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US Investor Visa

Expat Briefing Editorial Team
12 September, 2014


Americans are handing in their passports in record numbers to avoid the United States’ increasingly tight tax stranglehold on its citizens, but it isn’t all one-way traffic. This year, for the first time since its introduction, the US investor visa annual quota was reached prior to the end of the financial year. This article provides a summary of the visa’s rules.


Introduction

The Immigrant Investor Program, also known as “EB-5,” was created by the US Congress in 1990 to stimulate the American economy through job creation and capital investment by foreign investors. Under a pilot immigration program first enacted in 1992 and regularly reauthorized since, certain EB-5 visas also are set aside for investors in Regional Centers designated by US Citizenship and Immigration Services (USCIS), part of the Department of Homeland Security, based on proposals for promoting economic growth.


General Requirements

To qualify for the scheme, all EB-5 investors must invest in a new commercial enterprise, which is a business:

  • Established after November 29, 1990, or
  • Established on or before November 29, 1990, that is:
    • Purchased and the existing business is restructured or reorganized in such a way that a new commercial enterprise results, or
    • Expanded through the investment so that a 40-percent increase in the net worth or number of employees occurs

Commercial enterprise is defined as any for-profit activity formed for the ongoing conduct of lawful business including, but not limited to:

  • A sole proprietorship
  • Partnership (whether limited or general)
  • Holding company
  • Joint venture
  • Corporation
  • Business trust or other entity, which may be publicly or privately owned

This definition includes a commercial enterprise consisting of a holding company and its wholly owned subsidiaries, provided that each such subsidiary is engaged in a for-profit activity formed for the ongoing conduct of a lawful business.

However, it is important to note that this definition does not include non-commercial activity such as owning and operating a personal residence.


Job Creation Requirements

The commercial enterprise must create or preserve at least 10 full-time jobs for qualifying US workers within two years (or under certain circumstances, within a reasonable time after the two-year period) of the immigrant investor’s admission to the United States as a Conditional Permanent Resident.

These jobs can be either “direct” or “indirect.” “Direct” jobs are actual identifiable jobs for qualified employees located within the commercial enterprise into which the EB-5 investor has directly invested his or her capital. “Indirect” jobs are those jobs shown to have been created “collaterally” or as a result of capital invested in a commercial enterprise affiliated with a regional center by an EB-5 investor. A foreign investor may only use the indirect job calculation if affiliated with a regional center.


Definitions

Investors may only be credited with preserving jobs in a troubled business.A troubled business is an enterprise that has been in existence for at least two years and has incurred a net loss during the 12- or 24-month period prior to the date the immigrant investor’s initial application (Form I-526) was submitted. The loss for this period must be at least 20 percent of the troubled business’s net worth prior to the loss. For purposes of determining whether the troubled business has been in existence for two years, successors in interest to the troubled business will be deemed to have been in existence for the same period of time as the business they succeeded.

qualified employee is a US citizen, permanent resident or other immigrant authorized to work in the United States. The individual may be a conditional resident, an asylum seeker, a refugee, or a person residing in the United States under suspension of deportation. This definition does not include the immigrant investor; his or her spouse, sons, or daughters; or any foreign national in any non-immigrant status or who is not authorized to work in the United States.

Full-time employment means employment of a qualifying employee by the new commercial enterprise in a position that requires a minimum of 35 working hours per week. In the case of the Immigrant Investor Pilot Program, "full-time employment" also means employment of a qualifying employee in a position that has been created indirectly from investments associated with the Pilot Program.

job-sharing arrangement whereby two or more qualifying employees share a full-time position will count as full-time employment provided the hourly requirement per week is met. This definition does not include combinations of part-time positions or full-time equivalents even if, when combined, the positions meet the hourly requirement per week. The position must be permanent, full-time and constant. The two qualified employees sharing the job must be permanent and share the associated benefits normally related to any permanent, full-time position, including payment of both workman’s compensation and unemployment premiums for the position by the employer.


Capital Investment Requirements

Capital means cash, equipment, inventory, other tangible property, cash equivalents and 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. All capital is valued at fair-market value in United States dollars. Assets acquired, directly or indirectly, by unlawful means are not considered capital for the purposes of the Immigration and Nationality Act. Investment capital cannot be borrowed.

Required minimum investments are:

  • General: the minimum qualifying investment in the United States is USD1m.
  • Targeted Employment Area (High Unemployment or Rural Area): the minimum qualifying investment either within a high-unemployment area or rural area in the United States is USD500,000.

targeted employment area is an area that, at the time of investment, is a rural area or an area experiencing unemployment of at least 150 percent of the national average rate.

rural area is any area outside a metropolitan statistical area (as designated by the Office of Management and Budget) or outside the boundary of any city or town having a population of 20,000 or more according to the decennial census.


Application Process

Permanent residency is possible through consular processing if you live outside the United States. Consular processing is when USCIS works with the Department of State to issue a visa on an approved Form I-526, Immigrant Petition by Alien Entrepreneur, petition when a visa is available.

Additionally, it is also possible to become a conditional permanent resident through adjustment of status if you live inside the United States. Once the Form I-526 is approved and a visa number is available, conditional permanent residence can be applied for on Form I-485, Application to Register Permanent Residence or Adjust Status. 


Supporting Evidence

Applicants are required to submit the following supporting evidence and documentation with Form I-485:

  • Two passport-style photos
  • Form G-325A, Biographic Information, if aged between 14 and 79 years
  • Copy of government issued photo identification
  • Copy of birth certificate
  • Copy of passport page with non-immigrant visa (if applicable)
  • Copy of passport page with admission (entry) or parole stamp (if applicable) 
  • Form I-94, Arrival/Departure Record (if applicable)
  • Certified copies of court records (if the applicant has been arrested)
  • Form I-693, Report of Medical Examination and Vaccination Record
  • Applicable fees (USD1,070, which includes the USD85 biometric fee)
  • The approval notice for Form I-526 (Form I-797)


Families of Entrepreneurs

Spouses and unmarried children under the age of 21, (known in chilling official-speak as “derivatives”) may be included on an immigration petition.  If they are residing in the US, they will each need to file a Form I-485. They are counted towards the annual cap of 10,000 visas.


Work and Travel Authorisation

Generally, individuals with a pending Form I-485 are permitted to apply for authorization to work in the United States and to seek advance “parole” (advance permission to travel and be admitted to the United States upon your return).





 

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As an international lawyer, why someone would desire to become trapped into the US tax system is beyond me. There are better ways to invest in the U.S., and better venues outside the U.S. Be very cautious, and be sure to obtain excellent U.S. in-bound legal and tax advice before considering the U.S. Investor Program.

www.DavidTanzer.com

Dr David Tanzer, 3 years ago.

I hope investors migrating into the US get good advice on keeping offshore assets out of FATCA, FBAR etc. I am not a US lawyer but, having been asked, I see a nightmare for the unwary.

Dr Terry Dwyer
Dwyer Lawyers
www.dwyerlawyers.com.au

Dr Terry Dwyer, 3 years ago.
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