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US Investment Green Card: Ultimate Investor Guide 2020 2020-05-20T15:00:43+00:00

US Investment Green Card: Ultimate Investor Guide 2020

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Worldwide, investors are waiting with bated breath to see whether the USA will reduce the minimum investment requirement for its EB-5 Investment Green Card Program from $900,000 to $450,000. While this would be unlikely under normal circumstances, the severe impact of the Covid-19 pandemic on the American economy may well force the Trump Administration’s hand.

While initial media reports stated that the investment requirement may drop to $450,000, with and additional 65,000 new Green Card slots being made available per annum, these have been subsequently debunked. Having said that, the possibility that these EB-5 program changes cannot be ruled out as subsequent economic stimulus packages will be getting announced in due course.

The increase was determined on an inflation adjusted basis, and given that the US economy was booming and unemployment was at an all-time low. The astonishingly fast onset of the Coronavirus and its devastating impact on the US economy may well lead to this pricing increase being reappraised in 2020.

In the interim, EB-5 South Africa provides an overview of the current EB-5 Investment Green Program, and outlines how South African investors can obtain American residency with ease. Contact us for a confidential consultation and to start preparing your Green Card application today.

How long does it take to get an EB-5 Investment Green Card? 2020-04-12T13:44:59+00:00

Obtaining a conditional Green Card under the US EB-5 Program typically takes 18 to 24 months. As soon as the conditional Green Card is obtained, the investor will enjoy all the rights and obligations associated with US residency. This includes the ability to immediately live, work or open a business in the USA, and the permit is valid for 2 years.

Before the end of this validity period, the investor will have to apply to have the conditions on their Green Card removed. In order to do so, they’ll have to prove to USCIS that they have met the relevant EB-5 Green Card requirements during the initial 2-year period.

Provided that the job creation (or indirect job creation) requirements have been met, USCIS will convert the investor’s Green Card into an Unconditional Permanent Green Card. Ah this stage, the funds that were invested can be returned.

What are the tax implications of getting a green card by investment? 2020-04-12T14:01:40+00:00

It is important to note that any USA pre-immigration tax structuring must be implemented prior to obtaining an Investment Green Card. As with any residency by investment based application, it is vital that the prospective investor carefully considers the tax implications: obtaining a US Investment Green Card means automatically becoming tax resident.

While South Africa enjoys a double taxation treaty with the USA, obtaining a Green Card by investment could result in a South African CGT Exit Tax liability, which is a liability arising from the deemed sale of global assets by the applicant.

In practice, however, when opting for an investment in a state such as Florida, the South African investor’s tax liabilities will not be higher than if they were to remain tax resident in South Africa. Every investor’s situation is different, however, and as such it is essential to consult a qualified tax consultant in this regard.

What are the alternatives to the US EB-5 Visa in 2020? 2020-04-21T19:34:37+00:00

For investors unwilling to commit to a $900,000 investment, the American E-2 Visa Programme, which can be accessed by means of acquiring citizenship by investment in either Grenada or Turkey, may be a viable option.

Alternatively, there also exists a path to residency for existing business owners: A residency approach combining the E1 and EBc1 visa categories, on the basis of a $350,000 franchise investment, can also serve as the basis for obtaining a US Investment Green Card.

It is important to note that available client slots the latter investment option is even more limited than the EB-5 itself, so contact us today for more information should you believe that you may qualify for this option.

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The Investment Green Card Program at a glance

Created under the US Congress’ Immigration Act of 1990 (IMMACT90) and formally known as the EB-5 Investment Visa Program, America’s investment immigration scheme is one of the oldest and most established programs in the world.

Foreign investors from across the globe can apply for American residency on the basis of making a government approved investment of no less than $900,000. While the minimum investment requirement used to be $500,000, the threshold was raised on 21 September 2019. EB-5 investments, across the board, must be maintained for a minimum period of 5 years.

Under the current program, investors principally have a number of investment paths leading to US residency: 

1.DIRECT EB-5 INVESTMENTS:  

A) NEW ENTERPRISE DEVELOPMENT:

As of 21 September 2019, the minimum investment requirement for direct Green Card investments is $1.8 million, unless the business is situated in a Targeted Employ Area (TEA), in which case the investment requirement is $900,000. A TEA is defined as a Rural Area, or a location in which the unemployment rate is at least 150% higher than the national average.

Under this investment option, the investor invests directly into their own business. Direct investments can take the form of either common shares or a preferred equity stakeholding.

In order to qualify for a US Green Card under this investment pathway, the onus is on the investor to prove that a minimum of 10 full time employment opportunities have been created within the business. The latter proof typically takes of the form of payroll and income tax submissions for the employees in question.

In addition, the investor must be able to prove the creation of the enterprise, their involvement as senior manager, as well as that the business is situated in a recognized TEA.

B) NEW JOINT ENTERPRISE INVESTMENTS (EB-5 INVESTMENT POOLING):

Across many industries, the scaling of the initial capital investment in a new business can create a competitive advantage. It is for this reason that many prospective Green Card investors find joint venture enterprises, based on investment pooling, highly attractive.

Under this investment option, each individual investor must meet the minimum investment requirement: Each investor must invest a minimum of $900,000 if the business is situated in a TEA, and 1.8 million if the business is located in any other area.

Each individual investment must also lead to the creation of 10 or more permanent employment opportunities.

C) EXISTING ENTERPRISE EXPANSION:

Investing in the growth of an existing enterprise can be a lot less challenging than investing in a brand new business with no revenue or existing traction. Under this investment path, Green Card applicants are required to growth the business’ revenue and employee headcount by a minimum of 40%. The minimum job creation target for this option remains at 10 full time positions.

D) INVESTING IN DISTRESSED ENTERPRISES:

As of 2019 precedents, under this investment option, a distressed or “troubled” business is defined as an enterprise that has recorded net losses for at least 2 years leading up to the priority date specified on the investor’s Form I-256, Immigrant Investor form. Additionally, the recorded loss must have amounted to a minimum of 20% of the business’ worth prior to the business becoming distressed.

In TEAs, the minimum investment requirement for this option is $900,000, while an investment of $1.8 million is required in non-TEA areas. As with the other direct EB-5 investment options, the target for job creation (or job preservation) remains at 10 full time positions.

Especially in the current economic climate in the US, direct EB-5 investors may be able to get exceptional value for money under this investment option.

2. EB-5 Regional Center investments (Passive/Indirect Investment):

Regional Center investments start at $900,000, provided the project is situated in a Targeted Employment Area. The USCIC defines a Regional Center as an economic unit, either publicly or privately owned, that promotes economic growth, job creation, or enhances regional productivity through the facilitation of domestic capital investment by foreigners.

 A key advantage of Regional Center based Green Card investments is the fact that they’re generally passive investments – the investor is not required to be operationally involved in managing the investment at all.

Another key benefit is the fact that the job creation requirement is met indirectly; seeing as most of the available Regional Center projects take the form of hotel, retirement village or housing type developments, USCIS employs a standard formula to calculate the number of indirectly created employment opportunities. The requirement to prove job creation is commensurately waived for Regional Center investments.