For many foreign nationals who wish to live and work in the U.S.A., the E-2 Status offers a great opportunity to do so when no other options seem promising. However, interested foreign nationals must be citizens of at least one of the Treaty Countries listed below.
If you're lucky enough to be a citizen of a country with whom the U.S. has the required bilateral treaty (a "Treaty Country" listed above), you would be eligible to apply for E-2 Status in the United States. (If you are not currently and legally inside the U.S., you would need to apply for the E-2 Visa which you can then use to be admitted to the U.S. in E-2 Status. An E-2 visa may be issued for as little as one year, or for as long as five years.) Once a foreign national is admitted to the U.S. in E-2 Status, that person may live and work in the United States for the purpose of directing the specific enterprise. Technically, the Status is renewable indefinitely as long as the enterprise continues operating. While foreign nationals regularly confuse E-2 visas with EB-5 visas, the two classifications are actually very different. While the EB-5 program carries a minimum investment requirement of $1,000,000 USD ($500,000 USD in rural areas) and puts the bearer on the path to obtaining U.S. permanent residence, the E-2 Status carries no minimum investment requirement and can amount to a dead end in the sense that it does not, ipso facto ("by itself"), entitle its bearer to subsequently obtain U.S. permanent residence. That said, many people who have E-2 Status will eventually find a way to obtain Permanent Residence in the U.S. during their extended stay in the U.S.
It is also worth highlighting that foreign nationals from several large and densely populated countries will not qualify for E-2 Status because their countries have no qualifying treaty with the U.S. It is for this reason that citizens of Brazil, China, India, Indonesia, Russia, and Venezuela, among others, will need to meet the more demanding financial requirements of EB-5 Status if they are looking to live in the U.S. by virtue of an investment.
Meanwhile, foreign nationals from Treaty Countries are eligible to receive E-2 Status by investing in a business enterprise, whether a startup enterprise or an established one, and by conceivably placing as little as $17,000 at risk. This means that the foreign national needs to either spend money or create financial obligations that would aggregate a substantial amount of money, with $17,000 being the among the lowest investments for which lawyers have successfully obtained E-2 Status for their clients.
Requirements for obtaining E-2 Visa/Status
A Foreign National (a "Non-U.S. Citizen" or "Alien") who is a national of one of the Treaty Countries listed above, may apply for Non-Immigrant E-2 Status in the U.S. so long as it shall be used: "[s]olely to develop and direct the operations of an enterprise in which he or she has invested, or of an enterprise in which he or she is actively in the process of investing, a substantial amount of capital". INA §101(a)(15)(E)(ii) [8 U.S.C. 1101(a)(15)(E)(ii)]. The various, specific, sub-requirements will be fleshed out more comprehensively below.
1. National of a “Treaty Country”
While the foreign national seeking E-2 Status may either start a new business or purchase an established business from a third party, at least 50 percent of the business must be owned by nationals of the respective Treaty Country under which the E-2 Status is being requested. The country of incorporation is not relevant to the 50% Treaty Country ownership requirement. Instead, it is the actual ownership interest and the nationality of each owner that matters.
Accordingly, as an example, if E-2 Status is being requested based upon the treaty between the U.S.A. and Trinidad & Tobago (a “Treaty Country”), at least 50% of the investment business must be owned by citizens of Trinidad & Tobago in order for E-2 Status to be approved in connection with the business. This does not mean that 50% of investment capital must originate from citizens/nationals of Trinidad & Tobago. The source of investment capital is not relevant to whether E-2 applications would be approved in connection with the business.
Dual (Multiple) Nationality Owners
Persons with multiple nationalities can apply using any of their nationalities. However, persons who are U.S. citizens or U.S. Lawful Permanent Residents (LPRs) cannot use their interests in the business to satisfy the 50% Treaty Country ownership requirement, not even if such persons are citizens of the Treaty Country.
Accordingly, building on the example above, if a U.S. citizen or LPR has an ownership interest in the business, that person’s interest in the business will not count toward the requirement that at least 50% of the business be owned by citizens of Trinidad & Tobago -- even if that person is a citizen of Trinidad & Tobago. Stated ever more simply, 50% of the business must be owned by nationals of the Treaty Country, and none of those nationals can be a U.S. citizen or LPR.
However, persons who are dual citizens of Trinidad & Tobago and Brazil (not an “E-2 country”), provided they are not U.S. citizens or U.S. LPRs, can have their ownership interest in the business count toward the 50% ownership requirement discussed above.
2. Non-Immigrant Intent
Foreign nationals applying for E-2 Status must represent that they intend to depart the U.S. upon subsequent termination of the E-2 Status. This requirement is not as onerous as the one that must be overcome in order to obtain a U.S. Tourist visa (B-2 visa), where countless people are rejected under INA 214(b) due to insufficient ties to their respective home countries. Usually, it is sufficient for E-2 applicants to simply promise that they will return home once the business ceases U.S. operations. However, persons who previously overstayed their Status in the U.S. will be at risk of being denied an E-2 visa unless the overstay is thoroughly explained to the satisfaction of the interviewing consular officer.
3. Possession and Control of the Invested Funds
The Treaty Investor must possess and control the invested funds. However, the funds may be loaned or gifted to that person(s) by any other person or entity, even a person or entity that is in the U.S. The funds do not have to originate from a national of the Treaty Country.
4. Investment Must Be "at risk"
People are frequently and unnecessarily confused by this straightforward requirement. The investors have to place their own funds at risk of loss. This means the investors need to incur indebtedness that will either be covered by their own personal funds, collateralized by their own personal assets, (such as a second mortgage on a home), or covered by unsecured loans. See 9 FAM 41.51 N8.1-2. The Foreign Affairs Manual, which consular officers rely upon, expressly states:"A reasonable amount of cash may be counted as investment funds". See 9 FAM 41.51 N8.1-2.
5. Investment Must Be Irrevocably Committed
It is not sufficient for a foreign national to deposit money into a bank account and then apply for E-2 Status. It is true that liquid funds being held in a bank account can count toward the total investment, provided that such funds can be reasonably estimated to cover the cost of “routine business operations”. However, other funds must have already been “irrevocably committed” to the business, which may include down payments on leases, office equipment, etc. This irrevocable commitment of funds is easier to satisfy when an existing business is being purchased than when a new enterprise is being formed.
6. The Enterprise Must Be Bona Fide
The enterprise must be an active, for-profit enterprise, and not a passive investment such as real estate. Non-Profit organizations will therefore not qualify for E-2 status. This is because the regulations state: “The enterprise must be a real and active commercial or entrepreneurial undertaking, producing some service or commodity for profit and must meet applicable legal requirements for doing business in the particular jurisdiction in the United States.” See 22 CFR §41.51(b)(8).
7. Investment Must Be Substantial
Not only must the investment be at risk as stated above, it must be substantial and proportional to the type of business. As an example, while an investment of $20,000 may be accepted for a solo accounting practice, an investment of $200,000 will be required for a jewelry business. Ultimately, a sufficient amount of money must be invested as to allow a reasonable person to conclude that the business has a good chance of becoming profitable and successful.
8. Investment Must Not Be Marginal
Finally, the regulations require that the business not be marginal, meaning that it is expected to grow into a profitable venture and will not merely only generate enough revenue to feed the owners and no one else.
If you believe that you have a business idea that may allow you to apply for E-2 Status, call The Murray Law Firm at (888)354-6257 and discuss the matter with us.