E-1/E-2 Treaty Traders and Investors

Many foreign companies that are already doing business in the United States are engaged in some sort of trade. The trade may take many forms such as intangible service and tangible goods. Some companies may want to have a U.S. presence to export raw materials and distribute them to their U.S. customers; some companies export parts and components for their U.S. subsidiaries to put together and sell in the U.S. market place; and other companies trade news, consulting services, technology, etc. Such companies may qualify as E-1 candidates.

Both E-1 and E-2 visas were created to encourage international trade and investment. These visas are permitted for qualifying nationals of countries that have existing economic treaties with the United States.

Then, what are the advantages of utilizing E-1 as opposed to other options? First, there are no specialized degree requirements for the employees as in H-1B. Some high executives have degrees in Business or Economics or other general degrees and have become top executives through hard work and training. Although managerial or executive positions require outstanding background, they are not considered to be positions requiring specialized degrees, but rather positions based on past experience and performance. Thus, E-1 is a clearer option for top executives and managers. On the same token, this absence of specialized degree requirement works for other skilled employees. There may be many skilled positions in the company that do not require a Bachelor's degree in a specific field. In real life, Bachelor's degrees open a door for employment but people do not necessarily develop their career in that specific field. Oftentimes, people build expertise in a completely different field and become highly valuable employees. E-1 option is wonderful in that it allows such experience to be counted instead of making a decision based on a Bachelor's degree only. Second, the E-1 employer does not have to guarantee a prevailing wage or meet the restrictive DOL requirements as in the case of H-1B.

Third, the employees did not have to work for the foreign parent company for 1 year during the past 3 years to qualify for E-1 visa. They simply have to have the same nationality as the owners of the E-1 entity.

Fourth, there are no maximum stay limitations on E-1. In H-1B, the maximum allowed stay is 6 years, in L-1A, one can stay up to 7 years, and in L-1B, only 5 years are allowed. E-1 allows employees and their family members to enjoy a stable status without having to pursue different options to lengthen their authorized stay here.

Finally, E-1 visa applications can be examined and decided by the visa officers at the U.S. Consulates without getting a petition approved by the USCIS in advance. This helps to avoid delays at the USCIS level and having to submit frequent extension applications.

Given the above advantages, what kind of company or employees can qualify for this visa option? The majority of the U.S. entity must be owned and controlled by the treaty nationals. Also, at least 50% of the trade must occur between the U.S. and the treaty nation. This fact can be proven by an established pattern of trade. Thus, new entities and young companies may not have such a pattern to qualify for E-1. If the company does not already have some trade record, it should consider other options such as E-2 or L-1 until it establishes such a trade pattern.

If the company qualifies for E-1 or is already registered as E-1, the company must ensure that it continues to meet the requirements to maintain such a status. If the ownership structure changes or the trade volume falls under 50%, then the company and the employees no longer are in the valid E-1 status and must quickly change to another status even if E-1 visa has not expired.

Another option to consider when a company, owned by foreign national(s), wishes to transfer their home – grown employees and/or hire non-U.S. Citizens to conduct business in the U.S. is E-2 treaty investor.

Again, both E-1 and E-2 visas were created to encourage international trade and investment and are permitted for qualifying nationals of countries that have existing economic treaties with the United States. Also, the advantages that exist under E-1, including: 1) absence of specialized degree requirement; 2) lack of Labor Condition requirements; 3) no limitation on maximum allowed stay; 4) no requirement for 1 year prior employment with the foreign parent company; and 5) convenient Consular processing all exist for E-2 visas as well.

In many circumstances, the company often qualifies for both E-1 and E-2, and it is a simple matter of choice. Then, how is an E-2 option different from an E-1? Whereas E-1 options are limited to companies involved in trade, E-2 options are open to any kind of companies. Thus, if the U.S. entity does not have an established trade pattern, its trade between the U.S. and the treaty nation is below 50%, or the company is not in any kind of trade, E-2 may be an option for it. This also means that the U.S. entity can be quite independent of the foreign parent company. The E-2 entity does not have to trade with the foreign parent nor be in the same business as the foreign parent, which makes E-2 an ideal option for a diversified company. Also, there is no need for the foreign parent company to continue to exist and maintain the same relationship as in L-1. The U.S. entity can eventually absorb the foreign parent or exist separately.

Are there special requirements to qualify for E-2? E-2 companies must have invested or be actively in the process of investing. The investment has to be substantial in relationship to the total cost of either purchasing or creating an enterprise and sufficient to ensure and support the successful development of the enterprise. This also means indebtedness secured by the assets of the company is not considered a qualifying investment. If the company is engaged in neither substantial trade nor substantial investment, look into the L-1 'new office' option. In addition, the investment funds must have been gained by legitimate means and be controlled by the treaty investors. Thus, in case the ownership structure changes by going public in the U.S. or inviting investors of different nationalities, the company and the employees will both fall out the E-2 status. top

Employees and Their Family Members under the E Status

Finally, I wish to briefly explain the requirements for employees to qualify for E-1 or E-2 status and the legal boundary of the E-1 or E-2 status of the employees and their family members.

Two classes of employees may be accorded E-1 or E-2 status: treaty national serving in a managerial capacity and treaty nationals who serve in technical capacities requiring special training and qualifications. In effect, these employees must be essential for the company's operation because U.S. workers do not have the necessary skills to fill the positions. It is expected, whenever possible, that the company will train U.S. workers will to fill these positions.

Once in the U.S. under the E status, E-1 or E-2 employees themselves are clearly prohibited from engaging in employment for a third party. These employees must work for their E employer. The employees may also work on behalf of related companies of the employer, i.e., the parent treaty organization or any subsidiary or affiliate of the parent organization if such intent or possibility was disclosed at the time of application. On the other hand, the spouse of E employees, once they arrive in the U.S., now may apply for a work authorization and work for any employer of their choice.

These are general guidelines only. If you wish to discuss your eligibility as a petitioner or beneficiary under this category, please e-mail the individual's detailed resume with a brief description of the company/business plan to heller@greencard1.com.

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