What is the Difference Between an E1 and an E2 Visa? [Infographic]
The Difference Between an E1 and an E2 Visa
Operating a business in the United States is one of several ways to gain a visa that allows long-term entry into the country. One option, the EB-5 visa, allows entrepreneurs to obtain green cards and permanent residence status by investing in a business that will create jobs. Unfortunately, the substantial investment required for an EB-5 visa — either $500,000 or $1 million, depending on the circumstances — places the EB-5 visa out of reach for many people.
Fortunately, more affordable options are available for citizens of “treaty countries” who want to establish a business in the United States. Two possibilities are the E-1 and E-2 visas.
The E-1 and E-2 visas are classified as nonimmigrant visas. Unlike the EB-5 visa, they do not confer permanent residence. They do, however, create the opportunity for a lengthy stay in the United States for people who have the ability to create and manage a successful business.
The primary difference between the E-1 and the E-2 visa is the nature of the business that the visa holder must operate while living in the United States. An E-2 visa allows the visa holder to start or acquire a business and to earn a living by operating that business in the United States. An E-1 visa allows the visa holder to engage in the business of international trade between the United States and the visa holder’s own country.
Benefits of the E-1 and E-2 Visas
The E-1 and E-2 visas both allow nationals from “treaty countries” to live in the United States with their families while operating their approved business. Both visas initially authorize a stay of up to two years. However, they can both be renewed for additional two-year periods.
There is no limit on the number of times the visa can be renewed. Renewal generally depends on the continuing ability of the visa holder to operate the business successfully.
“Treaty countries” are countries that have entered into a treaty of commerce and navigation with the United States. More than eighty countries have entered into such treaties with regard to the E-1 visa, the E-2 visa, or both. A current list is available on the State Department’s website.
A “national” of a treaty country is usually a citizen of that country. An individual is typically regarded as the national of a treaty country if a treaty country issued that individual’s passport.
The visa may be issued so that the national can conduct business on his or her own behalf, or as an employee who will be acting on behalf of a qualifying business from the same treaty country. A business is considered to be from a treaty country if more than 50% of the business is owned by nationals of the treaty country. However, nationals who have permanent resident status in the United States cannot be included in that 50%.
Families and Employees
The visa holder’s spouse and dependent children under the age of 21 may also receive the same nonimmigrant visa, allowing them to live and attend school in the United States. Spouses may also apply for a visa that grants them work authorization in the United States. If authorization is granted, the spouse may work for any employer.
Both the E-1 and the E-2 visa allow the visa holder to apply for the same visa for key employees who can help the business succeed. A key employee must be a national of the same country as the visa holder, and must either work in an executive or supervisory role or have special qualifications.
An executive or supervisory role generally means that the employee manages a substantial part of the business operation. Special qualifications are skills that are essential to the operation of the business.
Differences Between E-1 and E-2 Visas
While the E-1 and E-2 visas offer similar advantages, they differ in the nature of the business that the visa holder may operate. Understanding those differences will help individuals decide which visa to pursue.
Overview of the E-2 Visa
The E-2 visa allows a national of a treaty country (the “business investor”) to reside in the United States by investing enough money to start or purchase a business, and to operate the business successfully.
To qualify for an E-2 visa, the business investor must:
- Make a substantial investment of his or her own money or assets in the business
- Prove that the investor acquired the investment capital legally (for example, through savings or an inheritance, or by selling an existing business)
- Choose a bona fide (legitimate) business in which to invest
- Have a realistic expectation of earning a profit within 5 years
- Have a realistic expectation that the business will be sufficiently successful to support the investor and any family members who accompany the investor
- Own at least 50% of the business or have control of the business’ operation
- Live in the United States with the sole purpose of operating or managing the business
No specific minimum investment is required to qualify for an E-2 visa, provided that the investment is substantial. A substantial investment is generally one that gives the investor a strong incentive to work hard so that the business will succeed. The investment must place the investor’s money or assets at risk, so that the investor will lose the investment if the business fails.
Whether the investment is substantial is measured against the cost of acquiring or starting the business. Low startup or acquisition costs require the investor to invest a larger percentage of those costs in the business. The investor is not expected to invest the same percentage when the cost is high, but the investment must still be considered substantial.
Overview of the E-1 Visa
The E-1 visa allows a national of a treaty country (the “trader”) to reside in the United States in order to engage in international trade between the trader’s country and the United States.
To qualify for an E-1 visa, the trader must be principally engaged in substantial international trade between the trader’s treaty country and the United States.
Trade means an exchange between nations of items that have economic value. Examples of international trade include:
- Import and export of goods
- International banking
- International accounting
- Data processing
- Business consulting services
- Technology exchange
The trader must be in the United States solely to engage in trade on his or her own behalf or on behalf of a qualifying business.
International trade is substantial if it results in a continuous flow of goods or services between nations. In other words, a single trade is not substantial trade, no matter how much money is involved. For a small business, multiple trades over the course of time will usually be considered “substantial” if they allow the trader to earn a living and to support family members who accompanied the trader to the United States.
The trader is principally engaged in trade between the trader’s treaty country and the United States if more than half of the trade conducted by the trader is between those countries.
Preparing for an E Visa Application
Before applying for an E-1 or an E-2 visa, it is important to know what business the investor plans to acquire or start, or what international trades the trader plans to make. Obtaining assistance in the United States from an attorney and, in some cases, a business adviser is often critical to a successful visa application. Learn how our team of Layers can help you in the process of acquiring an E-2 Visa. Click on the contact button below.