The Effect of COVID-19 on Foreign Investors’ Citizenship Plans

Nearly every government around the globe has restricted the personal freedoms of its citizens to control the public health crisis COVID-19 has caused. Adjustments in social benefits, travel restrictions, and employment mandates are some of the most visible effects. Even the definition of “essential workers” has been a hotly debated topic throughout 2020.

One collateral consequence of the widespread illness has been changes in the perspectives of potential immigrant investors in the United States’ EB-5 Immigrant Investor Program. Prospective EB-5 investment participants have been forced to re-evaluate their global mobility options. Due to the impact foreign nationals’ EB-5 investment capital can make, these are decisions that can have a crippling effect upon the United States’ already shaky economy.

The EB-5 Immigrant Investor Program has offered hundreds of thousands of immigrant investors a path to United States permanent residency in the last 30+ years while simultaneously garnering billions of dollars in EB5 investment funding to help with job growth and overall economic stimulation in the United States. Not surprisingly, this program has seen exponential growth in popularity around the globe since its inception. The question is, will that sentiment continue? Below, learn more about why we think the answer is yes.

The United States Offers Foreign Investors and Their Families Better Opportunities

It’s true that the United States continues to lead the world’s COVID-19 infection rates. It’s also clear that the Trump administration has strained the country’s attitudes toward immigration and aggravated its domestic political tensions. Nonetheless, the nation continues to be a top contender among foreign investors seeking residency due to its comparatively better education, healthcare, and economic opportunities.

Access to World-Class Education and Health Care

Two of the leading reasons the United States remains a foreign national investor favorite are the availability of top-tier education for all and access to the best health care in the world. The United States is home to a number of top-ranking universities and reportedly three of the best hospitals around the globe. EB5AN recently surveyed its own clients, who touted real estate investment in the United States as better than anywhere else.

Political and Economic Stability Compared to the Rest of the World

The political and economic strain that has heavily burdened U.S. citizens in recent years remains relatively minor compared to other foreign countries’ long-standing issues with political corruption and ever-widening economic gaps.

For these reasons, the United States remains a beacon among immigrants seeking a new life. The country is still “the land of the free,” and more than almost anywhere else, focused study and honest work are still rewarded. The EB-5 program is one of the most popular ways that eligible foreign nationals can live and work freely ins the United States.

Turmoil Beyond U.S. Borders Drives EB-5 Investment

When talking about years of political corruption and socio-economic gaps, it’s impossible to ignore the Latin American region. These countries have been dealing with cyclical highs and lows in terms of economics and politics for seemingly forever. That ongoing cycle has only been exacerbated by the pandemic. Namely, it has been a catalyst on the high end of the economic gap to seek stability through residency-by-investment and a driver of EB-5 investment.

In particular, wealthy citizens of Argentina, Chile, and Mexico have been placed under inordinate pressure through recent tax proposals aimed at shifting even more of the tax burden onto them. Some believe these new policies seem designed to abandon private capitalism and that those taxes are only going to help cover costs associated with oversized and inefficient governing.

For these reasons, high-net-worth individuals are finding viable ways to shift their wealth from their country of origin to avoid their home governments’ burdensome requests and maintain the value of their estates. Many of these foreign nationals are choosing the legal shelters afforded by the E-2 and EB-5 programs administered by the United States. Given this situation, the EB-5 industry is expecting considerable growth from South American EB5 investment applicants and their eligible family members.

EB-5 Investment Is a Model Where Everyone Wins

Beyond the meaningful personal incentives foreign nationals garner from investing in the EB-5 Immigrant Investor Program, they can also feel good about providing Americans with crucial benefits. Every investor’s capital is essential to the maintenance of this symbiotic model. The jobs EB-5 projects create and, ultimately, the economic wellness attained is a direct result of EB-5 investment participation. Right now, under the burden of high unemployment and wavering stability for individual businesses hit hardest by the pandemic, this win-win initiative provides a time-proven solution to quelling some concerns.

What’s more is the community surrounding and supporting EB-5 investors. Citizenship planning is just as difficult for investors to navigate now as it was three decades ago, when the EB-5 program was implemented. Maintaining the well-earned momentum of this residency-for-investment program requires experience, confidence, and strength from its citizenship planning support systems.

Navigating the Complexities of the Residency-by-EB-5 Investment Journey

Everyone knows that even the most straightforward international move can quickly become a logistical crisis when problems arise in tying up loose ends. Adding financial, investment, and other estate planning strategies into the mix provides a whole new layer of complexity. It takes a savvy foreign investment team to plan for both the interim and the long-term gains. For these reasons and more, partnering with the right EB-5 investment team is crucial to an investor’s success from the outset. When seeking a network of EB-5 professionals for support, investors should look for professionals who offer a plethora of logistical services, including (but not limited to):

  • Everyday administration and accounting functions
  • Forming corporate entities
  • Tax and regulatory compliance pre- and post-immigration
  • Legal guidance pre- and post-immigration
  • Guidance on the establishment and maintenance of trusts and other estate planning tools

Addressing the tax implications of a move to the United States is arguably one of the most important and complex aspects of planning for EB5 investment participants. Part of the reason is that the United States operates on a worldwide income tax model, meaning every taxpayer is required to provide information on all U.S. and foreign income on every annual return. Each business owner and investor must report all income, funding, investments, and other assets each year. Delegating these tasks to a team of trusted EB-5 advisors is the ideal solution for ensuring code compliance throughout the EB-5 investment process.

If you are considering participation in the EB5 investment program and have questions regarding how to best organize your finances—or anything else related to the program—check out our industry blog or reach out to EB5AN directly for answers to your most pressing questions. We are here to help!