EB-5 Immigration through Investment

 from Attorney Robert Baizer

 

The program known as EB-5 permits a person to obtain permanent resident status based upon an investment in a U.S. business.   There are basically two ways to do it-

       1. A direct personal investment in a new business of at least $1 million, to run the business, directly employing at least 10 U.S. workers in it.  Exceptions allow a $500,000 investment in a rural or high unemployment area ("targeted employment area") , but still require that 10 jobs be created. The jobs must be for direct, full-time employees of the business.  It must be a commercial enterprise, in which the investor is actively involved in management. It cannot be just a passive investment in real estate.

       2. An investment of at least $1 million or $500,000 in a “regional center” – that is, a development or project that the CIS agrees will create at least 10 jobs – which can be either direct or indirect – in the general area. The investor can be less involved in the business than in the direct personal option. Most regional centers charge an extra amount, above the EB-5 investment, for their administrative fees.

 In either case, there a lots of conditions and rules to watch out for. Many of the rules are subject to the risk of the CIS changing its policy without warning.  A few are:

1.       In each case, lots of papers proving the various requirements must be submitted, and then if everything is approved, the investor finally gets a green card ONLY GOOD FOR 2 YEARS.  After the two years, he must re-apply, and show that the business is still going and that the 10 jobs have really been created and still exist.  Only after that second application is approved does he get residence valid indefinitely, allowing to him to close or sell the investment.

2.      The money must be “at risk” – there can be no guaranteed return of the money at the end of the two years of conditional residence. Investment in a “regional center” entails the risk that they might fail.

3.      If either sort of investment fails within the two year conditional period, the residence application will likely fail too – meaning a loss of the money and the green card.

4.      The spouse & children under age 21 can be included and also get residence. When a child is close to 21, care must be exercised to time the application before the child loses eligibility.

5.      A U.S. permanent resident is subject to U.S. income tax on worldwide income. So, some wealthy individuals with a large income outside the U.S. may not want the green card, and may have spouse or child be the investor.

6.       The C.I.S. demands very detailed and specific proof that the investor used his own money, and that the money was lawfully obtained. 

-So, the money’s path from home to the U.S. must be documented through bank transfers, etc. 

-The investor must find a way to prove he got the money legally.  The C.I.S. will demand the investor’s last 5 years of tax returns from abroad, and documentary proof of how the invested money was obtained.  If the money was a gift, then the C.I.S. will demand the five years’ tax records of the person who made the gift. It can be useful to use accountants in the home country who are expert in preparation of such proof.

-For people from some countries, like China, one must consider that the government of their country restricts the amount of money that can be legally transferred out of the country, per year, per person, so there may need to be a way to deal with that.  Where income tax records in the home country are not sufficient, it may be possible to arrange a sale of property or other transaction there to show a source of the money.

For all these reasons, and others, the lawyer and business advisors should be involved before the money is transferred and investment is completed.     

 

 

 

 

CIS List of Regional Centers