E-2 Visa Proportionality Test
What is E-2 Treaty Investor Visa?
The E-2 Visa is a non-immigrant visa allowing individuals from a Treaty Country (see E-2 Visa country list here) to reside and work in the United States for a U.S. company in which they (or other people from the same Treaty Country) have invested a substantial amount of money.
What does a ‘substantial investment’ mean?
There is no minimum amount set for the E-2 Visa investment. Despite no minimum amount set, U.S. consulates abroad generally are more inclined to adjudicate E-2 Visa petitions based on at least a $80,000 to $100,000 investment. See our post E-2 Visa Investment Requirements. This rule is not as strictly applied in case of E-2 Visa applications filed from within the U.S. through change of status (Form I-129). See our related article here.
The E-2 Visa Proportionality Test
So, if there is no minimum amount set, how does the consular officer establish whether or not the investment is substantial? Here come into play the Proportionality Test.
Under the Department of State’s relative/proportionality test, the amount of qualifying funds invested must be (1) weighed against the total cost of purchasing or creating the enterprise; (2) the amount normally considered sufficient to ensure the investor’s financial commitment to the successful operation of the enterprise; and (3) a magnitude of investment to support the likelihood that the investor will successfully develop and direct the enterprise. 8 C.F.R. §214.2(e)(14); 9 FAM 41.51 N. 10.2; 22 C.F.R. §41.51(b)(9).
In other words, the consular officer has to determine whether the investment is substantial “in a proportional sense”, applying the so called “proportionality test.” This test aims at establishing whether the investment is substantial compared to the total cost of either purchasing an existing business, or creating a new business from the ground-up. Sometimes it may be challenging to reconcile the proportionality test with certain start-ups, such as consulting firms or e-commerce, as oftentimes the cost to establish these types of businesses is likely to be lower than other businesses.
The proportionality test can be better understood thinking about an inverted sliding scale: the lesser the cost of starting up the business, the more funds have to be spent (or better, irrevocably committed) prior to filing the application. There is no conclusive test to determine whether the investment is proportional under the proportionality test, however a small start-up should spend at least 80% of its start-up cost (for instance, a $100,000 investment for a consulting company where $80,000 has been spent will likely satisfy the proportionality test).
On the other hand, if the total investment for a certain business is $10,000,000, most likely the E-2 Visa application may be filed, and the E-2 Visa may be approved, showing that $1,000,000 (therefore a 10% of the global investment) has been used or irrevocably put at risk as of the time of the filing. As a general rule, investments under $200,000 require at least 80% of the investment amount being actually used before filing the E-2 Visa application.
If you are considering applying for E-2 Visa through investment, do it under the guidance of an expert E-2 Visa attorney. The E-2 Visa application requires the assistance of qualified E-2 Visa lawyers. Contact us today for a free evaluation of your case filling out the contact form below or our eligibility survey.
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Contact us today for guidance on your E-2 Visa application and further information on how the E-2 Visa requirements may apply to your specific situation.