New Restrictions on Citizenship-Through-Investment for E-2 Visa Applicants

What does this mean for investors from non-E-2-treaty nations, such as China and India?

The National Defense Authorization Act for Fiscal Year 2023 (H.R. 7776/NDAA) promises to make important modifications to the “E” immigration visa categories. This new bill, which was signed into law by President Biden on December 23, 2022, introduces the following new policies:

  • Portugal is now designated as an E-treaty country.
  • Individuals who have acquired citizenship in an E-treaty country through a financial investment must have been domiciled in that country for “a continuous period of not less than three years at any point before applying for an E nonimmigrant visa.”

What Is Citizenship by Investment?

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Citizenship by investment (CBI) in an E-2 treaty country has been growing in popularity among immigrant investors from non-E-treaty countries who are ultimately seeking U.S. citizenship and/or permanent residency status.

The largest non-E-treaty countries are China, India, Russia, and Brazil.

The CBI to E-2 to EB-5 Immigration Pathway

There are currently more than 140 countries that offer some form of citizenship through investment.

For instance, a Grenada passport can be issued in just five months in exchange for a government donation or real estate purchase of only USD $150,000. Moldova offers citizenship for an investor and their family for USD $100,000—in just four months.

The wait time for citizenship in these countries is often much shorter than that of immigration to the United States, as there is far less demand for immigration.

After quickly gaining citizenship in an E-2 treaty country with short processing times—such as Grenada, Turkey, or Montenegro—some investors from China or India have used their secondary citizenship with a treaty nation to apply for E-2 residency in the United States.

In many cases, such investors apply for E-2 status while waiting for the processing of their EB-5 residence visas.

What is an E-2 Visa?

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The E-2 visa is a temporary nonimmigrant visa that allows a foreign national from a treaty country to relocate to the United States if they invest a significant amount of capital in a U.S. business.

Foreign nationals who are currently in the United States on another nonimmigrant visa—and come from E-treaty countries—can file Form I-129, Petition for a Nonimmigrant Worker, to change their status to the E-2 classification.

What Are E-Treaty Countries?

United States Citizenship and Immigration Services (USCIS) defines an E-treaty country as:

“A country with which the United States maintains a treaty of commerce and navigation, or with which the United States maintains a qualifying international agreement, or which has been deemed a qualifying country by legislation.”

Citizens of E-treaty countries can apply for various E-category visas. The E-2 visa is one of the most popular options.

Examples of treaty nations with E-2 visa status include Australia, France, the United Kingdom, Canada, Japan, Bolivia, South Korea, the Philippines, Turkey, Singapore, and, more recently, Portugal.

The U.S. Department of State keeps a full list of treaty nations of all E-visa classifications.

Qualifying for the E-2 Visa

In addition to being citizens of an E-2 treaty nation, investors applying for the E-2 visa must have invested a substantial amount of capital in a U.S. business. The investment must be “at-risk,” and the funds for it must be lawfully obtained.

The investor must have a minimum of 50% ownership of the company, or demonstrate their operational control of the enterprise through a high-level management position.

USCIS defines a “substantial amount of capital” as:

  • Substantial in relationship to the total cost of either purchasing an established enterprise or establishing a new one.
  • Sufficient to ensure the treaty investor’s financial commitment to the successful operation of the enterprise.
  • Of a magnitude to support the likelihood that the treaty investor will successfully develop and direct the enterprise. The lower the cost of the enterprise, the higher, proportionately, the investment must be to be considered substantial.

Many of these qualifications are similar to the investment requirements for the EB-5 program. The possibility of transitioning to an EB-5 visa motivates many investors from non-E-2-treaty countries to acquire citizenship from a treaty country. They can then apply for an E-2 visa, relocate to the United States, and subsequently pursue a permanent Green Card through the EB-5 program.

Drawbacks of the E-2 Visa

The E-2 visa is a nonimmigrant visa. This means that as soon as the investor’s employment, investment, or business dealings end, they must leave the United States.

A treaty investor or employee can only work in the job they were approved for at the time of E-2 submission and may only work for their specified organization and/or parent company and its subsidiaries.

Furthermore, USCIS must approve any fundamental change to the conditions of an individual investor’s E-2 status, such as a merger, acquisition, sale of the investor’s division to another company, or another such event.

The E-2 visa also does not allow any additional visas for the investor’s spouse or family members.

E-2 Visa vs EB-5 Visa

As opposed to the E-2 visa, the EB-5 visa is an immigrant visa granting full permanent resident status—a Green Card—to a foreign investor for a single investment.

The EB-5 visa process also grants Green Cards to the investor’s spouse and all unmarried children under the age of 21. EB-5 investors can even apply for U.S. citizenship after five years of permanent residency.

While E-2 visas are temporary visas and require a single employer sponsor that cannot be changed, EB-5 visas allow immigrant investors and their eligible family members to work for any employer in the United States, and to change their job at will without restrictions.

An EB-5 investor and each of their eligible family members can live, work, and study anywhere in the United States. Children can attend U.S. public schools and have a much higher chance of attending a U.S. university, as they can apply as a U.S. permanent resident instead of a foreign national.

What These Changes Mean for Immigrant Investors

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The most significant changes presented in the National Defense Authorization Act are for investors from non-E-treaty countries. The bill may seriously curtail the demand for CBI programs in E-2 treaty nations.

A primary reason why many immigrant investors choose the CBI process in an E-2-treaty country is to shorten their wait time for U.S. residency. They can accomplish this by relocating to the United States on an E-2 visa and then beginning the transition to an EB-5 visa.

Since the E-2 visa typically has a much faster processing time than the EB-5 visa, starting as an E-2 investor can allow foreign nationals to move to the United States much faster.

However, under the National Defense Authorization Act, CBI investors who acquire citizenship in an E-2-treaty nation must now live full-time in the treaty nation for at least three consecutive years before applying for the E-2 visa program or any other E-nonimmigrant visa.

Since CBI investors are now required to establish full-time residence in an intermediary country and wait an additional three years, they may now consider making an EB-5 investment at the outset instead of going through the E-2 process first. Many EB-5 applicants receive their initial Green Cards in approximately two years.

Concurrent Filing: An Important Provision for EB-5 Investors

On March 15, 2022, the U.S. Congress passed the EB-5 Reform and Integrity Act of 2022. This new bill allows for concurrent filing of the I-526E and I-485 petitions. The I-485 petition is used by holders of nonimmigrant visas to adjust their immigration status.

Concurrent filing means that EB-5 investors that already hold a nonimmigrant visa will now be able to adjust their immigration status immediately, allowing them to live and work in the United States without restrictions while their I-526E petitions are adjudicated.

This will likely mitigate the negative impact of the National Defense Authorization Act on foreign nationals who wish to start a business in the United States and relocate through an investment. As of December 2022, even Chinese and Indian investors can carry out concurrent filing.

What Happens Next?

With these welcome changes to the EB-5 program and the curtailment of the “citizenship by investment to E-2 visa” immigration pathway, Congress has reaffirmed its commitment to the EB-5 program, which is still one of the fastest ways to get U.S. Green Cards for a foreign investor and their family.

Foreign nationals seeking the shortest route to a Green Card can contact EB5AN today. With frequent seminars, up-to-date info, and easy-to-use interactive tools, our consulting team has helped thousands of families safely and quickly achieve their dreams of U.S. permanent residence.

Schedule a free consultation with EB5AN to learn more.