E-2 Visa for Treaty Investors with Tax Holiday

Posted on 06/13/2016 ~ Categorized as Uncategorized
E-2 Visa for Treaty Investors with Tax Holiday

In this article I will show you how to get an United States E-2 visa for treaty investors and a 20 year tax holiday. That’s right, this is how to get the benefits of residency in the US with an E-2 visa for business owners and pay zero tax.

First, let’s review the E-2 visa program and compare it to it’s big brother, the US EB-5 investor visa.

The E-2 treaty investor visa is a temporary residence permit that allows you to live in the United States as long as you are operating the business described in your application. This may be for a few years or a few decades… however long you want to keep the business going and the requisite number of Americans employed.

Only citizens of countries that have a treaty with the US may apply for an E-2 treaty investor visa. For a complete list, see the US State Department website. You will be surprised to see how long the list is… and that it includes many countries you would have guessed were excluded.

There’s no specific number of workers you must employe in an E-2 visa business. You should have “a reasonable number” of employees in addition to yourself and your family. What’s reasonable will depend on the type of business and on the caseworker assigned to your E-2 visa application.

In my experience, 5 employees, including yourself, is a good number. This has always passed the auditor and been approved.

Likewise, there is no minimum investment amount required for the E-2 visa program. I’ve seen some approved with as little as $50,000. Most clients invest about $250,000.

However, the higher the investment amount, the more confident the auditor will be in your application. You must fund the business with enough cash to get it started and for it to become profitable. So long as your business plan and financials make sense, your E-2 investor visa should be approved.

The E-2 visa is for active business operators / owners. It is not for passive investors. If you want to invest in a business and receive a visa managing the day to day activities and employees, then you need the EB-5 investor visa. If you want to build a successful business in the US from the ground up, and be the person running the operating, you may apply for  the E-2 investor visa.

This also means that you can only work for the E-2 visa business you created. You will not receive a typical work visa and may not be employed by someone else while in America on the E-2 investor visa.

Your children and spouse can also move to the US on your E-2 investor visa. Your wife is allowed to work for another company - he or she is not required to work in the E-2 business. Your children are allowed to go to school but may not work  for any business, including yours.

An E-2 visa can be processed in as little as 1 month. 60 to 90 days is common and your processing time will depend on where you are immigrating from. If you are applying for an E-2 investor visa from the UK, France, Canada, or any other top tier country where performing a background check is simple, your visa will be approved quickly. If you are moving from a country where it is difficult to review your history or prove that your money is “clean,” then your application will take longer.

Allow me to briefly compare the E-2 investor visa to the EB-5 investor visa.

As I’ve said, the EB-5 visa is the big brother of the E-2 investor visa. With the the E-2 visa, you get to live in the United States so long as you operate the business. There is no path to permanent residency, a green card or citizenship. With the EB-5 visa, you and your family get green cards immediately and citizenship in 5 years.

Because of the high demand for the EB-5, and because it allows you to avoid the quotas, lotteries, and cut the line, US immigration does a lot of digging before granting an EB-5 investor visa. Typical processing time is 12 to 18 months compared to 60 days for the E-2 visa.

  • You can get into the US on an E-2 visa and then upgrade the business to an EB-5 visa if you wish to move you and your family more quickly into the United States.

Where the E-2 doesn’t have a minimum investment amount, the EB-5 will require $500,000 to $1 million. The minimum investment amount in most of the US is $1 million and the lower amount is for businesses that are setup in distressed areas of the country.

I like to say the E-2 visa requires 5 employees (though, this is not technically correct). The EB-5 visa is double that number. You must employ a minimum of 10 citizens to qualify for the EB-5 investor program.

With the E-2 visa, you’re allowed to live in America for as long as the business operates. With the EB-5, you will have citizenship in 6 years and can shut down the company if you chose. Once you have your US passport, you have all the rights and privileges of a citizen and are no longer bound by the terms of the EB-5 investor visa.

So, you will need to keep a business with at least 10 people going for 5 or 6 years to get that passport. No matter the minimum investment amount, you must have capital sufficient to sustain the company to profitability and through any economic downturn.

While the E-2 investor must operate the business, the EB-5 investor may be passive. That is to say, an EB-5 visa investor need not operate the business on a day to day basis. He should sit on the board of the company and be involved in some of the decision making, but he doesn’t need to be in the trenches running the team.

The E-2 visa is intended to be temporary… people have been in the US for decades, but the theory is that you are here to operate your business and will leave when that is completed. As a result, the US State Department may ask you to show your plans to return to your country when your business is concluded. You will not be required to maintain a home in your country, but you should have a return plan.

The EB-5 visa is for those who want to move to the US, become a permanent part of the community, and plan to become US citizens. Therefore, you will not be asked to show how you plan to return to your home. This visa is all about being a great American patriot.

Finally, here’s how to get the E-2 investor visa without paying tax to the US government… at least, not very much tax. Here’s how to get the benefits of residency and pay near zero tax.

E-2 visa holders are tax residents of the United States and those with an EB-5 visa have a US green card. Both of these groups will pay US tax on their worldwide income. Your business will pay US tax because it’s operated from the US. You will pay US tax on ALL income from ANY source (including money earned abroad) because you are a resident or green card holder.

Most E-2 and EB-5 visa holders pay business tax of 35% plus their State, which can be 10%. They also pay capital gains tax to the America on their worldwide income of about 23.5%.

There is one way, and only one way, to get out from under this tax burden. You can setup your E-2 or EB-5 investor visa business in the US territory of Puerto Rico.

As a US territory, Puerto Rico offers all the same programs as the United States. You can build an E-2 or EB-5 business to get US residency or citizenship from Puerto Rico. And travel from Puerto Rico to the US is a domestic flight - there is no immigration checkpoint between the island and the mainland.

The only difference between Puerto Rico and, say Miami, is the tax law. Florida is a US State and the Federal tax laws apply.  Puerto Rico is not a State and US Federal tax laws do not apply.

This has allowed Puerto Rico to offer a 4% tax holiday for new businesses on the island. Start a company in Puerto Rico that employees at least 5 people (a perfect fit for the E-2 visa), and pay only 4% in tax, guaranteed for 20 years.

Not all businesses qualify for this tax holiday. The company should be providing a service from Puerto Rico to companies and persons outside of the island. Popular examples include internet marketing, lead generation, call centers, import and wholesale of goods, software development, etc. are all good candidates.

What doesn’t fit the tax holiday are restaurants, businesses that sell to people in Puerto Rico, or just about any franchise. You need to be providing a service and building a new business from the ground up in Puerto Rico.

We can help you build a business in Puerto Rico that qualifies for the tax holiday and fits the requirements of the E-2 visa and the EB-5 visa. We can also assist in hiring the employees, leasing the office space, and handling all matters related to getting the business operational. And, of course, we can negotiate your E-2 and EB-5 investor visas.

For more on Puerto Rico’s tax holiday, see How to Maximize the Tax Benefits of Puerto Rico

A note for EB-5 investor visa  applicants: Puerto Rico’s tax holiday requires a minimum of 5 employees and the EB-5 program requires 10. So, an EB-5 investor visa from Puerto Rico will require 10 employees. You can start with an E-2 visa and 5 employees and upgrade to and EB-5 and 10 employees if you would like to get into the US more quickly.

I think you will find that the Puerto Rico tax holiday is a truly unique opportunity. If you want to immigrate to the United States on the E-2 visa or the EB-5 visa, but not give up half of your income to the US tax authorities, then Puerto Rico is where you want to base your business.

I hope you have found this article helpful. For more on the US E-2 investor visa and how to structure it to minimize taxes through Puerto Rico, please contact me at info@premieroffshore.com or call (619) 550-2743. I will be happy to work with you to get you to American tax free.


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