Alternatives to the EB-5 Visa
The EB-5 Visa program has been widely promoted as a legal basis for foreign business owners to gain conditional residency followed by permanent residency in the United States. The program is a great solution to the proposition “I want to live in America.”
The decision to become a permanent resident or U.S. citizen has some significant, potentially costly, trade-offs from a tax perspective. These trade-offs should make a wealthy foreigner think twice about becoming a U.S. permanent resident or citizen particularly if there are other ways to spend a substantial amount of time in the U.S. without being locked into permanent residency or U.S. citizenship from a tax perspective.
[box]Originally published in Journal of Taxation of Investments on August 27, 2015.[/box]
Please see full Article by Gerald Nowotny below for more information: Tax-Savvy Planning for Foreign Business Owners Seeking Temporary U.S. Residence: Alternatives to the EB-5 Visa PDF
The EB-5 Visa program
The EB-5 Visa program has been widely promoted as a legal basis for foreign business owners to gain conditional residency followed by permanent residency in the United States. The program is a great solution to the proposition “Ï want to live in America.”
Unlike other countries, the decision to become a permanent resident or U.S. citizen has some significant tradeoffs from a tax perspective. These tradeoffs should make a wealthy foreigner think twice about becoming a U.S. permanent resident or citizen particularly if there are other ways to emigrate to the U.S. without being locked into permanent residency or U.S. citizenship from a tax perspective. In otherwards, the cost of U.S. residency may prove to be too steep!
It is my view that the tax consequences of U.S. residency are not adequately discussed when business immigration options are being considered. Some of the subtleties of being an American taxpayer are often overlooked including the tax consequences of forfeiting U.S. residency or citizenship in the future after obtaining residency. The civil and criminal penalties of foreign bank account reporting and compliance may come as a complete shock to many foreigners.
It is a very common fact pattern around the wealth world that wealthy families have stockpiles of cash in all of the best known tax havens. What is less known and less appreciated are the compliance requirements for maintaining that pile of cash offshore in the event you are a U.S. citizen or resident.
Factually, the foreigners only needs to be in the U.S. for a short time until the political and economic situation in the home country approves. Alternatively, the foreigner’s children have been educated in the United States and remained in the U.S. because the combination of political and economic freedom are greater than the home country. In a number of cases, the children have married Americans that they met in college or graduate school. As a result, the senior generation needs a way to visit and remain for longer periods of time that the typical tourist visa allows particularly considering the combination of personal and political factors in the decision matrix.
It is not uncommon that many foreign business owners become aware of these adverse tax consequences after becoming a U.S. resident. I have been articulating this point through a series of articles that the decision to pursue the EB 5 may be premature in a number of cases. It is an excellent solution, but not necessarily for everyone. This article looks at the E2 Investor Visa as an alternative to EB5 Visa. Furthermore, it considers a strategy for investors to consider when their home country does not have a treaty with the U.S. for the E2 visa.
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Gerald Nowotny
Law Office of Gerald R. Nowotny
266 Lovely Street
Avon, CT 06001
United States
860-404-9401
TaxManDotCom.com
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