Much press has been given to immigrant investors in recent years. One of the main reasons why the EB-5 immigrant investor program has captured the attention of so many prospective immigrants is the low demand for visas under this category relative to the heavily backlogged third preference (EB-3) and, for some countries, the second preference (EB-2) categories.
At present, the EB-5 program presents one of the fastest routes to a green card, be it through the regular program which requires a $1,000,000 direct investment or the regional center or pilot program, in which an indirect investment of $500,000 is usually sufficient.
However, there are avenues that have long existed for other types of investors, particularly those who do not seek permanent resident status in the U.S.
Immigration law and regulations allow treaty traders (E-1) and treaty investors (E-2) to enter the U.S. for specific purposes as non-immigrants. However, one main distinction between them and most non-immigrants is that they can extend their stay almost indefinitely. After an initial period of two years, E-1 traders and E-2 investors can renew their stay every two years for an unlimited number of times if they maintain an intention to depart the U.S. at the expiration or termination of their status.
An E-1 treaty trader is a national of a country with which the U.S. maintains a treaty of commerce and navigation who enters the U.S. solely to engage in international trade. Trade is defined as the existing international exchange of items of trade for consideration between the U.S. and the treaty country, and includes goods, services, international banking, insurance, transportation, tourism, technology and some news-gathering activities.
The trade carried on by the treaty trader must be substantial, meaning that it must be sizable, sufficient to ensure a continuous flow of trade between the two countries. Substantiality cannot be based on a single transaction no matter how monetarily valuable it is. The trade must also be principally between the U.S. and the treaty country, i.e. more than 50% of the total volume of the trade must be between the two countries.
An E-2 treaty investor, on the other hand, is one who is seeking to enter the U.S. to direct and develop a business in which he has invested, or is in the process of actively investing, a substantial amount of capital. Like the E-1 treaty trader, the E-2 treaty investor must also be a national of a treaty country.
For E-2 purposes, substantiality is determined by weighing the amount of funds invested against the total cost of purchasing or establishing the enterprise. It is an amount considered sufficient to ensure the investor’s financial commitment to the enterprise’s success.
A higher proportion of investment is required of small businesses for the investment to be substantial. For instance, while an E-2 investor may be allowed to fund only 10% of an investment worth $10 million, for an investment of less than $100,000, the E-2 investor would normally be required to provide the entire investment.
The investment must be in a bona fide enterprise or one that is a real, active commercial or entrepreneurial undertaking. It may not be idle or passive investment, such as in stocks or undeveloped land. Furthermore, the E-2 investor’s investment cannot be marginal or solely to provide for himself and his family. A marginal enterprise is one that does not have the capacity at present or within five years to generate more than enough income for the investor and his family.
An employee of the E-1 trader and E-2 investor may qualify for the same classification if he is of the same nationality as the treaty employer and if the position is primarily executive or supervisory in character, giving the employee ultimate control and responsibility for the operation of the enterprise. If the employee is employed in another or lower capacity, to be eligible for E-1 or E-2 classification he must have special qualifications or skills essential to the operations of the business.
E-1 traders and E-2 investors, as well as their employees, may be accompanied or followed by their spouses and unmarried children below 21 years old. The dependent family members need not be of the same nationality as the trader, investor or the E-1/E-2 employee.