Transcript: E-2 Visa Partnership Scenarios
Today I am going to talk about E-2 visa partnership scenarios…
Starting a business can be better when you have a partner. Joining forces with a partner can help you afford a bigger business. And, having a business partner can help you get through all the stressful times that will inevitably arise as you start and grow your business.
But how does a business partnership work in the E-2 visa context?
The good news is that you can absolutely use a partnership to qualify for the visa. However, there are some things that you should know about this option.
Two Common E-2 Visa Partnership Scenarios
There are two common E-2 visa partnership scenarios…
The first scenario involves applying for an E-2 after forming a partnership with a US citizen. This can be beneficial from a logistical standpoint. While the foreign National founder is abroad, the US founder can be setting up the business and starting operations. This is great because one of the E-2 requirements is that the business is operational or right on the cusp of becoming operational before you apply.
The second scenario involves two foreign nationals who are both seeking E-2 status to run the E-2 business. This is possible as well.
Two Challenging Requirements
While both of these scenarios are possible, there are two requirements that can be challenging in some partnership scenarios.
The first requirement to be aware of is that you, as the investor, must have the ability to direct and develop the business. If the foreign National owns at least 50% of the business, then joint control can be fairly easily proven. If the foreign National investor owns a lesser percentage of the company, then proving ability to control may not be possible. So as a rule of thumb, the investor applicant should own at least 50% of the E-2 business.
There is a possible solution if an individual investor will not own 50% of the company. It involves setting up a holding company that will end up serving as the investor. But that gets pretty technical, so I will save that discussion for another day.
The second requirement that can cause problems for partnerships relates to the proportionality requirement. This requirement says that the investor’s investment in the business must be proportional to the cost of establishing the business. So if the business costs $70,000 to start, the investment must be $70,000. But, if there are two investors who each invest 35,000 then together they have invested enough to make the business work. But, since neither person is investing enough by themself to make the business operational, then the foreign national investor(or investors) could face a denial.
So what can you do?
There are a few options. One option that works well when there is one US partner, is to have the US partner loan their share of money to the foreign National partner. The foreign National then invests 100% of the funds that are needed to start the business.
Another option that works well, is to categorize the foreign nationals funds as the startup funds while categorizing the US partners funds as reserves for operating expenses. Of course, this will only work if the foreign national’s share is large enough to pay for everything that is needed to make the business operational.
If there are two foreign nationals partners from the same country, then things get a little tricky. Assuming that they both want to own 50% of the E-2 business—and assuming that the both are nationals of the same E-2 treaty country—then one option is for the partners to pool their investment in a holding company. The holding company would then invest in an E-2 business and the foreign national partners could apply as managers of the E-2 company.
There you have it…those are a few of the common e-2 visa partnership scenarios.
If you are interested in doing this, I highly recommend that you reach out to one of the amazing US immigration lawyers that you can find across the globe.
Best of luck!
Benjamin Frear, Esq.
Immigration Lawyer For Entrepreneurs