Visa Applications: Part 1 of What is an E-2 Treaty Investor Visa?

Are you wondering if you qualify or are eligible for an E-2 Treaty Investor Visa? Is it possible to start a business in the U.S. and be approved for a visa as a result of this investment? This blog post aims to answer those questions and more. Jeffrey Olsen is an experienced immigration attorney who has represented clients in filing E-2 visas as well as many other immigration applications. If you have any questions about E-2 Visas or other immigration matters, please contact our office today to schedule an appointment.

The E-2 Treaty Investor Visa is a nonimmigrant visa available by application to nationals of countries which have a treaty of commerce and navigation with the United States, or with which the United States maintains a qualifying international agreement, or which has been deemed a qualifying country by legislation. You can find a list of these countries on the State Department's website.

An E-2 Treaty Trade Investor must invest, or be actively in the process of investing a substantial amount of capital in a bonafide enterprise in the United States.

There are two methods of eligibility for the E-2 Treaty Investor Visa. The first is an "E-2 Investor" and the second is an "E-2 Employee." An E-2 Investor is an individual who invests a substantial amount of money in a U.S. business or entity. The E-2 Employee is an executive, manager, or essential employee of a company owned by someone from their country. In today's post, we are going to look at the criteria that is evaluated for an E-2 Investor. A future blog post will assess the criteria for an Employee of an E-2 Investor. The qualifications of an E-2 Investor are:

1. There is a treaty of commerce and navigation or qualifying international agreement in place between the U.S. and the Investor's country;

2. The investor and/or the business possess the nationality of the treaty country;

3. The investor has invested or is actively in the process of investing;

4. The enterprise is a real and operating commercial enterprise;

5. The Investor's investment is substantial;

6. The enterprise is more than a marginal one solely for earning a living;

7. The Investor is in a position to "develop and direct" the enterprise; and

8. The investor intends to depart the U.S. when the E-2 status terminates.

Now, that the criteria is clear, let's discuss some of the more nuanced issues that arise. The first issue that must be overcome is what does "invested or in the process of investing" actually mean? The key here is that the money must be at risk. In other words, the funds must have been spent and it is possible that you could suffer a loss or gain as a result of the spending. Simply transferring money into a U.S. business account is not going to meet the burden.

Evidence our office typically offers in support of an E-2 application is proof that office space has been purchased or leased and the space has been furnished with supplies and/or inventory. However, many clients and potential clients we speak with are worried about committing a substantial amount of money to an enterprise when they may have their E-2 visa application denied. This is a valid concern. Fortunately, using an escrow account to protect your investment is generally acceptable. For example if you are buying office space or a pre-existing business, you can negotiate an agreement with the seller where you condition the release of the funds on the approval of the E-2 application. This offers you and your funds a form of protection. If your application is rejected then your funds are returned to you.

Another issue is establishing the entity as a "real and operating commercial enterprise." Typically, we want to show this is a bonafide company operating in the U.S. Of course, we will include your business formation documents and any applicable business licenses and insurance with the application. Additionally, proof of utility bills, employee wages and customer invoices are some strong examples of supplemental evidence.

Perhaps the most frequent E-2 Visa clients ask is: "How much money is a substantial amount?" and there really is no exact threshold amount to point to. There is no set dollar amount to throw out at you. However, we do know that a substantial amount of capital is an amount:

• Substantial in relationship to the total cost of either purchasing an established enterprise or establishing a new one;

• Sufficient to ensure the treaty investor’s financial commitment to the successful operation of the enterprise

• Of a magnitude to support the likelihood that the treaty investor will successfully develop and direct the enterprise. The lower the cost of the enterprise, the higher, proportionately, the investment must be to be considered substantial.

Different types of enterprises require different amounts of capital to be successful. The value of an existing business is typically the fair market value and this will be compared to the purchase price by the Investor to ensure there was no "insider trading" on the deal. When it comes to startups, you can imagine the amount of money to start an accounting practice is probably significantly less than to open a fitness gym. You likely can operate an accounting practice with a small office, a computer and yourself. In order to operate a gym, you are going to need a large physical space and equipment for starters. Under the proportional test, you would likely have to contribute a higher proportion of the cost to open the accounting practice than you would a gym, since the accounting firm likely has a lower cost.

Some other questions that frequently come up are:

• "What does it mean that the enterprise is more than marginal?"

• "How can I be a in a position to develop and direct the enterprise?"

For the first question about marginality, a marginal enterprise is one that does not currently have nor will possess in the future, the capacity to generate enough income to provide more than a minimal living for the treaty investor and their family. However, an enterprise that does not have the capacity to generate such income but has a present or future capacity to make a significant economic contribution is not a marginal enterprise. It is suggested that the future capacity generally be realizable within five years from the date the investor commences normal business activity of the enterprise. The business plan is a crucial piece of evidence for this. We must show that the business plans and will have the money to hire additional employees (besides the E-2 investor and their family) in the next few years.

As for the final question on developing and directing the enterprise, there must be proof that the E-2 Investor owns at least 50% of the enterprise and is active in the enterprise. If the entity is a joint-venture where the E-2 investor owns 50% with another individual holding an equal share, that is typically enough. The investor should also be involved in managing or overseeing operations to meet the "directing" criteria.

Thank you for taking the time to read this post as part of the nonimmigrant visa series. We hope you found this post informative. If our firm can be of any assistance in helping you with an E-2 Visa application or any other immigration matter, please do not hesitate to reach out to us.

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The information in this blog is provided solely for informational purposes. The information provided is not intended to create an attorney-client relationship and shall not be construed as legal advice on any specific matter. Each legal matter is unique and requires an analysis based on the particular circumstances. As a result, the information provided here may not be applicable in every situation, including your situation, and action should not be taken based on this information without seeking specific legal advice based on particular circumstances. Results may vary depending on your particular facts and legal circumstance.