Foreign national investors can use investment visa to expand their business in the
U.S. There are three elements necessary which if any of these misses, the visa can
not be issued:
- A treaty must exist between the U.S. and the native country of the alien.
- Nationals of the native country must control or own majority of the investment or
trading.
- Each employee or principle of the company must have the citizenship of the native
country.
There is no petition required to be filed in the U.S.; the applicant can apply directly
to a U.S. consular office abroad.
The spouse and minor children of the main alien can accompany him/her to the U.S.
under the same principle as him/her while they are not required to have the same
nationality. Investment must be substantial
The investment required for treaty investor status must be “substantial.” No set
dollar figure constitutes a minimum amount of investment to be considered “substantial”
for E-2 visa purposes. The requirement is met by satisfying the “proportionality
test.” The test is a comparison between two figures: the amount of qualifying funds
invested, and the cost of an established business or, if a newly created business,
the cost of establishing such a business. The amount of the funds or assets actually
invested must be from qualifying funds and assets. The cost of an established business
is, generally, its purchase price, which is normally considered to be the fair market
value. The cost of a newly created business is the actual cost needed to establish
such a business to the point of being operational. The actual cost can usually be
computed as the investor should have already purchased at least some of the necessary
assets and, thus, be able to provide cost figures for additional assets needed to
run the business. The value (cost) of the business is clearly dependent on the nature
of the enterprise.
Proportionality test
The amount invested in the enterprise should be compared to the cost (value) of
the business by assessing the percentage of the investment in relation to the cost
of the business. If the two figures are the same, then the investor has invested
100 percent of the needed funds in the business, and such an investment is substantial.
Illustrations: A newly created business might need only $50,000 investment to be
set up and to become fully operational. As this cost figure is relatively low, a
higher percentage of investment, such as 90-100 percent, is anticipated. A business
costing $100,000 might require an investment of 75-100 percent to meet the test.
A small business costing $500,000 would demand generally upwards of a 60 percent
investment, with a $375,000 investment clearly meeting the test. In the case of
a million dollar business, a lesser percentage might be needed, but 50-60 percent
investment would qualify.fn61 A business requiring $10 million to purchase or establish
would require a much lower percentage.
A $3 million investment might suffice in view of the sheer magnitude of the dollar
amount invested. An investment of $10,000,000 in a $100 million business would qualify
based on the sheer magnitude of the investment itself. Caution: Assessing proportionality
requires the use of judgment that takes into account the totality of the factors
involves and is not a simple arithmetic exercise.
Enterprise must be real, operating commercial enterprise
The enterprise, to qualify for treaty investor classification, must be a real operating
commercial enterprise or active entrepreneurial undertaking, that is, a business
venture productive of some service or commodity. The enterprise cannot be a fictitious
paper organization, or an idle speculative investment held for potential appreciation
in value, such as undeveloped land or stocks held with no intent to direct the enterprise.
Enterprise must be more than marginal
The alien seeking treaty investor status must not be investing a relatively small
amount of capital in a marginal enterprise solely for the purpose of earning a living.
An alien is not entitled to treaty investor status if the investment, regardless
of its substantiality, will return only enough income to provide a living for the
applicant and the applicant’s family.
There are various ways to help determine whether an investment is marginal, in the
sense of providing only a livelihood for the applicant. First, the consular officer
will look to the alien’s income or financial situation, and if the applicant has
another source of income or other financial means to support him or herself and
his or her family, then the business is not deemed to be established for the sole
purpose of earning a living. If the income derived from the business exceeds what
is necessary to support the alien and the alien's family, then this too meets the
test. If the first test is not met, and it becomes necessary to consider other factors,
the consular officer may look to the economic impact of the business. An applicant
may show, for instance, that the investment will expand job opportunities locally
and/or that the income or return from such a business will have a positive significant
impact on the local economy. The investment must be more than a mere conduit by
which the alien seeks to enter the skilled or unskilled labor market.