Israeli citizens can begin applying for E-2, investor, visas on May 1, 2019. This long-awaited US immigration option for Israelis is the culmination of years of efforts by both the United States and Israel toward the goal of reciprocal US/Israeli investor visa options. This treaty-based, temporary, category opens up options for Israelis to make business investments in the US in any industry and operate the businesses developed through investment. The new visa option is a welcomed development for a country known as the "start-up" nation. The E-2 visa will surely energize Israeli nationals with an entrepreneurial spirit to bring this business drive to the United States.
Background: Substantial Investment Without Set Minimum
The E-2 visa is an extremely valuable US immigration option, available only to citizens of a specified list of treaty countries. The E-2 category has substantial advantages over other immigration options, including other investment-based immigration options. Most notably, the E-2 category does not have a set minimum investment requirement.
The E-2 regulations require that the investment be "substantial and sufficient to ensure the successful operation of the enterprise." What this means in practice is that the investment must be enough to properly capitalize the business and fund its growth beyond merely the employment of the investor. Put simply, the funds must be enough to support a forecasted growth beyond a marginal, small, family-type operation. The acceptable amount of funding varies with each business' needs, but typically is well below the US$500,000 or $1 million required in the EB-5, immigrant investor, category.
Core Requirements and Features of the E-2 Investor Visa
The basic E-2 requirements are set forth below. Of course, there are many nuances to these requirements and case-specific considerations.
Source of Funds: In addition to the investment level requirements, the investor must be able to document the legitimate source of funds which will be invested in the business.
Nationality: E-2 eligibility is tied to Israeli nationality, both for the individual seeking the E-2 visa and the US company sponsoring visa. The nationality of the company is determined by the nationality of its owners. Therefore, the business entity must be at least 50% Israeli-owned to qualify for an E-2 visa.
Investors and Essential Company Employees: The E-2 category is available to the individuals who will develop and direct the business enterprise in the United States. This includes the working investor(s) as well as "essential employees" of the company. Essential employees are defined as employees engaged in executive, supervisory and/or highly specialized capacities.
Active Commercial Enterprise: The investment must be in an active commercial or entrepreneurial enterprise. Passive investments or uncommitted funds are not sufficient.
Funds at Risk: The E-2 investor must control the investment funds. These funds must be "at risk." This concept implies the placing of funds or other capital assets at risk, in the commercial sense, in the hope of generating a financial return.
Timing and Other Considerations
Unlike most employment-based immigration categories, such as H-1B or L-1, the complete E-2 application process typically takes place at the consular section of the US Embassy. There is no petition or other preapproval required prior to making the visa application. It is the consular section that determines eligibility, based upon the visa application and business-related documentation. Once the appropriate groundwork has been laid with respect to establishing the business, this visa application-only process greatly expedites the immigration process for E-2s. In time, the process can move quite quickly in the case of E-2 renewals and new employees of registered companies.
For new businesses seeking to take advantage of this new visa offering for Israelis, the primary time commitment is the important planning, strategizing, and documentation of the business in preparation for the E-2 visa application. These applications must be well-documented, including formal five-year business plans, appropriate financial documentation, and proof of the business’ existence. There are detailed application instructions for Israeli E-2 visas, which include the need to register the company with the US Embassy Tel Aviv branch office to establish eligibility in advance of any E-2 visa applications.
Generally, the E-2 visa is initially valid for five years. The E-2 investor or essential employee is typically admitted to the US for an initial period of two years. A favorable aspect of this visa category is there is no visa time limitation; the visa may be renewed as long as the foreign national is working on behalf of the sponsoring company under the E-2 employment terms.
Exploring E-2 Options
Israeli citizens and Israeli-owned US companies interested in applying for the E-2 option can initiate the preparation for the E-2 process while waiting for the May 1, 2019 start date. While there are location-specific nuances to the E-2 application and adjudication process, the overall legal requirements are well established. For those looking to establish a new company in the United States, the financial investment must be combined with a time commitment to properly prepare the supporting documentation required to present a persuasive visa application. The consular officer assessing the E-2 visa application must be confident in the sufficiency of the company's financial resources, documentation of the source of funds, and the overall business plan.
While the E-2 category is new for Israel, it is a staple business immigration category for many of the E-2 treaty-qualified countries. Steptoe has extensive experience with these cases in wide-ranging industries, including manufacturing, technology, real estate and various service industries.