![Visas ,[object Object],[object Object],[object Object],[object Object]](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
Recommandé
Recommandé
Contenu connexe
Tendances
Tendances (20)
Similaire à Investor Webinar
Similaire à Investor Webinar (20)
Investor Webinar
- 1. Immigration Options for Foreign Investors Eric Riess / Tiffany Baldwin
Notes de l'éditeur
- A serious reduction in the dollar, real estate price meltdowns, and general lack of U.S. investing because of the economic downturn, BIG opportunities now exist for foreign investors. Hunting for capital in this frozen economy?
- Average 150,000 E-2 visa admissions in the United States each year. Up to 10,000 EB-5 visas granted each year, but less than 1,000 granted. Franchises are ideal businesses for E-2 and EB-5 visa applicants .
- Individuals who wish to invest in the United States may be able to obtain an E-2 Treaty Investor Visa if: The investor is a national of a country with which the United States maintains a treaty of commerce; The purpose of the investor's entry must be to develop and direct the operations of an enterprise, such as a franchise, in which the individual has substantially invested; and The investor must have more than fifty (50%) percent ownership of the investment, unless he/she is coming as an employee of the enterprise. The investor and the required investment funds both come from the same Treaty Country. The investor possesses operational control through a managerial position or other means.
- The investor must possess the nationality of the treaty country, and ownership may be as an individual proprietor, majority partner, or majority corporate shareholder. Unlike many countries, there is no requirement that a U.S. citizen own any interest in the investment – it can be a purely foreign investment. The nationality of a business is determined by the nationality of the individual owners of that business. If the investor is a foreign corporation, at least 50 percent of the corporate owners must be nationals of the treaty country. If the corporation is owned by another business, then the ownership must be traced to the point of reaching the 50 percent rule with respect to the parent organization. While the country of incorporation is not determinative of the country of nationality, where a corporation is sold exclusively on a stock exchange in the country of incorporation, however, one can presume that the nationality of the corporation is that of the location of the exchange. In the case of a multinational corporation whose stock is exchanged in more than one country, then the investor must present the best evidence available to show that the business meets the nationality requirement. 2-party joint venture or partnership gives controlling interest, if Full management rights and responsibilities retained. Each has the capacity of making decisions that are binding on the other party. Except in the case in which an enterprise is owned and controlled equally (50/50) by nationals of two treaty countries, a business for which E-2 visa status is sought may have only one qualifying nationality. In the case of dual national owner(s), a choice must be made by the owners as to which nationality shall be used. The owners and all E-2 visa employees of the company must possess the nationality of the single E-2 visa qualifying country, and hold themselves as nationals of that country for all E-2 visa purposes involving that company, regardless of whether they also possess the nationality of another E-2 visa country. When a company is equally owned and controlled by nationals of two different treaty countries, employees of either nationality may obtain E-2 visas to work for that company. The investor must have control of the US business by owning at least 50 percent of the enterprise. An equal share of the investment in a joint venture or an equal partnership of two parties, generally does give controlling interest, if the joint venture and partner each retain full management rights and responsibilities. This arrangement is often called "Negative Control". With each of the two parties possessing equal responsibilities, they each have the capacity of making decisions that are binding on the other party. The US Department of State has determined that an equal partnership with more than two partners would not give any of the parties control based on ownership, as the element of control would be too remote even under the negative control theory.
- The applicant must make a substantial investment to qualify for the E-2 investment visa. However, the law does not specify a minimum dollar amount to qualify. Instead, “substantial investment” is defined as sufficient funds to ensure the investor’s financial commitment to the successful operation of the E-2 enterprise, is more than marginal and not solely for earning the investor’s living, and large enough to support the likelihood that the investor will successfully direct and develop the business.
- Substantiality is measured by the proportionality test. This proportionality test compares the total amount invested in the enterprise with the cost of establishing a viable enterprise. If the two figures are the same, then the investor has invested 100 percent of the needed funds in the business. Such an investment is substantial. However, most cases involve lesser percentages of investment. The proportionality test can best be understood as a sort of inverted sliding scale. The lower the cost of the business the higher a percentage of investment is required, whereas, a highly expensive business would require a lower percentage of qualifying investment.
- An amount of capital invested in an enterprise will be presumed to be substantial when it meets or exceeds the percentage figures given in the following examples: 100%: Small enterprises of $100,000 or less. Generally, the applicant should be prepared to invest at least $50,000. 75%: Enterprises costing more than $100,000 but no more than $500,000. 60%: Enterprises costing more than $500,000 but no more than $1,000,000. 50%: Enterprises costing more than $1,000,000 but no more than $3,000,000. Any multi-million US dollar investment regardless of the percentage it makes up.
- The E-2 investor must have possession and control of the capital and funds invested. Moreover, the investor must have acquired the funds from lawful sources such as personal savings, investment earnings, gifts, inheritance, etc. The source of funds may come from within the U.S., though inheriting a business does not qualify one for E-2 visa. Certain types of loans may qualify as E-2 investment fund as long as the funds are “at risk”. Loans may only be allowed if secured by the investor’s personal assets, such as a second mortgage on a home, or unsecured loans, such as a loan on the investor’s personal signature, may be included in the investment. Loans would not qualify as an E-2 investment if it was secured by the assets of the E-2 enterprise itself, such as a commercial loan. The funds and assets to be invested must be committed to the investment, and the commitment must be real and irrevocable. For example, the purchase of a business which qualifies for E-2 status in every respect may be conditioned upon the issuance of the visa. Despite the condition, this would constitute a solid commitment if the assets to be used for the purchase are held in escrow for release or transfer only on the condition being met. Fortunately, you can usually protect your investment by making completion of the purchase conditional upon you getting the appropriate visa, and the purchase money can be put in a special escrow account that puts it beyond your reach for other day-to-day uses. This mechanism does allow you to get your money back if you don’t get the visa and have to pull out of the purchase.
- The Consulate will have to be convinced that not only do you have the required amount of money, but that it is committed to investment in business in the USA. If buying an existing business, it will not usually be enough to simply show that you have the purchase money in your business account, as this could be temporary “window dressing”. The E-2 enterprise must have started operating or be close to the start of actual business operations, not simply in the stage of signing contracts or searching for available space. Mere intent to invest, or possession of uncommitted funds in a bank account, or even prospective investment arrangements entailing no present commitment, do not satisfy the E-2 visa requirements. However, if you are setting up a new business, there is an unfortunate “Catch 22” situation. To qualify for an E-2 visa you will have to demonstrate that you have already invested substantially by making most or all of the purchases necessary to set up your business, including the purchase or rental of premises, equipment, etc. You have a robust business plan to make it sufficiently profitable.
- The E-2 enterprise must produce some service or commodity. The business must have all the necessary licenses and permits as required by the government for the particular type of business. The enterprise cannot be a paper organization or an idle speculative investment held for potential appreciation in value, such as undeveloped land or stocks held by an investor without the intent to direct the enterprise. The investment must be a commercial enterprise. Thus, it must be for profit, eliminating nonprofit organizations from consideration. The authorities will rate your chances of success more highly if you are buying a recognized franchise that can demonstrate consistent success and good support for franchisees. Franchises have a much higher success rate then other start up businesses so are an ideal way to set up a business without taking a huge leap into the unknown. The authorities will rate your chances of success more highly if you are buying a franchise that can demonstrate consistent success and good support for franchisees.
- The law does not specify a minimum business size to qualify for the E2 investor visa. The law requires that the investor must not be investing in a marginal enterprise solely for the purpose of earning a living. An applicant is not entitled to E2 visa, if the investment, even if substantial, will return only enough income to provide a living for the applicant and family. There are various ways to help determine whether an investment is marginal, in the sense of only providing a livelihood for the investor.
- To determine whether a business is considered marginal, first, look to the income from the investment. If the income derived from the business exceeds what is necessary to support the investor and his or her family, then the business is sufficiently large. If the above test is not satisfied, then it becomes necessary to consider other factors. One can look to the economic impact of the business. The business must have the capacity, present or future, to make a significant economic contribution such as employing US workers. The projected future capacity should generally be realizable within five years from the date the investor commences normal business operations. Applicants need to submit a reliable business plan to verify the capacity to realize a profit within a maximum five years.
- If the principal E-2 investor personally operates the enterprise or if a foreign corporation develops and directs the U.S. company, employees may apply to come as employee E-2s. In order to qualify to bring an employee into the United States on an E-2, the employer must demonstrate that: The prospective employee and the principal investor/investing corporation share the same nationality. The prospective employee must be coming to the U.S. for work in an executive or managerial capacity or as an essential skilled worker. In instances in which treaty country ownership may be too diffuse to permit one individual or company to demonstrate the ability to direct and develop the US enterprise, the owners of treaty country nationality must: Show that together they own 50% of the U.S. enterprise; and Must demonstrate that they collectively have the ability to develop and direct the US enterprise. In these cases an owner may not receive an E-2 visa as the "investor". Rather, all E-2 visa must be coming to the U.S. enterprise to work in an executive or supervisory capacity or be an essential skilled employee.
- The spouse and children, regardless of nationality, of the E-2 investor may obtain E-2 visas for dependent family members to reside in the US. Children must be unmarried and under 21 years old to qualify for the dependent E2 visa. Dependents are not automatically entitled to work in the U.S. based on the E visa. However, spouses may apply for an employment authorization document (EAD) with the USCIS after arriving in the US. The EAD is an open market work authorization and offers the spouse great employment flexibility and convenience. The spouse may work for the E-2 investor’s business or find a job with another employer. The spouse may also start his or her own business using the work permit. The employment may be full-time or part-time. The USCIS usually takes approximately two to three months to issue the EAD. In addition, the spouse and children may attend school under the dependent E-2. The children are allowed to enroll in either public or private schools. Keep in mind that upon reaching 21 years old, the child is no longer eligible for the dependant E2 visa status and must have his or her own visa in order to continue residing or studying in the US..
- The EB-5 Visa provides the most flexible path to a green card based on a US investment. The EB-5 visa does not require the investor to manage the day-to-day affairs of a business, but the investor must have at least a policy-making role in the enterprise. One may invest in an existing business, or a new business. More than one person may invest in the same business. The EB-5 investor may be a minority owner of the business.
- Invest in a regional center. USCIS designated specific areas, called Regional Centers, as eligible to receive immigrant investor capital. INS approved over 30 Regional Centers. Regional Center investors may rely on indirect job creation rather than directly hiring ten employees. A competent professional, such as an economist, must quantify the indirect employment. If the regional center is in a high unemployment area the required capital is reduced to $500,000.
- In general, "eligible individuals" include those who establish a new commercial enterprise by: Creating an original business; Purchasing an existing business and simultaneously or subsequently restructuring or reorganizing the business such that a new commercial enterprise results -- The statute and regulations provide little insight into what degree of restructuring or reorganization must be done to establish a new enterprise. The AAO has held that simply changing the legal form of the enterprise does not satisfy this requirement. There is only one known case where the AAO agreed the business was sufficiently restructured or reorganized. Expanding an existing business by 140 percent of the pre-investment number of jobs or net worth, -- Only an expansion resulting in an increase of at least 40 percent in the net worth of the business or in the number of employees of the business will satisfy the visa requirements. [32] This could require the investor to create more than 10 new jobs to qualify for a visa if the pre-expansion number of employees was more than 25. The larger the business that the investor expands, the more onerous his or her burden to qualify for a visa under this standard. However, an investor need not show that his or her investment alone caused the 40 percent increase. [33] The AAO has insisted that proof of expansion of the company requires audited financial statements concerning the company’s former net worth at the time of investment. [34] Troubled Businesses— Special rules govern investments in “troubled” businesses. A troubled business is one that has been in existence for at least two years, has incurred a net loss for accounting purposes during the 12- or 24-month period before the petition was filed, and the loss for such period is at least equal to 20 percent of the business’s net worth before the loss. [67] To establish an investment in a troubled business, the petitioner must show that the number of existing employees will be maintained at no less than the pre-investment level for at least two years. Thus, this provision includes a significant incentive in that it does not require the creation of 10 new jobs. Instead, it requires only that the business maintain the number of existing employees during the conditional status period. [68] However, 10 jobs must be saved for every EB-5 investor. [69] As a caveat, if the troubled business does not remain afloat for two years after the investment, the investor might lose his or her conditional residency status.
- The statute defines a “targeted employment area” as a rural area or an area that has experienced high unemployment of at least 150 percent of the national average. [64] An area not within a metropolitan statistical area (as designated by the Office of Management and Budget) or the outer boundary of any city or town having a population of 20,000 or more is considered a rural area
- The regulations define “capital” as cash and cash equivalents, equipment, inventory, and other tangible property. [44] According to USCIS, retained earnings cannot count as “capital.” [45] The term “invest” means to contribute capital. A contribution of capital in exchange for a note, bond, convertible debt, obligation, or any other debt arrangement between the entrepreneur and the new commercial enterprise does not constitute a contribution of capital and will not constitute an investment. [43] Capital does not include loans by the petitioner or other parties. [46] Indebtedness secured by assets owned by the entrepreneur may be considered capital, provided the investor is personally and primarily liable for the debts and the assets of the enterprise upon which the petition is based are not used to secure any of the indebtedness. [47] Indebtedness typically consists of a promissory note signed by the petitioner that specifies a payment schedule to the new commercial enterprise. Absent fraud, a signed promissory note that is secured by the petitioner’s personal assets constitutes a contribution of capital by the petitioner. [48] The issuer of the promissory note, i.e. , the investor, is considered to be “at risk” if the petitioner is clearly obligated to make all the required payments on the note and there are no “escape” clauses. The investor cannot receive any bond, note, or other debt arrangement from the enterprise for the capital contributed to it. This includes any stock redeemable at the holder’s request, a form of a put option. All capital is valued at fair market value in U.S. dollars at the time it is given. [49]
- 8 C.F.R. § 204.6(e) defines "capital" to include "cash, equipment, inventory, other tangible property, cash equivalents, and indebtedness." The regulations allow funds obtained by loan, but only for "indebtedness secured by assets owned by the alien entrepreneur, provided that the alien entrepreneur is personally and primarily liable and that the assets of the new commercial enterprise upon which the petition is based are not used to secure any of the indebtedness."
- By Stephen Yale-Loehr and Christopher Repole* Introduction Seeking classification as an immigrant investor under the employment-based fifth preference category (EB-5) carries a heavy evidentiary burden. Much of this burden derives not from the statute or regulations, but from Administrative Appeals Office (AAO) decisions. Drawing on a quartet of 1998 precedent decisions,[1] the AAO has demanded a much more stringent burden of proof than the EB-5 regulations seem to require. This is particularly true concerning proving the lawful source of the petitioner's funds for a qualified investment. Almost all recent nonprecedent AAO EB-5 decisions have dealt with this requirement. In almost every case, the appeal has been dismissed with the same language: "the petitioner has failed to demonstrate a qualifying investment of lawfully obtained funds."[2] This article summarizes 17 recent nonprecedent AAO EB-5 decisions. All of the cases were decided in 2004 or 2005. The decisions indicate the AAO's focus on requiring comprehensive and effective documentation in EB-5 cases. Where the source of funds is at issue, the AAO describes its emphasis as finding the "path" of funds from source to investment in the enterprise. Detection of a "pattern of income" from evidentiary submission is also a primary AAO preoccupation. Practitioners who note and follow these trends will be more likely to gain EB-5 status for their clients. The EB-5 Classification: General Requirements To qualify for EB-5 classification a foreign investor must: have invested at least $1 million (or at least $500,000 if investing in a "targeted employment area") in a new commercial enterprise. The new company must benefit the U.S. economy and create full-time jobs for at least 10 U.S. workers. Moreover, the investor must have at least a policy-making role in the enterprise.[3] The investor must also prove that he or she "has invested or is actively in the process of investing lawfully obtained capital."[4] Most unsuccessful EB-5 applicants trip up on this last requirement. The AAO's 1998 four precedent EB-5 decisions established a high standard for proving lawful source of funds. The four decisions addressed many issues concerning investment funds, ranging from the legality of funds obtained by loan[5] to the legality of loaning investment funds to the enterprise with the expectation of redemption later.[6] The AAO also created new procedural rules for proving the legality of funds. Of the 17 AAO decisions reviewed for this article,[7] the AAO ruled in favor of the EB-5 petitioner in just one instance,[8] and remanded one case.[9] In the other 15 cases the AAO dismissed the appeal. All of the denials dealt in whole or in part on the petitioner's inability to meet evidentiary requirements for source of funds. Thus, a discussion of the requirements for proving source of funds is in order. Source of Funds: Regulatory Provisions 8 C.F.R. § 204.6(e) defines "capital" to include "cash, equipment, inventory, other tangible property, cash equivalents, and indebtedness." The regulations allow funds obtained by loan, but only for "indebtedness secured by assets owned by the alien entrepreneur, provided that the alien entrepreneur is personally and primarily liable and that the assets of the new commercial enterprise upon which the petition is based are not used to secure any of the indebtedness."[10] The regulations prohibit the use of "assets acquired, directly or indirectly, by unlawful means (such as criminal activities)."[11] The AAO distinguishes between proving the "source" of funds and proving lawful investment of the funds. This distinction flows from 8 C.F.R. § 204.6(j), which separately presents requirements for documenting a petitioner's investments[12] and the legal acquisition of the investment funds.[13] 8 C.F.R. § 204.6(j)(3) lists the documentation required to prove the lawfulness of funds used in EB-5 cases: * Foreign business registration records; * Corporate, partnership (or any other entity in any form which has filed in any country or subdivision thereof any return described in this subpart), and personal tax returns including income, franchise, property (whether real, personal, or intangible), or any other tax returns of any kind filed within five years, with any taxing jurisdiction in or outside the United States by or on behalf of the petitioner; * Evidence identifying any other source(s) of capital; or Certified copies of any judgments or evidence of all pending governmental civil or criminal actions, governmental administrative proceedings, and any private civil actions (pending or otherwise) involving monetary judgments against the petitioner from any court in or outside the United States within the past fifteen years.[14] Without documentation of the path of the funds, the petitioner cannot meet his burden of establishing that the funds are his own funds. The AAO also looks for a "pattern of income" to justify the EB-5 investment.[35] For example, in one case the EB-5 petitioner had obtained £750,000 by selling property in Britain. As evidence of this sale the petitioner provided the sales contract and several letters from accountants verifying the sale. The AAO nevertheless denied the appeal, noting the absence of a path for the funds into the new enterprise, an absence of significant income in the five years of tax returns filed, and no evidence of "a pattern of income that could account for owning property of [the indicated] value."[36] Use common sense when considering the myriad potential sources of an EB-5 petitioner's investment income. Where funds are inherited, a will or trust forms are instructive. Where funds are earned from income on an investment, stock certificates, dividend letters, and account statements are vital. Where funds were earned from income on a previous business investment, the corporate tax returns for the business, complete with evidence of payouts to the owners, should be included.
- To qualify for EB-5 status, an investment normally must create full-time employment for at least 10 U.S. citizens, lawful permanent residents, or other immigrants lawfully authorized to be employed in the United States. Neither the investor nor the investor’s spouse and children count toward the 10-employee minimum. Nonimmigrants are also excluded from the count. The “other immigrants” provision means that conditional residents, temporary residents, asylees, refugees, and recipients of suspension of deportation or cancellation of removal may all be considered employees for EB-5 purposes. The regulations define an “employee” for EB-5 purposes as an individual who (1) provides services or labor for the new commercial enterprise and (2) receives wages or other remuneration directly from the new commercial enterprise. [55] This definition excludes independent contractors. [56] The Types of Jobs— The jobs created must be full-time. This means employment of a qualified employee in a position that requires a minimum of 35 working hours per week, regardless of who fills the position. [58] Job-sharing arrangements, where two or more qualifying employees share a full-time position, will also serve as full-time employment if the hourly requirement per week is met. [59] Job-sharing does not include combinations of part-time positions even if when combined such positions meet the hourly requirement per week. [60] When the Jobs Must Exist— The law is unclear about when new jobs must exist. The statutory language is prospective and therefore does not require jobs to exist at the time of initial investment or before the I-526 petition is filed. USCIS does not require retention of employees until a reasonable time after conditional visa issuance. In fact, a petitioner may support a petition with a comprehensive business plan demonstrating a need for at least 10 employees within the next two years. The business plan need only indicate the approximate dates during the following two years when the employees will be hired. [61] The temporary vacancy of a position during the two-year conditional period does not disqualify an investor, as long as good-faith attempts to re-staff the position are made.
- The statute requires an EB-5 applicant to enter the United States to engage in a new commercial enterprise. [38] To qualify, an investor must maintain more than a purely passive role in the new enterprise upon which the petition is based. The regulations require an EB-5 immigrant to be involved in the management of the new commercial enterprise. [39] The petitioner must either be involved in the day-to-day managerial control of the commercial enterprise or manage it through policy formulation. The regulations state that if the EB-5 petitioner is a corporate officer or board member, or, in the case of a limited partnership, is a limited partner under the provisions of the Uniform Limited Partnership Act (ULPA), he or she satisfies the requirement of engaging in the management of the new commercial enterprise. [40] The AAO, however, has found that merely calling the investor a limited partner pursuant to the ULPA in a partnership agreement does not automatically mean that the person is involved in the management of the new commercial enterprise. [41]
- Pooling Arrangements— The regulations specifically allow immigrant investors to pool their investments with others seeking EB-5 status. [35] Each investor must invest the applicable statutory amount. All of the new jobs created by the new commercial enterprise will be allocated among those within the pool seeking permanent investor visas. The AAO has injected a restriction on pooling investments by requiring the petitioner to show that every investor in the partnership identify the source of their funds and prove that they were derived by lawful means
- Each petitioning investor has invested/is investing the required amount; The creation of at least 10 qualifying full-time jobs may be attributable to each investor; The source(s) of all capital invested is (are) identified; and All invested capital has been derived by lawful means.
- A sophisticated knowledge of corporate, tax, investment, and immigration law are all required. Sometimes, investors must discard normal investment opportunities in favor of investments structured to meet the unrealistic requirements of the law and its precedent decisions. In many cases it may be more practicable for investors to come to the United States through other visa categories such as the E-2 investor, L-1 intracompany transferee, or EB-1-3 multinational executive or manager routes.