Immigration Options for Foreign Investors: A Side by Side Comparison of the E-2 and the EB-5

Immigration Options for Foreign Investors: A Side by Side Comparison of the E-2 and the EB-5

Foreign investment into the United States economy continues to hold appeal for many wealthy immigrants. Those immigrants wishing to relocate and establish their life in the United States, as well as contribute to the economy of the United States through their capital investments, may consider two visa options - E-2 and EB-5.

This article will provide a side-by-side comparison of these two visa options and may serve as a guide for foreign investors in terms of planning for the future of both their business and their family. 

E-2 Visa: What You Need to Know

The E-2 investor visa is a nonimmigrant visa, which allows an investor to enter the United States in order to establish and oversee an enterprise of their choice within the United States.1 The E-2 visa emerged from a bilateral investment treaty program  through which the United States has entered into treaties with over 70 other countries around the world.  Congress has implemented legislation governing these treaties as part of the Immigration and Nationality Act (INA).2 According to the INA, citizens of E-2 treaty countries are permitted to enter the United States, accompanied by their spouses and minor children (i.e., children under the age of 21), for the sole purpose of investing in and managing a business enterprise within the United States. Visa duration depends upon treaty country reciprocity. Treaty investors may apply for an unlimited number of extensions, provided the business remains operational. Extensions of status within the U.S. are granted in increments of up to two (2) years each.

The list of countries currently maintaining a bilateral investment treaty with the United States can be found here: US Department of State’s Treaty Countries.

Some benefits of the E-2 visa3 include:

  • The US Department of State has not established a minimum or maximum investment amount required to qualify for an E-2 visa. The Foreign Affairs Manual (FAM) only states that the investor must make a substantial investment into a United States business. In other words, foreign investors may be able to enter the United States and start a business provided that the investment sufficiently capitalizes the venture’s start-up and first year operating expenses.  
  • The E-2 allows for the investor’s spouse and minor children to be issued E-2 visas and permits the investor’s spouse to apply for employment authorization as an E-2 dependent.
  • Minor children of an E-2 investor, while not permitted to work in the United States, may attend the educational institution of their choice. Some colleges have even elected to extend in-state tuition benefits to nonimmigrant children holding E-2 visas.
  • While the E-2 visa validity is limited by treaty country reciprocity, , an investor may renew their visa indefinitely as long as the business continues operations.

There are some drawbacks to the E-2, which include:

  • It is not uncommon for renewal applications to be denied should the enterprise be show signs of struggling at the time of renewal. Moreover, should their business fail or be sold to another investor, the E-2 investor must to leave the country, even if their E-2 visa has not expired.
  • Investors under an E-2 visa may only work for the E-2 enterprise.
  • The E-2 visa does not provide a direct route to permanent residency within the United States.

EB-5 Visa: What You Need to Know

The EB-5 investor visa provides foreign nationals with the opportunity to obtain a United States green card by investing a minimum of $1,000,000 ($500,000 in a Targeted Employment Area) into a new United States enterprise that will create at least ten (10) full-time positions for qualified employees.4

Some benefits of the EB-5 visa5 include:

  • The foreign investor is permitted to reside in the state of their choice and is not required to oversee the investment business. In other words, foreign investors who obtain lawful permanent residency through the EB-5 program may be employed in any position with any employer. They may decide to own and operate their investment business or they may choose to retire.
  • EB-5 investors, their spouses, and any minor children are granted conditional permanent residence within the United States for a two (2) year period. Prior to the end of this preliminary conditional period, EB-5 investors and their derivative family members must petition for removal of these conditions on their permanent residence.  
  • As lawful permanent residents, minor children of EB-5 investors may attend the school of their choice within United States, while also qualifying for scholarships and in-state tuition as a lawful permanent resident. They are also permitted to work within the United States.

Some disadvantages of the EB-5 visa include:

  • The EB-5 visa has a very high investment threshold, lacking the investment flexibility of the E-2 visa.
  • As lawful permanent residents, EB-5 investors must maintain their residency by being physically present in the U.S. for at least 180 days out of the year or applying for a reentry permit for extended absences.
  • Foreign investors who reside in the United States under an EB-5 visa are required to declare their entire worldwide assets and income for United States tax purposes.

Using the E-2 as a Pathway to the EB-5

In some instances, a foreign investor may wish to establish their business in the United States as expediently as possible, but would also like to retain the option of pursuing permanent residency within the United States. This can be done by utilizing the E-2 investment visa as a transition to permanent residency through the EB-5 category. For investors wishing to use this strategy, it is recommended that they speak with an experienced immigration attorney prior to beginning the E-2 process.

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