Beware! The US E-2 Visa has its drawbacks

Ari Farkas Photo: Tomer Yakobson

Adv. Ari Farkas points out some of the pitfalls of the US E-2 visa, which might make other types of visa preferable.

As the fanfare surrounding the impending rollout of the US E-2 visa, for Israeli nationals increases, it is important to keep in mind some of the pitfalls that are unique to the E visa categories. The E-2 visas may be excellent options for some investors and entrepreneurs, but as with everything it is important to go into it with eyes wide open, and to know the potential risks, downsides, and what may or may not be appropriate for your business and relocation plans. What follows are a number of scenarios that I have witnessed in my practice over the years:

Changes in the owner’s immigration status can affect company employees

In order to take advantage of an E visa, the entity sponsoring the petition must maintain its nationality - that is, it must be, and remain, at least 50% owned by nationals of the E visa country. The qualifying owners of at least 50% of the entity cannot be dual US citizens or be US Lawful Permanent Residents (hold a Green Card).

Not long ago, a technology company relocated one of its founders to the U.S. under an L-1 intra-company visa. Within three years of arriving in the US he was granted a Green Card, which shifted the nationality of the company to less than 50% Israeli. As a result, the company lost its E-2 qualifying status, and three key employees had to return to Israel on short notice, with only one being able to return under an L visa, after a lengthy qualification process. We were unfortunately only consulted after the Green Card was issued.

Investment, acquisition, and changes of ownership can affect E-2 validity

Nationality of the company’s owners is especially relevant when a new venture enters the US on an E-2, is actively seeking investment, and with each successive round the founder’s interests become ever more diluted.

About two years after witnessing the first example, above, another client of our firm sold off its operations in the US and the purchasers failed to properly conduct their due diligence on the immigration status of some of the most senior key managers who were all in the US on E visas. Upon closing the transaction, all those managers had to return to Israel. Similarly, after a dilution an entity may no longer be of the same nationality as its employee resulting in that employee having to return to their home country abruptly.

Children of E-2 visa holders can “age out”

While it is true that there is no end to the number of times the E visa may be renewed for the principle beneficiary and his spouse, the same is not true for their children. Upon the child’s 21st birthday they are no longer entitled to remain on the E visa. This concept, called “aging out,” is applicable to both E-1 and E-2 visas, as well as many other immigration processes.

One of my earliest clients came to me after they had been on an E-1 visa for a furniture company for over 20 years. Their oldest child, born abroad, was then on a student visa in order to remain in the U.S. and was frantically searching for a job in order to remain in the U.S. for another year in the hopes of obtaining H-1B sponsorship. Otherwise he would have had to return to a country he never lived in and only visited on a few family vacations.

Renewals are never 100% guaranteed

A colleague represented a family who had lived in the U.S. for several years on E-2 visas. They returned to their home country on what they believed would be a routine renewal of their E visas, but their application at the consulate was denied. Although they were allowed to return to the U.S. as tourists, they had to sell their company and say goodbye to the life they built in the U.S. We have seen both USCIS and the Department of State move the goal posts with no warning, making it less predictable for this visa to be approved, even if the applicant was previously approved for the visa under similar circumstances. While this is true of all other visa types, unlike most other visas the E-2 is generally applied for while abroad and therefore there i may be no grace period to remain in the US after the status ends depending on the timing of the interview.

E-2 status lacks a clear “path” to a Green Card

In some instances, an E-2 visa holder will not easily be able to transition to a Green Card, that is, to Lawful Permanent Residence. In fact, the E-2 is specifically designated as a “non-immigrant intent” visa, meaning the E-2 holder is supposed to maintain the intention to leave the U.S. at the end of their authorized stay, or continued authorized stays. Unlike the L-1A Intracompany Manager/Executive category, there is no Green Card option that follows directly from an E-2. For example, an investor with sole proprietorship, or who owns a significant share in the company, will not be able to “self-petition” for an employment-based Green Card through that company.

No consistency between Consulates

Very often we see substantially similar applications receive different outcomes at different US consulates around the world. Most often we see this subjectivity applied to the meaning of “substantial” as it relates to the sum invested and committed. For example, one consulate may maintain that the minimum acceptable investment is $50,000, while another will accept no less than $75,000. Since the E-2 is new to the U.S. Consulate in Israel, we have yet to see what standards and norms will apply.

Time of adjudication

A few months ago, a frustrated E visa applicant engaged us to file a concurrent L visa petition for him because his E visa petition had been sitting undecided for almost 4 months and he had still not received an interview date. The E visa had been suggested by an attorney in his home country, but we were able to submit the L visa petition in just under two weeks and by taking advantage of the Premium Processing Service offered by the United States Citizenship and Immigration Services we were guaranteed a response within 15 calendar days. This stands in contrast to an E visa petition at a U.S. Consulate where the speed in which the petition may be reviewed may vary greatly based upon a number of factors such as time of year, number of available Consular Officers and currently pending E petitions, all of which will differ from consulate to consulate around the world.

Ari Farkas is the Chair of US Business Immigration practice group at the US offices of Pearl Cohen Zedek Latzer Baratz LLP in New York and regularly lectures on immigration law at conferences in Israel, the US and Canada.

Published by Globes, Israel business news - en.globes.co.il - on June 5, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Ari Farkas Photo: Tomer Yakobson
Ari Farkas Photo: Tomer Yakobson
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