Key Differences Between E-2 and EB-5 Visas

The E-2 visa and the EB-5 visa are both investment-based visas that provide legal residency to foreign entrepreneurs who wish to live and work in the United States.

Although both these visas can be obtained in exchange for making a qualifying investment in a U.S. business, there are several differences between the two residence permits.

In this article, we shall examine how the E-2 visa and the EB-5 visa are distinct from each other so that potential investors can choose the better option that meets their individual immigration goals.

Eligibility Criteria: Nationality, Investment, Job Creation, and Source of Funds

To be eligible for an E-2 Treaty Investor Visa, the applicant must be a citizen of a country with which the United States maintains a treaty of commerce and navigation, must invest a substantial amount of capital in a U.S. business, and should be seeking to enter the United States solely to develop and direct the business enterprise.

Certain employees of an E-2 investor or a qualifying organization may also be eligible for this visa.

There is no minimum investment requirement for an E-2 visa, but it must be sufficient to ensure the treaty investor’s financial commitment to the successful operation of the enterprise.

Although generating job opportunities is a primary objective of this visa program, there is no mandatory job creation requirement for investors.

Under the EB-5 Immigrant Investor Program, nationals of any country can apply for an EB-5 visa by investing a minimum amount in a U.S. commercial enterprise and creating 10 permanent full-time jobs for qualified U.S. workers.

For projects in a designated targeted employment area (TEA), the minimum investment amount is $800,000. For all other projects, at least $1,050,000 must be invested.

Therefore, unlike the E-2 visa, there are strict requirements for capital investment and job creation in the EB-5 program.

Both the E-2 visa and the EB-5 visa require the funds to be legally sourced. However, EB-5 applicants generally face more scrutiny and need proper documentation to prove the lawful source of funds.

Residency Status: Temporary vs Permanent

The E-2 visa is a temporary non-immigrant visa valid for an initial stay of two years, which can be renewed indefinitely every two years, subject to meeting certain criteria.

E-2 investors are restricted to working for the business they invested in and for which the visa was granted.

The E-2 visa prohibits investors from having an intent to immigrate to the United States and does not offer a path to permanent residency or citizenship. E-2 visa holders must be willing to leave the United States upon termination of their visa.

On the other hand, the EB-5 visa is an immigrant visa that offers permanent residence status (Green Card) to investors and the freedom to live and work anywhere in the United States permanently.

As Green Card holders, they have access to almost all privileges enjoyed by U.S. citizens.

EB-5 visa holders can also apply for U.S. citizenship five years after they were granted their initial conditional permanent resident status.

Rules for Dependent Family Members

Dependent family members of an E-2 investor, i.e., spouse and unmarried children under 21 years of age, can obtain the E-2 dependent visa and are granted the same period of stay as the principal applicant.

While the spouse of the principal applicant can apply for a work permit and get legal employment without any restrictions, the dependent children do not have permission to work in the United States.

However, all dependents can freely study anywhere in the United States as long as they have a valid E-2 visa.

Once the dependent children turn 21, they are no more eligible for the E-2 visa and must apply for another visa if they wish to continue living in the country.

In contrast, the qualifying family members of an EB-5 visa holder are lawful permanent residents of the United States. They can live, work, study, and retire in the United States without any restrictions.

Aging out (reaching 21 years of age) of the children of EB-5 investors does not affect their Green Card holder status.

Ease of Visa Processing and Timeline

The E-2 visa provides quick and easy access to U.S. residency to citizens of select countries. There is no limitation of country-specific quota for applicants; hence, there are no backlogs. Consequently, the visa processing time is much shorter — usually not more than 3 to 5 months.

E-2 applicants already in the United States in a lawful non-immigrant status are required to file Form I-129 to request a change of status. Investor’s dependents must file Form I-539 to switch to E-2 status.

For such applicants, premium processing can further reduce the processing time to approximately 15 days after filing.

E-2 applicants from outside the United States will need to apply directly to a U.S. consulate or embassy in their home country by submitting Form DS-160. The application approval is followed by a visa interview, after which they will get their visa.

In either case, whether applying from within the United States or from their home country, E-2 investors do not have to wait for longer than a few months to receive their E-2 visa.

In comparison, the EB-5 visa process generally takes longer to complete. There are three main stages in the process:

• Investing necessary capital in a selected EB-5 project and filing Form I-526 / I-526E.
• Obtaining two-year conditional permanent resident status by filing Form DS-260 for an immigrant visa (if applying from abroad) or Form I-485 for adjustment of status (if already in the United States on a valid non-immigrant visa).
• Removing conditions on permanent resident status by filing Form I-829 three months before the expiry of the conditional Green Card.

It can take applicants several years to receive their EB-5 visa.

Taxation and Time Spent in the U.S.

E-2 visa holders can spend as much time as they wish in or outside the United States. This flexibility helps them to avoid taxation on worldwide income by reducing the number of days they spend in the country.

For EB-5 visa holders, it is necessary to stay for more than half the year in the United States to maintain their Green Card status. Hence, they are subject to U.S. taxation on worldwide income.

An E-2 visa does not lead to lawful permanent residency. E-2 visa holders are also subject to many limitations.

On the contrary, obtaining the EB-5 visa takes longer but offers a Green Card and its associated privileges to investors.

Nonetheless, there are many ways by which E-2 visa holders can convert their status to EB-5, such as increasing their capital investment and investing in regional center projects.

The E-2 visa can pave the road for immigrant investors to transition to permanent resident status through the EB-5 program and eventually obtain U.S. citizenship.