WHAT IS THE BEST TYPE OF VISA TO START A BUSINESS IN THE UNITED STATES?
COMPARISON BETWEEN E-2 AND L-1A VISAS
By Deirdre Nero
When foreign nationals come to the United States to start a business, they are faced with the decision of which type of visa will best suit their needs, whether it is the E-2 visa (for investors from treaty countries) or the L-1A (for the transfer of managers and executives from a foreign company to one in the United States). As a first step to help you understand the most important issues and points to consider when making your decision, this article compares and contrasts the two visas.
NATIONALITY
E-2 visas are used only when there is a bilateral trade and navigation or investment treaty between the United States and the country of nationality of the foreign company or investor. Among the countries that are part of the treaty are: Argentina, Armenia, Australia, Austria, Belgium, Bolivia, Bosnia and Herzegovina, Bulgaria, Canada, Chile, China (Taiwan), Colombia, Costa Rica, Croatia, Czech Republic, Ecuador, Egypt, Finland, France, Georgia, Germany, Grenada, Honduras, Ireland, Italy, Jamaica, Japan, Jordan, South Korea, Lithuania, Luxembourg, Mexico, Mongolia, Morocco, the Netherlands, Norway, Panama, Paraguay, the Philippines, Poland, Romania, Senegal, Singapore, Slovak Republic, Slovenia, Spain, Sri Lanka, Suriname, Sweden, Switzerland, Thailand, Trinidad and Tobago, Tunisia, Turkey, Ukraine, United Kingdom and Yugoslavia.
If the foreign citizen does not belong to one of the countries that are part of the treaty, in most cases they can only access the L-1A visa.
NATURE OF THE BUSINESS
The E-2 visa can be used to create an entity in the United States, if the investment to be made is for a very large amount. It must be sufficient to guarantee the successful operation of the company. The percentage of investment required for a low-cost company is generally higher than that required for a high-cost company.
The investment must be made in an actual operating business enterprise. Speculative or passive investment does not qualify. Uncommitted funds held in a bank account or similar are not considered investment. The investment must not be marginal, that is, it must have the capacity to generate an income significantly greater than simply providing livelihoods for you and your family; or must have a significant economic impact in the United States. You must be in control of the funds and the investment must be at risk, in the business sense. Loans secured solely with the assets of the investment firm are not considered at risk.
To obtain the L-1A visa, it is not necessary to make a significant investment in the United States. International companies can use it to establish a branch, subsidiary or affiliate in that country.
EMPLOYMENT IN A FOREIGN ENTITY
To obtain E-2 visas, it is not a requirement that the foreign national has worked for a related foreign entity. If a citizen born in one of the treaty countries does not have a foreign employer who is about to make an investment or establish a business entity in the United States, they do not have many options other than the E Visa, assuming that the rest of the conditions are met. Note that there is also an E-1 visa, which is used for trade in goods between a treaty country and the United States, but is not covered in this article.
To qualify for the L-1 visa, the applicant must have held an executive or managerial position in the related foreign company for at least one uninterrupted year within the last three years.
TYPE OF RELATIONSHIP REQUIRED
To use the E-2 visa, the company or individual that is going to do business or invest in the United States must have the nationality of the treaty country (the national citizen of the treaty country must own more than 50%) .
The L-1 visa may be used for the transfer of an employee of a foreign entity to establish or manage a related organization in the United States; or to work for her. It is a requirement that the type of relationship be that of parent company, subsidiary, branch or affiliate.
DURATION OF EMPLOYMENT
The E-2 visa is usually initially granted for a period of two years. Companies anticipating a “slower start” to establishing themselves in the United States may find the E visa option, which gives them an initial two-year period to start operations, more suitable. The E-2 visa can be granted as many times as necessary, for a maximum period of two years each time, as long as the applicant's stay remains temporary and the qualifying activity continues.
The L-1 for a new company is initially granted for a period of one year. After the expiration of the first year in L-1 status, the applicant must prove that the new company in the United States was operating during the last year and still requires their services as a manager or executive. The applicant who is in L-1 status in the United States cannot extend his stay under that regime for more than 7 years. Once the employee has spent a full year outside the United States, he can begin the period corresponding to L-1 status again.
INTENTION TO GET A GREEN CARD
For E-2 visas, although they can be extended for an indefinite period, it is still required that applicants maintain the intention of not being an immigrant. The beginning of the permanent residence process can harm the applicant when wanting to maintain or extend the E-2 status. However, the United States Citizenship and Immigration Services (USCIS) and consular officers accept the applicant's statement of no intent to be an immigrant. In addition, the process to obtain the Green Card is considerably longer, since there is no direct path from the E-2 visa and, generally, the company that the E-2 holder has started will not be able to act as a sponsoring employer for obtain the Green Card.
The L-1 may be the best option if the applicant's intention is to ultimately apply for a green card while in the United States. An L-1 visa holder can attempt to obtain permanent residency and still maintain their L-1 status and apply for an extension of stay. This is not possible for nonimmigrants who have an E-2 visa. Additionally, L-1 visa holders are generally not required to obtain an approved employment certificate before applying for residency. The process takes less time and is less expensive.
CONCLUSION
Which visa will best suit your needs is a decision for each individual applicant to make, weighing the options and considering their specific circumstances. An immigration attorney can tell you which method is right for you and your business.
[notice]
Disclaimer: The companies featured on this website provide guidance information only, and do not provide legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information contained herein should not be used as a substitute for consulting with legal, tax, accounting or other competent advisors. Before making any decision or taking any action, you should consult with a qualified professional who has received all pertinent data relating to your particular situation.
[/ notice]