THE E-2 INVESTOR VISA

The E-2 Treaty Investor visa allows an investor to live in the US in exchange for a significant investment made towards the economy. With an E-2 visa you will be able to live and do business in the US for a potentially unlimited amount of time though without the tax requirements of citizenship or a Green Card.

US is one of two countries in the world that forces citizens who do not live in the US to pay taxes on their worldwide income. Even if you hold a Green Card though spend most of your time abroad you will still be required to submit to US tax law. For this reason some Americans we work with end up choosing to renounce citizenship. When doing business abroad paying US taxes and dealing with the rusty American bureaucratic machine can become a huge waste of time and money. Many entrepreneurs would rather not deal with the stress, paperwork, or pay US income tax at all.

But what happens if you still run businesses in the US or plan to open a business there in the future? Usually a treaty trader visa or a treaty investor visa, like E-1 or E-2, is one of the best options. Rather than delving into the treaty trader visa option we are going to focus on the E-2 visa right now because it is open to a wider variety of entrepreneurs.

The E-2 visa is a non-immigrant visa, which means you’ll never get a passport or Green Card though only your US income will be taxed. However in some cases you may end up being taxed in the US if you exceed the Substantial Presence Test.

Something to keep in mind is that the E-2 visa is really designed for those who have active business interests in the US which requires their presence. Unlike other investor visa programs  passive investments like stocks and bonds, will not grant you eligibility for the E-2 visa. That being said, while the E-2 visa does require active effort on your part you can often get away with making a much smaller initial investment than you might with other programs like the EB-5 immigrant visa, yet another reason the E-2 is often preferred.

WHAT ARE E-2 COUNTRIES?

In order to apply for an E-2 visa  you must hold citizenship to a country that has signed an E-2 Treaty with the US, or in layman’s terms, a commerce and navigation treaty. Plenty of these countries have citizenship by investment programs (CBI), but when it comes to the E-2 visa, not all CBI programs are created equal.

Each of these countries has signed different agreements with the US, so the amount of time you can stay on an E-2 visa varies by country.

Whether or not you can renew your visa and how many times you can do so will also differ.

For example, one of the strongest options is a Grenada passport, which would allow you to stay in the US for 5 years under the E-2 visa. It would also grant you the opportunity to renew as many times as you’d like. Theoretically, as an American, you could renounce citizenship to the US and get citizenship to Grenada within a few months. This would still allow you to conduct your business interests in the US indefinitely  while avoiding payment of US income tax on your worldwide income.

Many Americans who renounce citizenship like to go down to countries in the Caribbean for an alternative passport. As we said  not all citizenship by investment programs are going to be worth the effort. Of the Caribbean countries with CBI programs only Grenada has an E-2 visa agreement with the US.

Citizenship to Grenada will cost you a $150,000 donation; not the most expensive option out there, but also not the cheapest. On the other hand, citizenship from a country like Armenia or Bangladesh will only grant you three months in the US and two renewals, so as far as this discussion goes, they may not be the best option.

DON’T FORGET CITIZENSHIP BY DESCENT

If you decide to work with a company that basically sells passports, they’re going to get you to shell out tens of thousands of dollars for citizenship to one of the E-2 countries. At Nomad Capitalist, we try to be a little bit more strategic than that. Once we delve into your family background, we might find that you’re actually already entitled to citizenship by descent to one of the E-2 countries – such as Ireland or Italy – through one of your parents or grandparents.

The process for obtaining citizenship by descent is not only a fraction of the cost but the wait time is usually significantly shorter with much less paperwork. In some cases  you might have your second passport in a few months or even a few weeks  which will open up the pathway to an E-2 visa quite quickly. Same goes for if you are married to or in a common law partnership with a citizen of a different country or someone who is eligible for citizenship by descent to an E-2 country.

E-2 INVESTOR VISA: PROS AND CONS

The E-2 Investors visa is a really solid option for those who want to do business in the US  especially for those with no interest in US citizenship and its tax burdens.

Pros and Cons:

THE PROS

One of the biggest pros of the E-2 investor visa is the processing time. While the popular EB-5 Immigrant visa for investors can take a few years to process the E-2 visa only takes a few months.

The E-2 visa does require a lot more work on your part as far as business goes but it gives you much greater control over your investment. For Canada’s federal investor visa program and the American EB-5 immigrant visa  you must release your funds to be invested by a third party. Not only are you not guaranteed that you’ll ever see that money again but you may be required to invest upwards of $1 million USD. The E-2 investor visa usually requires a much smaller investment and you are fully in control of your funds; it’s up to you to determine whether you’ll see a return on your investment.

For capitalists with families the E-2 visa will also cover them. Your spouse and any unmarried children under the age of 21 will be permitted to join you when you relocate to the US. Your spouse may then apply for work authorization. If granted there will be no restrictions on where your spouse can work. Your children will also be able to attend school in the US. If they go to a state college they’ll be eligible for in-state tuition.

One of the biggest benefits of the E-2 visa over the EB-5 visa is the travel flexibility. For nomad capitalists the need to travel internationally for pleasure or to follow up on other business interests makes many investment visa programs impractical. Since the E-2 is a non-immigrant visa and you will never be applying for citizenship you don’t have to meet stringent presence requirements. In fact in order to avoid being taxed on your worldwide income you will need to be out of the US for 243 days of the year.

THE CONS

As mentioned, some visa programs allow you to make a passive investment or even donation to a non-profit in exchange for the right to live in your country of choice. The E-2 investment visa is going to require you to actually work in the US and prove that you are doing so, so this might not be the right option if you’re looking for a beach vacation.

As we mentioned before, this visa does not present a clear path to citizenship. If your intention is to eventually become a US citizen, you’re going to want to look into other options, like the EB-5 immigrant visa. The E-2 visa is best for those who travel often, have business interests elsewhere, and want to avoid US income tax law.

While the legal fees for the E-2 visa tend to be lower than for the EB-5 visa, you have to consider that you will have to renew the E-2 visa every few years, depending on which E-2 country you hold citizenship to.

The E-2 visa is geared more towards domestic businesses. If you’re looking to undertake an imports/exports enterprise, you should check out the E1 Treaty Trader visa instead.

HOW TO GET AN E-2 TREATY INVESTOR VISA

One of the aspects about the E-2 visa application is that not all of the requirements are set in stone. That means that there’s a lot more flexibility in the kind of entrepreneurs who can apply but also a lot of guesswork. Luckily, we’ve been helping entrepreneurs apply for this visa for years, so we have plenty of insights that should provide you with more clarity. Let’s delve into some of the requirements for this visa.

GENERAL REQUIREMENTS

The main requirement for this visa is, of course, a passport from an E-2 Treaty country.

The second requirement is investing “a substantial amount of capital” in a business enterprise in the US. Third, your reason for entering the US must be to “develop and direct the investment enterprise.” To establish your commitment to your investment you must prove that you hold at least a 50% ownership stake in the business or demonstrate that you have significant operational control of the business.

While some investment visa programs allow you to make a philanthropic investment into an NPO or NGO, that is not the case with the E-2 visa. Your investment must be made with the intention of generating a profit and with the possibility of financial loss for the investor should the enterprise fail.

Another important factor to note from the requirements in the “substantial amount of capital” requirement. United States Citizenship and Immigration Services (USCIS) isn’t clear about the exact dollar amount they require. They do give a few guidelines to help you determine how much you should invest.

USCIS recommends that the amount should be enough to demonstrate your financial commitment to the business endeavor. Basically, your investment should show that if the business fails, you’re going to feel the sting and therefore have the incentive to make this enterprise financially viable. The invested amount must also be enough to show that you will “successfully develop and direct the enterprise.”

While there’s not technically a minimum investment, through working with investors at , $200,000 seems to be the magic number for this visa. But ultimately, it depends on what kind of business you’re starting. If you’re launching a startup, you need to have enough to cover the cost of launching a new enterprise. In addition, the business you’re launching should ideally provide employment for US citizens as well.

The investment itself must also demonstrate the ability to provide a minimal living for the investor and his or her family. The enterprise doesn’t necessarily have to generate that income at the time of investment, but it should be able to generate enough income within five years time.

While the enterprise should be able to provide a basic living for you and your family, this is not sufficient in and of itself. Your business should be able to boast a profit margin beyond just covering your living expenses. USCIS wants to be able to see that your enterprise can pose an economic benefit to the US.

E-2 FOR EMPLOYEES

If you want to bring employees with you to the US to work in your enterprise, the E-2 visa process can cover them as well. However any employees who want to simultaneously apply for an E-2 visa, must be of the same nationality as you, the investor. An employee you bring with you on an E-2 visa must serve in a supervisory or executive role within the company, or hold special qualifications that make the employee essential to the operation. In essence, you should be able to prove that there is valid reason to bring said employee with you and that he or she possesses skills not readily available among American workers.

OTHER BUSINESS INTERESTS

Under an E-2 visa you are only able to work within your approved enterprise. The situation is slightly different for employees who are potentially permitted to work for subsidiaries or the parent company of the original enterprise.

If you’re an American entrepreneur considering renouncing your US citizenship, but already have a successful business venture in the US, your standing business venture may already qualify you for an E-2 visa.