The E visa is one of the more versatile visas available to small and emerging businesses. Consular officers have great amount of judgment and discretion in interpreting the regulations and the success of an E application is based on the consular post adjudicating the application and their interpretation of such regulations. Therefore, it is important that the Attorney preparing and filing the E Visa application research the current trends of a particular consular post prior to submitting an E visa application.
What does an E visa do?
The E visa allows nationals of a treaty country to enter the U.S. as a treaty trader or a treaty investor. As a treaty trader, the treaty national must intend to carry on substantial trade principally between the United States and the treaty country. As a treaty investor, the treaty national must invest a substantial amount of capital (or be in the process of investing) into an enterprise. Spouses of E-2 visa holders are eligible to obtain unrestricted work authorization for up to two years that is renewable for as long as the principal E visa holder maintains E status.
Limitations: Ownership and Nationality
The main limitation of the E visa is that only nationals who have a treaty of Friendship, Commerce and Navigation Treaty or a Bilateral Investment Treaty with the United States qualify. Therefore, many small and emerging business owners from Russia, China or India are ineligible for the visa. The list of countries with which the United States has such a treaty can be found on the US Department of State website.
The business must be at least 50% owned by the treaty national and nationality is traced to the nationalities of the individual owners of the business if there are multiple owners. Furthermore, employees who hold the same nationality of the treaty company may qualify for the E visa if they are coming to the U.S. to engage in an executive or supervisory capacity or in an essential capacity which is necessary for the efficient operation of the enterprise. If the business has dual nationality because it is equally owned and controlled by nationals of two different treaty countries, employees of either nationality may obtain E visas to work for that company.
E-1 Visa: Trade of Services
What does it do?
E-1 (treaty trader) allows treaty nationals to enter the U.S. to engage in international trade that constitutes an exchange as long as it is substantial and involves a continuous flow of numerous transactions over time.
- Over 50% of the trade conducted by the E enterprise must be between the U.S. and the treaty country.
- There must be consideration for the international exchange of goods, moneys, or services that is traceable or identifiable and title must pass to the other party.
- Acceptable forms of international trade include commercial exchange of goods, services, international banking, insurance, transportation, tourism, communications, and newsgathering activities.
- The focus of the international trade is not solely on the volume of trade conducted, but also on the monetary value of the transactions. Smaller and emerging businesses can demonstrate a pattern of trade based on its number of transactions and the value of each transaction.
- ABC USA has been engaged in the trade of services with their parent company, ABC Poland.
- ABC Poland has a team of developers dedicated to developing technology for ABC USA. ABC
- USA commissions all software components and technological modules from ABC Poland.
For a project that lasted several months, ABC Poland delivered the API (application programming interface) for the technology to ABC USA.
Currently, ABC Poland continues to provide programming language development services to ABC USA. The trade of the above services between ABC USA and ABC Poland are directly related to the development of ABC USA’s unique technology and applications and are activities considered to constitute trade. Further, as the traceable exchange takes place between the two treaty countries, the U.S. and Poland, it is international in scope.
ABC USA has been engaging in systematic and substantial trade of services and goods for application development with the treaty country, Poland and has conducted 20 transactions since its inception in 2013 with transactions ranging in value from $3,000 to $500,000. In 2013, ABC USA’s international trade with Poland totaled $800,000.
Accordingly, ABC USA conducts substantial trade with Poland as it engages in a continuous flow of international trade involving numerous transactions of value and therefore qualifies for the E-1 visa.
E-2 Visa: Substantial Investment
What does an E-2 Visa do?
Small and emerging business can qualify for an E-2 based on active investment of substantial funds into the treaty enterprise that have been irrevocably committed to the E enterprise. Investments can include payment in the form of leases, rents for property or equipment, equipment purchased, inventory and rights to intangible or intellectual property as long as the value can be determined. There is a no minimum investment amount (i.e. $100,000) of capital to meet the substantiality requirement.
Consular officers use a proportionality test to determine whether the funds invested meet the substantiality test:
- What is the total amount of funds invested by the treaty national?
- What is the total cost of purchasing the enterprise? What is the total cost of creating the enterprise (i.e. start-up costs)?
- What is the amount that would be sufficient to ensure the investor’s financial commitment to the successful operation of the enterprise?
- What is the magnitude of investment to support the likelihood that the investor will successfully develop and direct the enterprise?
The substantiality test is based on the treaty investor’s capital investment into the enterprise, not the total investment received by all investors.
ABC USA is 100% owned by a ABC France (which is 100% owned by French citizens) and has received a total investment of $1,100,000 from ABC France and U.S. investors.
Of this amount, ABC France has invested a total of $100,000 and the $1,000,000 investment is from an U.S. angel investor in the form of a convertible note. The total cost for creating the enterprise (i.e. start-up costs) is $50,000.
Accordingly, the French company has invested more than 100 percent of the needed funds in the business and meets the proportionality test as the amount invested by French investors is substantial in relation to the total start-up costs.
These investments were made with the objective of developing ABC USA and expanding the company’s business. These funds are at risk, subject to partial or total loss if investment fortunes reverse.
As the investment funds originated from ABC France’s business account, ABC France is in possession and control of these investment funds and is irrevocably committed to the investment and the funds are at risk in the commercial sense. Therefore, ABC France has made a substantial investment into ABC USA.