E-1 & E-2 — Treaty Traders and Treaty Investors
The E visa (E-1 for treaty traders and their dependents; E-2 for treaty investors and their dependents) was designed to further the ability to conduct business of companies and individuals who are nationals of a treaty country
E-1 & E-2 — Treaty Traders and Treaty Investors
The E visa (E-1 for treaty traders and their dependents; E-2 for treaty investors and their dependents) was designed to further the ability to conduct business of companies and individuals who are nationals of a treaty country, and to promote substantial investment in the U.S. It is based on existence of a treaty of Friendship, Commerce and Navigation, a Bilateral Investment Treaty or other multilateral trade agreement (such as NAFTA) between the U.S. and the country of nationality of the foreign worker and corporation.
Treaty Traders are persons or organizations who engage in substantial trade (purchase/exchange/sale of goods/services) between the U.S. and their home country. Treaty Investors are persons or entities who have invested a substantial amount of capital in a U.S. concern that is under the alien’s direction and development. Before one even determines whether an E visa may be the appropriate type of visa, it must first be determined whether there is a treaty of commerce or navigation between the U.S. and the alien’s home country. Note that not all treaties qualify nationals of participant countries treaty trader and treaty investor status. Many Bilateral Investment Treaties afford only treaty investor status, not treaty trader status. Once the existence of an appropriate treaty has been determined, E visas are available to four categories of individuals:
- The foreign national who is the actual trader/investor;
- The foreign national who controls the corporation or other business entities seeking treaty trader/investor status;
- Management or supervisory employees of a treaty enterprise; and
- Other employees with special skills who are essential to the treaty enterprise
E visas may be granted for an initial validity period not to exceed two years, during which time the visa holder may engage in work in the U.S. only for the sponsoring entity. The visa may later be extended in two-year increments. Spouses of principal E visa holders may obtain an Employment Authorization Document allowing them to work in the U.S. without restriction.
The nationality of a person seeking entry on an E visa is generally the same as their country of citizenship. Nationality is determined based upon the laws of the country from which nationality is claimed by the individual.
The nationality of a business organization is determined by charting the ownership of the organization back to the individuals who ultimately control and/or own the entity. In order to qualify as a treaty entity, the organization must be at least fifty-percent owned by individuals of a treaty country who are either E visa holders or eligible for E visa status. In making the fifty percent calculation, Lawful Permanent Residents in the United States (i.e. green card holders) and U.S. Citizens are precluded from being used in the count, even if the individuals hold dual citizenship or dual nationality with a country other than the U.S.
Treaty traders must engage in “substantial trade” between the U.S. and the treaty country and seek entry to the U.S. in furtherance of such trade. The trade must already be in existence (not planned in the future); it must involve actual/tangible items; trade must be international in nature (i.e. title passes from one treaty party to another); trade items must involve goods or services and should be continuous (i.e. an ongoing flow of transactions over time); and more than fifty percent of the international trade of the treaty entity should be between the U.S. and the treaty country.
Treaty investors enter the U.S. to develop or direct the operations of a bona fide enterprise in which the investor has invested (or is actively in the process of investing) a substantial amount of capital. Treaty investors must be able to trace the source of the investment funds to themselves; show that the investment is at risk for loss, that the funds are irrevocably committed to the enterprise; the investor must have possession and control over the capital that is invested; investment must be in a “real, active and operating commercial or entrepreneurial undertaking which produces services or goods for profit;” and the capital invested must be a substantial amount.
Whether the capital invested is “substantial” is determined through the use of a three-part test established by regulations. First, an inverse sliding scale is used: the amount of capital invested must be substantial in proportion to the total cost of purchasing an established organization or creating a new one. In other words, the lower the cost of the enterprise, the higher the required percentage of investment required to meet the “substantial investment” test. Second, the amount invested in the enterprise must be sufficient to ensure the treaty investor’s financial commitment to the success of the business. Finally, the amount of capital must be high enough to make it likely that the treaty investor will successfully develop and direct the business.
Note that the principal purpose of the enterprise can not simply to generate income for the investor and the investor’s family. The goal must be to make a significant economic contribution to the United States. Realizing that the start of a brand- new business may mean several years of little or no income, the government requires investors to demonstrate future capacity for economic contribution through submission of comprehensive business plans. The plans should include documentation for future economic impact and a roadmap to serve as a guide for getting there.