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Martensen Wright PC

Establishing Scandinavian businesses in the U.S. every day.

E Visas: A Viable Pathway to U.S. Work Visas for Entrepreneurs and Companies

By: Olga Quinones, LL.M. Martensen Wright PC, and Anne Grethe Martensen, MBA, HA (Jur.) 

Getting a U.S. work visa can be challenging for individual foreign entrepreneurs and for foreign companies that wish to send their personnel to work in the U.S.

Most U.S. work visas require a job offer from a U.S. company. This requirement cannot be met by individual entrepreneurs. As far as the companies are concerned, they often have to comply with ever tightening requirements of Intra-Company Transfer L-1 visas or face the limitations of the Specialty Occupation H-1B visas before they can employ foreign personnel in the U.S. The E visa option is frequently the only viable option for individual entrepreneurs, and it is often the best solution for companies who need to relocate some of their key employees to the U.S.

There are two types of E visas: E-1 Treaty Trader Visa and E-2 Treaty Investor Visa. Both types of E visas are based on Treaties of Commerce and Navigation between the U.S. and foreign countries (“Treaty Countries”). Denmark, Norway and Sweden are three of the countries which maintain the above Treaties with the U.S., which allows citizens from these countries to apply for E-1 and E-2 visas. A full list of Treaty Countries can be found on the website of the U.S. Department of State:
https://travel.state.gov/content/travel/en/us-visas/visa-information-resources/fees/treaty.html

Benefits of E visas:

  • E visas allow foreign entrepreneurs to come to the U.S. to start a business or to purchase and develop an existing U.S. business.
  • E visas can be extended as often as needed, potentially indefinitely, as long as all the requirements continue to be satisfied.
  • It is important to note that the E visa itself does not lead to permanent resident status (a.k.a. Green Card), irrespective of how long the individual has lived and worked in the U.S. in E status.
  • The validity period of E visa stamp issued by the U.S. Embassy is determined by reciprocity agreements between the U.S. and the Treaty Country. Citizens of some countries may have an E visa validity period of 18 months whereas citizens of other countries may have up to five years. It is important to check the reciprocity schedule prior to applying for an E visa as the validity period may change. This can be done via the State Department website (https://travel.state.gov/content/travel/en/us-visas/Visa-Reciprocity-and-Civil-Documents-by-Country.html)
  • E visas allow for the transfer of essential employees to the U.S., including employees who have been employed with a foreign parent or affiliated company for a short period of time (less than a year) or have not been employed with the foreign company at all prior to the transfer
  • Spouses of the E visa holders are automatically authorized to work for any U.S. Company once the dependent spouse is admitted to the U.S. in ‘E2S’ dependent status.
  • E visa allows the visa holder to travel to the U.S. from abroad during the validity period of the visa stamp in their passport. The validity period of the visa stamp does not determine how long time the individual is allowed to stay in the U.S. The period of allowed stay in the U.S. is determined by the U.S. Customs and Border Patrol authorities (CBP) upon the individual’s entry to the U.S. E visa holders are typically allowed to stay in the U.S. for two years from the day of their last entry, regardless of the visa stamp expiration date.
  • If an E visa holder does not plan or want to travel outside the U.S. after their E visa stamp expires, they can apply for an extension of their E status in the U.S., without having to apply for a new E visa stamp at the U.S. Embassy. Extensions of stay in the U.S. are processed by the U.S. Citizenship and Immigration Services (USCIS) and are typically granted in two-year increments. Extension of stay in the U.S. can be granted even after the expiration date of an E visa, as long as the extension application is filed before the expiration date of the admission period on the I-94 arrival/departure form.
    • However, if an extension of stay is granted, it is only valid while the individual is in the U.S. If this individual travels outside the U.S. after their E visa stamp expires, they will need a valid visa stamp before they can travel to the U.S.
    • The visa stamp renewal process requires a new E visa application processed by a U.S. Embassy abroad. The U.S. Embassy is not bound by the USCIS approval of E status extension.

The Basic Requirements for Both E Visa Types:

  •  The U.S. Company must ultimately be at least 50% owned by citizen(s) of the same Treaty Country as the visa applicant’s country of citizenship. It is important to note that ownership is traced to the ultimate individual owners of the business.
    • Foreign citizens who are permanent residents of the U.S. (Green Card holders) cannot serve as qualifying owners for the purposes of E visa applications.
  • The visa applicant must demonstrate an intent to leave the U.S. after the termination of their E visa status. Note: This does not preclude the applicant from ultimately applying for a Green Card if a separate basis for the Green Card application exists, but it does mean the visa application cannot complete the Green Card process from within the U.S.

E-1 Treaty Trader Visa

The specific requirement for an E-1 visa is that the Treaty Trader (individual or company) must have established “substantial trade” in goods or services between their country of nationality and the U.S. To be considered substantial, this trade must constitute at least 50% of the company’s or individual’s total international trade. This trade requirement may be fulfilled either by the foreign individual, foreign company or by the U.S. subsidiary that will serve as the employer of the intended visa holder.

Notes regarding Qualifying Trade:

  • Trade between the foreign country and the U.S. must be in existence before the visa application can be submitted for processing. Trade includes both export and import of goods and/or services.
  • If the company is trading goods, the goods must be manufactured in the applicant’s country of nationality (Trade Country), shipped to the U.S. from the Trade Country and invoiced in the Trade Country to count as trade for E-1 visa purposes. Alternatively, the goods can be manufactured in the U.S., shipped from the U.S. to the Trade Country and invoiced in the U.S.
  • Substantial trade is determined by the number of transactions over time, not only by the dollar amounts. For example, one transaction will not qualify as substantial trade, even if it involves a large sum of money.
  • Typically, US Embassies require substantial and detailed documentation in regard to the company’s international trade to satisfy the E-1 visa requirements. Such documents include, but are not limited to, bills of lading, invoices, bank account statements and other documentation showing transactions between the two countries.

Note Regarding the Visa Applicant’s Position in the U.S. Company

The visa applicant must be coming to the U.S. to be employed in a supervisory, executive or specialized capacity.  Ordinarily skilled or unskilled workers do not qualify for E-1 visas.

E-2 Treaty Investor Visa

As the name suggests, an E-2 visa is based on investment. This type of visa requires a substantial investment to be made in the U.S. Company by a foreign individual (often, but not always, the visa applicant) or a foreign company that has the same nationality as the visa applicant.

Notes regarding qualifying investment:

  • Qualifying Investment must be “substantial,” and the funds have to be irrevocably committed. “Substantial” is not defined in the visa regulations. Typically, if the U.S. Company is new, we see success with an initial investment of $80,000 – $100,000.
    • The investment must be sufficient to ensure the successful operation of the U.S. enterprise, and this amount is typically relative to the type of enterprise.
  • The investment must be made into qualifying categories of expenses related to the U.S. Company. Uncommitted funds in a bank account or mere ownership of undeveloped land are not considered an investment.
    • Specific types of qualifying expenses often depend on the type of business.
    • Examples of expenses for E-2 visa purposes include, but are not limited to, U.S. office infrastructure, inventory on hand, equipment, company cars, marketing expenses, recruiting expenses, and one-month’s office rent.
  • The investment may not be marginal, meaning that the U.S. enterprise must have the present or future capacity to generate more than just the income needed to provide a minimal living for the treaty investor (or the employee of the investor) and their family.
    • The U.S. business must demonstrate a realistic need and plan to hire U.S. employees and a realistic potential for a financial return that significantly exceeds what is necessary to support a living for the visa applicant and his/her family.
    • While there is no specific mention of job creation in the visa regulations, this requirement is the core of why the E-2 visa exists.
  • The investment must be ‘at risk’ in a commercial sense. If the investment funds are not subject to partial or total loss if business fortunes reverse, then the investment does not qualify to support an E-2 visa application. Loans secured with the assets of the U.S. enterprise do not qualify for E-2 visa purposes, nor does simply transferring money to a U.S. bank account

Note Regarding the Visa Applicant’s Position in the U.S. Company:

If the visa applicant is the principal investor, this individual must be coming to the U.S. to develop and direct the U.S. enterprise. If the applicant is a prospective employee of the U.S. company, this applicant must be employed in a supervisory, executive, or specialized capacity. As with the E-1 visa, ordinarily skilled or unskilled workers do not qualify for E-2 visas.

If you have questions or would like further information on E visas, please feel free to contact Martensen Wright PC at info@usa-eurolaw.com.

Danes and Dual Citizenship

Danish Nationals living in the United States now enjoy the option of having dual citizenship.

This means that Danes can apply to become US citizens via naturalization in the USA without losing their Danish citizenship. The Application for Naturalization, form N-400 is available here: https://www.uscis.gov/n-400passports

Danes who lost their Danish citizenship when they became citizens of another country prior to September 1, 2015, can apply to have their Danish citizenship reinstated. The deadline for submitting an application is August 31, 2020.

The application, Erklæring om Generhvervelse af Dansk Indfødsret for Tidligere Danske Statsborgere, is available here.

For more information about Citizenship [in Danish statsborgerskab og indfødsret] please see Tidligere Danske Statsborgere.

Questions about the application should be directed to the Office for Indfødsret at phone no.: 011 45 7226 8700 or via e-mail: uim@uim.dk

Martensen Wright welcomes Pernille and says goodbye to Sandra

Our team is saying  goodbye to Sandra who has interned with us for a year and welcoming Pernille, our new intern from Denmark.

Dorthe Mikkelsen Wright awarded the knighthood

On Monday 20 August 2018 Dorthe Mikkelsen Wright had an audience with the his Royal Highness Crown Prince Frederik of Denmark to thank him for the knighthood she was awarded for her services as Honorary Consul of Denmark in Northern California. Dorthe continues to serve as Honorary Consul, assisting Danes in need in Northern California.

Lars Reed being sworn in as a California attorney

Martensen Wright congratulates Lars Reed, our former Law Clerk, on being sworn in as a California attorney.

The swearing-in ceremony took place in Alaska (notice the seal on the wall in the picture), because Lars is currently clerking there for Chief Justice Craig Stowers of the Supreme Court of Alaska.

Lars graduated in May 2017 from UC Davis School of Law and passed the California bar in November.

Martensen Wright is proud to have been part of the beginning of Lars’ legal career and we wish him the best of luck in the years ahead.

Finn Martensen, co-founder of Martensen Wright PC, passed away

It is with great sadness we announce that Finn Martensen, co-founder of Martensen Wright PC, passed away in Denmark on November 28, 2017.

Finn pioneered the concept of bringing Danish companies to the United States and helping these companies navigate through foreign legal systems and regulations.

Even after “retiring” to his native Denmark in 2009, Finn continued to assist companies get established in the United States and secure visas for their employees.

Finn worked until the very end and he will be greatly missed in the legal community of Danish-American commerce.

Our thoughts are with his wife Anne Grethe, his sons Jens and Rasmus and their families.

Peace be with his memory.

New I-94 Website with Reminders for Travelers

CBP logoFrequent travelers to the United States should be very familiar with the U.S. Customs and Border Protection’s I-94 website.  Martensen Wright has just learned that the site has been updated with a feature allowing certain travelers on visa waivers to check the status of their stay in the US.  Staying past one’s “admitted until date” can have serious consequences for future visa applications, so this new feature will surely come in handy for many travelers.

Future updates to the I-94 website will incorporate additional non-immigrant travelers and will allow travelers to check how much longer they may remain in the United States. In addition, CBP is working towards emailing travelers 10 days before their expected departure date to remind travelers how much longer they can remain in the United States without overstaying the terms of their admission.CBP travelers in line

Read more about the changes to the I-94 website here.

 

IRS Starts Transfer Pricing Audit Campaign

IRS building and signThe Internal Revenue Service (IRS) has announced that U.S. distribution subsidiaries of foreign multinationals, including Danish companies, can expect special transfer pricing scrutiny during IRS audits.   The IRS is concerned that foreign-owned companies are not paying their “fair share” of income tax when a parent company charges excessively high prices on goods, services and royalties. Incorrect cross-border prices can lead to artificially low corporate income tax payments.

Recently, we have seen the IRS become more aggressive in employing this audit strategy, and challenging transfer prices has become a lucrative way to raise tax revenue.  During audits, the IRS will request information on the company’s business operations and justification of the cross-border prices charged between companies – commonly known as a transfer pricing documentation report.

IRS auditIn discussions with tax agents, IRS Auditors regularly review earnings before interest and tax (EBIT) as a percentage of net sales when selecting targets. U.S. subsidiaries incurring losses face the highest risk of scrutiny, and many middle-market companies are being audited for the first time.

New Transfer Pricing Standards in DK Raise the Bar and Widen the Net – Starting at $20 Million in Group Revenue!

The IRS is not the only tax authority concerned about transfer pricing.  The Danish tax authority, SKAT, has also become more aggressive in auditing transfer pricing practices for Danish companies.

Transfer pricing has long been a tax concern for the largest multinationals and news articles on Apple, Starbucks, Google and others have raised the profile of this contentious tax issue.  Danish transfer pricing documentation rules were updated in 2016 to follow the OECD’s recommendations for combating large-scale tax avoidance by multinational companies.  Consequently, fines now apply for documentation breaches.  SKAT, for the first time in March 2017 published details of a court case in which a fine for failure to comply with transfer pricing documentation rules was upheld.

For the largest companies, new international transfer pricing documentation standards require companies to provide information on both global business operations (a “Master File”) available to all tax authorities and a transfer pricing analysis (a “Local File”) for tax authorities in all countries where a multinational operates.  However, many middle market companies will also be subject to these higher documentation standards in Denmark. Most notably, Danish regulations now require companies with global revenues of DKK 125 million (~ $20 million) and more than 250 employees to be subject to the same higher transfer pricing documentation standards as large multinationals.

In our experience, these new requirements are more prescriptive both in terms of the volume of information required and the details that must be included in a report. For instance, a Master File should include written descriptions of important drivers of business profit, the supply chain for the five largest product lines, major service agreements within the group, and an explanation of which companies own intangibles by country.  By contrast, a Local File for each country, requires a thorough explanation of local business strategies, functions, risks and assets. Each Local File must also include an explanation of inter-company transactions, financial results and selection of the “Best/Most Appropriate Method” for bench marking transfer prices.

What to Do Next?

Taxpayers of all sizes should review their transfer pricing arrangements in anticipation of a potential audit. Companies with U.S. distribution subsidiaries can expect additional transfer pricing scrutiny as a part of every IRS tax audit. Depending on the risk profile of a company, transfer pricing documentation or other supporting economic analyses may be necessary to justify operating results and reduce the risk of additional tax assessments and penalties.

The IRS has published a Transfer Pricing Audit Roadmap which can be viewed here: https://www.irs.gov/businesses/corporations/transfer-pricing-audit-roadmap-now-available .

This article was written by Hanne Rørholm LeLoup and Alex Martin.  Hanne LeLoup is a Partner with Hutchinson and Bloodgood LLP, http://www.hbllp.com/  in San Diego, California. HBLLP is a full-service CPA firm. Hanne grew up in Denmark and assists numerous Danish companies with their American tax issues. Hanne can be reached at hleloup@hbllp.com .  Alex Martin is a Transfer Pricing Expert at Clayton & McKervey in Detroit, Michigan, https://claytonmckervey.com/.  Alex can be reached at  amartin@claytonmckervey.com .

Buy American and Hire American

H-1B visaOn April 18, 2017, President Trump signed his latest Executive Order “Buy American and Hire American.”  The American Immigration Lawyers Association (AILA) observed that while the announcement reflects the administration’s desire to move toward reforms to the H-1B program, there will be no immediate changes or impacts on H-1Bs. It appears that the agencies are asked to review policies related to all visa programs and recommend changes to root out “fraud and abuse,” and to propose additional reforms so that H-1B visas are awarded to the most skilled or highest-paid applicants.

See the official White House announcement here: https://www.whitehouse.gov/the-press-office/2017/04/18/presidential-executive-order-buy-american-and-hire-american

 

USCIS suspends premium processing for H-1B visas

Visa applicationStarting April 3, 2017, USCIS will temporarily suspend premium processing for all H-1B petitions. This suspension may last up to 6 months. We will notify the public before resuming premium processing for H-1B petitions. While premium processing is suspended, we will reject any Form I-907 filed with an H-1B petition. If the petitioner submits one combined check for both the Form I-907 and Form I-129 H-1B fees, we will have to reject both forms. Read more here: USCIS Will Temporarily Suspend Premium Processing for All H-1B Petitions  and here USCIS Newsletter .