The Treaty Investor Visa (nonimmigrant E-2 classification) is intended for nationals of a foreign country with which a qualifying treaty exists. Investors from a treaty country will either have to purchase an existing business in the U.S., or start one from scratch.
2 CFR 41.51(m) requires that: “The enterprise must be a real and active commercial or entrepreneurial undertaking, producing some service or commodity for profit and must meet applicable legal requirements for doing business in the particular jurisdiction in the United States.” Simply put, the business cannot be an organization on paper, or an idle speculative investment held for potential appreciation in value; for instance, investing on an undeveloped, raw land with expectation of profit in the future, or purchasing stocks without the intend to direct the enterprise, will not fulfill the eligibility requirements. The investment must be a commercial enterprise. It must be for profit, thus nonprofit organizations are not sufficient to be considered.
The question we come across often from foreign investors is, whether a real estate investment will meet the E-2 visa requirements. The essential distinction to clear the confusion here is that the business must be active and real.
More often than not, the management of a developed commercial or residential property, whether this is a small 4-5 units apartment building or a strip mall consists of a few stores, would be a real and active commercial investment and would qualify for an E-2 visa. There are, however, a few issues that may arise with respect to a real estate investment that the E-2 investor should take into consideration. One issue is that, an E-2 investor must also demonstrate that the principal purpose of the entity is related to management of the investment. In situations where the real investment in question overseen by a property management company that in fact requires no or very little oversight by the investor, the E-2 investor applicant will not be able to demonstrate his principal purpose for entry is related to management of the real estate investment. In real estate investments another problem may arise when the real estate investment in the U.S. is significantly financed by funds from the resulting loans or mortgage, as opposed to investor’s own funds, in this case the investment may not be considered substantial based on the “proportionality” test.
The proportionality test compares the total amount invested in the enterprise with the cost of establishing a viable enterprise of the nature contemplated or the amount of capital needed to purchase an existing enterprise.
The E-2 visa has strict requirements. Before investing your money you should consult an experienced attorney in investment visa and business matters, please contact us. We would be happy to assist you.