E-1 “Treaty Traders” and E-2 “Treaty Investors” are nonimmigrant visa classifications that as the name implies are treaty-based and carry specific requirements to qualify. In sum, the foreign national seeking to enter the U.S. with E-1 or E-2 visa status intends to do so for an indefinite period, granted in two-year increments, in order to engage in international trade (E-1) or to invest in the United States’ economy by dedicating adequate capital toward a bona fide venture. There is no set dollar amount required, but the type of business (restaurant vs. software development company) and location (rural vs. urban) factor into the analysis of whether the entity(ies) is adequately funded.
As a gating issue, the first consideration is whether the foreign national is from a country which maintains a “treaty of commerce and navigation” with the United States. The U.S. Department of State (“DOS”) maintains a list of E-1 and E-2 treaty countries on their website, with effective dates of each. Some countries maintain an E-1 treaty with the U.S. and some an E-2 treaty; many countries have both E-1 and E-2 visa treaties with the United States. A detailed business plan and adequate capital are required for either category, as detailed below.
E-1 Treaty Traders
E-1 visa applicants seek to enter the U.S. to engage in “international trade” on their own behalf, and if approved, may bring qualified employees to work at the U.S. venture if they are nationals of the same treaty country. Obtaining E-1 visa status may be completed within the U.S. via the Immigration Service, or abroad by applying to a U.S. consular post (via DOS), but an “existing” or established trade relationship must be documented. Qualifying applicants must be nationals of the treaty country, principally* engaging in “substantial” trade with the U.S. (*defined as business volume representing more than 50% of the business—trade between the U.S. and the treaty country cannot be ancillary or collateral to the venture). Such trade can include goods, services, banking, technology and tourism, but the list is not exclusive as to the type of trade involved. In addition, goods and services must be identifiable and traceable between the E-1 treaty country and the United States, and cannot be “domestic” trade in goods within the U.S.—there must be an exchange that is “international” in character, so primarily between the U.S. and the E-1 country.
In addition, while “substantial” is not defined in dollar terms, this facet requires an ongoing relationship or lawful “trade” of goods and/or services between the two countries that ensures continuity and envisions repeated and significant transactions over time; the greater value and/or frequency of the trade, the higher chance of success that an E-1 visa adjudication will be favorable. Singular events, regardless of their high monetary value, do not qualify. For smaller closely-held businesses, the volume of trade contemplated must be sufficient to support the E-1 visa holder, family members, and all accompanying employees in E status. Employees must be nationals of the same treaty country at an executive or managerial level, or possessing special skills deemed “essential” to the success of the venture.
The principal E-1 foreign national can be a legal entity rather than a person, but for purposes of establishing nationality, the venture must be classifiable as 50%+ owned by nationals of the same treaty country to qualify. E-1 nonimmigrant status is renewable indefinitely, as long as the underlying requirements are maintained (adequate principal trade volume, no changes in ownership impacting the principal’s nationality, and no disqualifying merger or acquisition that otherwise severs a required relationship). Spouses and unmarried children under 21 may accompany the principal E-1 trader or employee, and such family members do not need to be nationals of the same country as the treaty trader. E-1 status is not recognized as “dual intent” by statute, and therefore, all E-1 visa holders, their family members, and qualifying employees should intend to depart the United States at the conclusion of the venture.
E-2 Treaty Investors
Similar to E-1 treaty traders, E-2 “investors” are coming to the U.S. to engage in a venture that qualifies pursuant to a treaty between the U.S. and the E-2 visa applicant’s country of nationality. The financial investment must be “substantial” and “at risk,” which requires a robust business plan providing for the indefinite continuity of the venture. Evidence that supports this requirement includes proof of incorporation documentation (of the U.S. entity), bank accounts with foreign-sourced liquid capital, brick & mortar lease agreements, purchase orders, client contracts, utility statements, etc.
E-2 investors must actively control the U.S. entity rather than act as a silent partner, meaning actively investing and controlling the day-to-day operations of the business. All capital dedicated to the establishment and operation of the E-2 investment must be at risk and irrevocably committed to the enterprise; so temporary loan agreements between a foreign entity and the E-2 venture are generally not permitted. Some forms of capitalization are permitted such as the principal’s leveraging of certain assets or securing personal lines of credit, but inheriting a business is not an “investment” for E-2 purposes, nor can non-profit entities qualify for E-2 investor status.
E-2 status contemplates an active venture that is launching business operations in the very near term. Simply opening a U.S. bank account and transferring funds is insufficient; the E-2 applicant must have committed funds, signed contract(s), lease agreement(s), etc., in order to prove up his/her irrevocable financial commitment to the enterprise. Intellectual or other intangible “property” may be deemed valuable consideration, but a good faith determination may require an objective expert opinion to establish value for E-2 visa qualification purposes. DOS will apply a “proportionality test” to determine the sufficiency of capitalization relative to the nature of the enterprise; taking into consideration the type and location of the business, as well as normal operational costs. While there exists no clear delineation of the amount of funding constituting “substantial” for E-2 purposes, the smaller the business the higher the need for liquid capital investment approaching 100% of funding.
Lastly, E-2 visa status is not contemplated as a method to permit long-term nonimmigrant status to the U.S. as the primary objective. Thus, marginal ventures which simply provide the E-2 investor and his/her family a source of income will be deemed inadequate. Business plans with 5+ years of increasing revenue and expansion are expected, where the investment will generate income significantly in excess of the E-2 holder’s singular household requirements.
For additional information on the requirements of E-1 or E-2 status, please reach out to Philip Levin & Associates for a consultation where your particular situation can be discussed with one of our immigration attorneys.
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