E Visa status is available to nationals of countries that maintain treaties with the United States for commerce and navigation. The E2 Visa is specifically for those coming to the United States to develop or direct the operations of a business enterprise in which they have invested a substantial amount of capital. One of the main considerations when determining qualifications for the E2 visa is whether the investment is considered “substantial.” In order to determine the substantiality of an investment, a proportionality test is used. We discuss what is considered “substantial” and the “proportionality test” here.
What is considered “substantial” for an E2 visa investment?
A set investment amount has not been set to meet the “substantial’ requirement for an E2 visa. In some cases, this can make the determination of the substantiality of an investment for E2 visa purposes complicated. The following guidelines can be used in determining if an Investment is substantial for E-2 visa purposes:
- Substantial in a proportional sense, as determined through the application of the proportionality test;
- Sufficient to ensure the treaty investor’s financial commitment to the successful operation of the enterprise; AND
- Of a magnitude to support the likelihood that the treaty investor will successfully develop and direct the enterprise.
What is the “proportionality test” for an E2 visa investment?
The proportionality test is used to determine if an investment made for E2 visa purposes is substantial as related to the cost of the enterprise. If the investment made reflects the actual cost of the enterprise being purchased, then the investment amount for E2 visa purposes is 100% and would be considered substantial for an E2 visa. The lower the investment amount the higher the percentage of investment required by the investor. The higher the investment, the lower the investment amount may be sufficient. For example:
- An investor buys a convenience store with a total cost of $65,000 USD and invests $65,000 USD in the enterprise. The investment amount is 100% and would be considered substantial for an E2 visa.
- An investor buys a warehouse tied to their logistics company for a total cost of $1M USD and invests $500,000 in the enterprise. Although the investment amount is 50%, it may still be considered substantial based on the amount of the investment.
- An investor buys a shopping mall for a total cost of $100M USD and invests $10M USD in the enterprise. Although the investment amount is 10%, it may still be considered substantial based on the amount of the investment.
As indicated in the examples above, the smaller the investment amount the larger the percentage of investment required by the investor. The larger the investment amount, the smaller percentage of the investment may be acceptable.
E Visas for Traders & Investors
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