to or from the USA. Lastly, the trader must have a past history of conducting trade between the US and the treaty country.
The E-2: Treaty Investor Visa
The E-2 visa is often the most appropriate visa for Arab investors buying their own business or establishing a new business in the United States. To qualify for this visa the most important factors are:
The investment must be “substantial.” There is no minimum figure required and investments in small and medium-sized businesses are contemplated in the Foreign Affairs manual, but it is related to the amount necessary to purchase an existing business or establish a new one. This “proportionality” is an either or test: the amount invested is weighed against either criterion. Investments at the lower end of the range are usually between $100,000 and $150,000, but can be less. Some financing is possible, but should not be more than 25% - 30% of the purchase price.
The investment must be irrevocably committed to the purchase and should be placed in a special escrow account. Funds in a business account, for example, are normally insufficient to qualify you for an E-2 visa.
The investment must be “non-marginal.” This requires demonstration that the business will generate more than enough income to support the investor and the investor’s family, but also contribute to the US economy, by employing US workers. In short the business will produce profits.
The enterprise funded must be a real and active commercial or entrepreneurial undertaking, producing some service or commodity. The investor is expected to be actively engaged in developing and directing it. Passive investments - non-committed funds in a bank account, a paper organization or passive speculative investment, likes stocks or undeveloped land - do not qualify since they do not require the intent to direct or develop a commercial enterprise.
The investor must be the source of the invested funds. Personal loans from relatives or friends can be considered part of the investment as long as the business is not collateral for the loan. Gifts of funds or inheritance for the investment are also permitted.
Current regulations allow for two co-investors to invest in, obtain E-2 visas and work in the business. The two investors can be related or unrelated business partners.
The spouse of an E-2 investor can apply for work authorization once in the US, and work for any employer. Dependent children under 21 will normally receive E-2 dependent visas valid until their 21st birthday. Dependent visas do not permit recipients to work in the business or elsewhere, but they can study or simply accompany their parents.
Elderly or disabled dependents can obtain B-2 visas, often simultaneously with the investor and are normally permitted to stay in the US with the investor as long as their visa status remains valid.
E-2 visas can be issued for up to five years. On renewal the visas are often granted for five years as long as the issuing US Embassy is satisfied that the business continues to meet the E-2 requirements. So long as eligibility continues, "E" status not only permits the visa holder to engage in the qualifying trade, but permits incidental activities as well, and to stay in the United States “indefinitely”, so long as the alien engages in the qualifying "E" employment.
This visa category cannot be used as the prerequisite for an application for permanent residence (Green Card) by the Treaty Investor, because the law prohibits the investor from petitioning himself. However, if the investor has a business in the treaty country which continues to trade while the investor is in the US, the investor and his/her family may be able to qualify for Green Cards on the basis of a Multinational Manager application, after the US business has traded for at least one year.
Investors can also consider other options to obtain a Green Card, after an initial E-2 visa including:
Sponsorship by a close relative.
Sponsorship by a prospective employer.
Making an investment of $1 million (or $500,000 in a rural area or area of high unemployment) in a business.
Of course, there is always the risk that the "E-2" visa will be denied. Therefore, careful planning in the formation of the investment must be used to insure it meets all the criteria established by USCIS regulations - if it does, the visa should be approved, however, consular officers at many U.S. Embassies and Consulates around the world exercise independent discretion in approving "E" visas, and there is no guarantee that the visa will be issued. The documentation which must be submitted to the American Embassy, however, is quite extensive, and recently documentary standards have been raised further.
"E-2" visas are very complex. We recommend seeking the advice of qualified immigration/business counsel, not only for the preparation of the immigration paperwork, but in the formation of the underlying U.S. business entity, or the purchase of an already existing U.S. business.