The E-2 Investor Visa: A Practical Guide for Canadian Entrepreneurs and Investors

For entrepreneurs and business owners from many countries around the world, the E-2 treaty investor visa is one of the most valuable, but least understood, nonimmigrant categories under U.S. immigration law.  I will summarize the key eligibility requirements of the E-2 treaty investor visa below.

Existence of a Relevant Treaty

The basis of E-2 classification lies in treaties that were intended to enhance and facilitate economic and commercial interaction between the United States and the treaty country.  The list of relevant treaties (or the equivalent) currently in effect between the United States and eligible countries appears in the Foreign Affairs Manual (“FAM”), specifically, 9 FAM 402.9-10.  The FAM is published by the U.S. Department of State (“DOS”), and it provides guidance to U.S. consular officers around the world. 

Nationality

In order to qualify for an E-2 treaty investor visa, an applicant must possess the nationality of an eligible treaty country.  For example, citizens of Canada and Mexico are eligible to apply for E-2 visas as a result of the United States-Mexico-Canada Agreement (“USMCA”).

The nationality of a business is determined by the nationality of the owners of that business.  A business that is at least 50% owned by nationals of the relevant treaty country will be deemed to hold that nationality.  Its place of incorporation is irrelevant to the nationality requirement for E-2 purposes.

Individual owners with dual nationality (other than those with U.S. citizenship) can be counted as treaty nationals when calculating the nationality of a business.  However, treaty nationals who also hold U.S. citizenship of lawful permanent resident (“LPR”) status (i.e., a “green card”) may not be counted when calculating the nationality of the business. 

Bona Fide Enterprise

The treaty enterprise must be a real and active commercial or entrepreneurial undertaking, producing some ser-vice or commodity for profit, and must meet applicable legal requirements for doing business in the particular jurisdiction in the United States.  It cannot be a paper organization or an idle speculative investment held for potential appreciation, such as underdeveloped land or stocks held by an investor without the intent to direct the enterprise.  As the investment must be a commercial enterprise, E-2 status is not available to nonprofit organizations.

The Meaning of Investment

The term “investment” means the treaty investor’s placing of capital, including funds and other assets, at risk in the commercial sense with the objective of generating a profit.  These requirements are discussed below.

The treaty investor must be in possession of and have control over the capital invested or being invested.  The source of the investment may include capital assets or funds from savings, gifts, inheritance, contest winnings, loans collateralized by the foreign national’s own personal assets, or other legitimate sources; it must not be the result of illicit activities.  The source of the funds need not be outside the United States.  However, inheriting the treaty business itself will not constitute an investment. 

The investment capital must be subject to partial or total loss if investment fortunes reverse.  Such investment capital must be the investor’s unsecured personal business capital or capital secured by personal assets.  Indebtedness secured by the assets of the business is not considered a qualifying investment.  This is true even where personal assets in addition to the assets of the business secure the indebtedness.  However, unsecured loans or loans secured solely by the foreign national’s own personal assets are considered qualifying investments.

Capital that is “in the process of being invested” must be irrevocably committed to the enterprise.  However, it is possible to use various legal mechanisms, such as holding funds in escrow, to establish the commitment of funds.  For the foreign national to be “in the process of investing,” the foreign national must be close to the start of actual business operations, not simply in the stage of signing contracts (which may be broken) or scouting for suitable locations and property.  Mere intent to invest, or possession of uncommitted funds in a bank account, or even prospective investment arrangements entailing no present commitment, will not suffice. 

The Investment Must be Substantial

According to INA §101(a)(45), the term “substantial” means “such an amount of trade or capital as is established by the Secretary of State, after consultation with appropriate agencies of Government.”  The DOS position continues to be that there is no set minimum dollar amount that will be considered “substantial” for the purposes of E-2 eligibility.  

The FAM states that as long as all the other requirements for E-2 status are met, the cost of the business is not independently relevant or determinative of qualification for E-2 status.  While a manufacturing business might easily cost millions of dollars, the cost of purchasing or establishing a consulting firm may be relatively low. 

The current FAM contains only two specific examples of what would qualify as a substantial investment.  It states that investments of 100% or a higher percentage would normally automatically qualify for a small business of $100,000 USD. It also states that an investment of $10 million USD in a $100 million USD business would likely qualify, based on the sheer magnitude of the investment itself. 

In practice, many consular posts still apply an informal minimum investment threshold in addition to the proportionality test, although they may characterize it as a marginality issue.  For example, the United States Consulate General in Toronto would likely be fine with an investment costing $100,000.00 USD (especially since this investment amount is specifically mentioned in the FAM), provided that the proportionality of investment was 100%.  However, these informal minimum investment thresholds will vary significantly from post to post.  Other consular posts could still reject an E-2 visa application with an investment of only $100,000 USD, despite the fact that it is mentioned in the FAM.

Not a Marginal Enterprise

To qualify for E-2 status, the applicant must not have invested in a marginal enterprise.  A marginal business is an enterprise that does not have a present or future capacity to generate more than enough income to provide a minimal living for the treaty investor and their family.  However, an enterprise that has a present or future capacity to make a significant economic contribution is not be considered a marginal enterprise. 

In other words, the best way to show that the business is not marginal is by demonstrating that the treaty enterprise currently employs (or soon will employ) U.S. workers; the more employees and the higher their salaries, the better.  If the enterprise does not have any employees on its payroll, but uses several full-time contractors, this should also demonstrate that the treaty business is supporting U.S. workers, in addition to the treaty investor.

Even if the enterprise does not have U.S. workers, it may be possible to demonstrate that the investment will indirectly expand job opportunities locally or otherwise have a positive significant economic impact on the local economy.  For example, if the business regularly hires third parties to perform jobs on their behalf, it is indirectly creating employment.  In addition, a business that earns much more than would be necessary to support the investor and their family should not be considered a marginal enterprise, because it could support U.S. workers, if the investor chose to hire them. However, the projected future capacity should generally be realizable within five years from the date that the foreign national commences normal business activities.

Ability to Develop and Direct

A treaty investor (but not E-2 employees) must be seeking entry solely to develop and direct the treaty business.  The ability to develop and direct can be established by owning at least 50% of the treaty business (if the owner retains full rights of control over that portion of the business and has not assigned them to another), by possessing operational control through a managerial position or other corporate device, or by other means. 

Factors considered include ownership, control of stock by proxy, and management position and authority.  Where the treaty investor does not possess at least 50% of the treaty business, it may be possible to utilize proxy agreements and/or management agreements to evidence their ability to develop and direct the business.

Some consular officers have interpreted this FAM guidance as an obligation to be involved in the day-to-day management of the business.  This appears to be official DOS position also, despite the fact that it contradicts the clear language of the DOS regulations.

Employees of E-2 Treaty Investors

A noncitizen employee of an E-2 Treaty Investor may be classified as an E-2 employee, if that employee is in, or is coming to, the United States to engage in duties of an executive or supervisory character, or if employed in a lesser capacity, the employee has special qualifications that make the services to be rendered essential to the efficient operation of the enterprise.  However, employees of E-2 Treaty Investors seeking E-2 employee status must have the same nationality as their employer. 

Executive or supervisory duties grant the employee ultimate control and responsibility for the enterprise’s overall operation or a major component thereof.  An executive position provides the employee great authority to determine the policies and direction of the enterprise.  A supervisory position grants the employee supervisory responsibility for a significant proportion of an enterprise’s operations and does not generally involve the direct supervision of low-level employees. 

In an essential skills worker case, the applicant bears the burden of establishing at the time of application not only the need for the special qualifications that they offer but also the length of time that such skills will be needed.  Some skills may be essential for as long as the business is operating.  Other skills may only be necessary for a shorter period of time, if U.S. employees can be trained to successfully operate the enterprise.  In the case of short term essentiality, employers are typically expected to train U.S. workers to replace these employees within a short period of time (i.e., one or two years).

Intention to Depart

In order to qualify for E-2 status, the foreign national must intend to depart the United States upon the termination of their status.  However, an applicant does not need to establish an intention to remain in the United States for a specific temporary period of time or the existence of a residence in a foreign country that the applicant does not intend to abandon.  That said, because the Immigration and Nationality Act (“INA”) does not recognize dual intent for E-2 nonimmigrants, applicants who have previously violated their U.S. immigration status or who may merely be pursuing LPR status may have difficulty obtaining an E-2 visa. 

A limited form of dual intent still appears to be recognized by DOS, although the guidance has recently become less clear. The current DOS position is that an applicant who is the beneficiary of an immigrant petition will need to satisfy the consular officer that they intend to depart from the United States at the end of their authorized stay, and not stay in the United States to adjust status or otherwise remain in the United States.  However, the guidance was more generous prior to April 6, 2018.

A limited form of dual intent is also recognized by USCIS. The current USCIS position is that an application for initial admission, change of status, or extension of stay in E classification may not be denied solely on the basis of an approved request for permanent labor certification or a filed or approved immigrant visa petition.  In addition, an applicant who has already filed an application for adjustment of status may still file for an extension of E status.  This clearly shows that an E nonimmigrant may be the beneficiary of a labor certification or immigrant petition, or have an adjustment of status application pending, and remain eligible for E status.

Dependents of E-2 Treaty Investors

The spouse and dependent children (unmarried and under age 21) of an E-2 treaty investor are entitled to the same classification as the principal foreign national.  The nationality of a spouse and child is not material to their eligibility. 

Prior to November 12, 2021, dependent spouses of E-2 Treaty Investors did not automatically have the ability to work.  However, they were eligible to apply for an open market Employment Authorization Document (“EAD”).  Unfortunately, it would take months to obtain an EAD.  Fortunately, as of November 12, 2021, dependent spouses of E-2 Treaty Investors are now authorized to work for any employer in any job, or even engage in self-employment, without the need for an EAD. 

Dependent children of E-2 Treaty Investors may remain attend school without additional authorization.  However, they are not entitled to work in the United States. 

Period of Visa Validity and Period of Admission

The maximum validity period for an E visa will depend upon reciprocity with the foreign national’s country of nationality. The maximum visa validity period for each country is shown in the reciprocity schedules published by DOS.  The maximum duration for Canadian citizens is five years. 

On May 1, 2023, certain changes to the FAM altered the validity period of spouses and children of E-2 Treaty Investors who are accompanying or following to join the principal E visa applicant.  Before this date, dependent spouses and children would receive E visas for the same duration as the principal E visa applicant.  However, the following rules now apply:

• Derivatives of Treaty Countries: If the spouse and/or children of a principal E visa applicant possess the nationality of a treaty country, they should be issued visas valid for the maximum validity authorized by the reciprocity schedule of that country, rather than the maximum validity authorized by the reciprocity schedule of the principal E visa applicant’s country of nationality.
• Derivatives of Non-Treaty Countries: Non-treaty country spouses and their children should be issued visas valid for the maximum validity authorized by the reciprocity schedule of the principal E visa applicant’s country of nationality.

This change may create problems for certain spouses and children of principal E visa applicants, who are citizens of a different treaty country, since they will now receive dependent visas valid for a different duration than that of the principal E visa applicant.  

It should be mentioned that the period of validity of a nonimmigrant visa is the period during which the foreign national may use it to make an application for admission.  It has no relationship to the period of time that the immigration authorities at a port of entry may authorize the foreign national to remain in the United States. 

In other words, a visa is an entry document; it only needs to be valid on the day that the foreign national applies for admission to the United States.  In terms of how long an E-2 nonimmigrant can be admitted to the United States, the default period of admission is two years; the expiration date of the foreign national’s period of authorized stay will appear on their Form I-94.  So, a foreign national with a visa that expires the date after their entry should still receive a period of admission of two years. 

Conclusion

In summary, the E-2 Treaty Investor category offers numerous advantages over other nonimmigrant options, including: (a) long visa validity periods; (b) no limit on the number of renewals; (c) the ability to engage in self-employment; and (d) no requirement that an employee have a previous employment history with the employing organization.  Foreign entrepreneurs and investors should always consider the E-2 Treaty Investor category when assessing their U.S. immigration options.