By International Manufacturing & Distribution

Generally

Many investors seeking permanent resident status for key international employees are curious about the potential for a Fifth Preference “green card.” This type of employment-related visa, commonly called an “EB-5,” was created by legislation in 1990. Ten thousand such visas are allotted annually for immigrant investors who invest in an enterprise or a regional center and meet other requirements discussed below.

Typically, applications for the EB-5 status do not reach the annual allotment of 10,000 visas. The main disincentive for use of the EB-5 is the United States tax structure; an immigrant investor is subject to U.S. taxation on his or her worldwide income during the two-year conditional residence period that follows issuance of the visa. The tax obligation runs regardless of whether the investor is making progress toward removing the development and employment conditions on residence during this two-year period. Other immigration options, such as the B-1 or L-1 non-immigrant classifications, do not trigger the tax requirements of the EB-5 program.

Requirements

To qualify for an EB-5, the investor must (1) invest at least $1,000,000 in the enterprise (capital placed at risk for the purpose of generating return); (2) create full-time employment for not fewer than ten U.S. workers; (3) invest in either a new commercial enterprise or a troubled business; and (4) engage in the management of the enterprise (through either day-to-day managerial control or policy formulation).

The investment may be in cash, a cash equivalent (such as a treasury bond or other instrument that can be converted readily into cash), equipment, inventory, other tangible property, and/or indebtedness that is secured by assets owned by the investor (such as a promissory note).

The jobs created by the enterprise may be held by citizens, permanent residents, and other lawful immigrants.The immediate family of the investor does not count toward the worker requirement.A full-time employee is one who works at least thirty-five (35) hours per week.

Six months after the investor’s petition is approved by the United States Citizenship & Immigration Services (USCIS), a two-year period of “conditional residency” begins.During this period, the investor must pursue a business plan that projects the number of jobs to be created during the two-year conditional period.At the close of this two-year period, if the employees have been hired and other conditions are met, the investor obtains permanent resident status.

Regional Centers

Immigrant investors may choose to invest in an approved regional center rather than make a direct enterprise investment. The “regional centers,” both public and private, have been established in parts of the U.S. to promote economic growth through international investment. Use of the regional center option for an EB-5 petition means that the government will consider both direct and indirect positions created by the business toward satisfaction of the investor’s conditional residency requirements.

The Application Process

A foreign investor seeking an EB-5 petition first completes and files a form I-526 with USCIS.Within 90 days of the second anniversary of admission as a conditional resident, the foreign investor may apply to remove the conditions on permanent resident status.The investor does so by demonstrating compliance with the EB-5 hiring and investment conditions.Immediate family members of an EB-5 immigrant may immigrate with the investor in a derivative status.

The I-526 petition requires a variety of supporting documents and data, such as proof of the investor’s date of arrival in the United States and current visa status, as well as information on the business the investor will operate (including the amount of initial investment and total capital investment to date).The investor should provide all materials it has used in planning, organizing, and publicizing its business, as well as information on efforts to recruit workers (such as job descriptions and advertisements).The investor also must document its capital investment and prove its at-risk nature.Articles of incorporation, partnership agreements, bank statements showing money deposited in U.S. business accounts for the enterprise, evidence of property transfers, and contracts with vendors are all appropriate supporting documentation.

The investor must be prepared to show the qualifying capital was obtained lawfully, so foreign business registration records, tax returns, and bank statements may be included.To show that the enterprise will create not fewer than ten full-time positions, the petition should include documentation of I-9s or other employment records, if the employees have been hired at the time of the petition, or a copy of the business plan projecting dates and strategies for obtaining such employment over the next two years.Finally, to show that the investor will be engaged in the day-to-day management of the enterprise through managerial control or policy formulation, the petition must include an explanation of the petitioner’s position in the new enterprise, with a job description; evidence that the investor is a corporate officer or member of the board of directors; or other types of evidence that the investor satisfies the management or policy formulation requirements.USCIS may request supplemental evidence after the petition is filed.

The EB-5 option is one of many paths to permanent residency for international employees.While its requirements are detailed and the potential for their satisfaction must be carefully documented, it may be a faster path to residency for some foreign nationals than more common alternatives.Please contact us to learn more about the EB-5 or other employment-based permanent residency options.

The contents of this publication are intended for general information only and should not be construed as legal advice or a legal opinion on specific facts and circumstances. Copyright 2024.