How can my parents apply for an EB-5 visa using my funds?
I am living in the United States on an H-1B visa. Can I transfer funds to India to my parents' account so they can invest in an EB-5 project? Or conversely, can I just pay the funds on their behalf directly from my account? It will not be a loan to my parents and they will have no obligation to pay me back.
You should be able to gift funds to your parents if you have a lawful source of gifted funds, such as employment in the United States and accumulation over time. The gift declaration from you as donor should be properly prepared and you will have a 709 (gift and generation skipping transfer tax return) filing requirement to report the gift for the year the gift is made.
You may gift the money to your parents. It is still necessary to show the source and path of funds with the petition how you earned the money, tax payments, etc. Regarding the funds transfer, I recommend talking to an attorney to advise you in this matter.
A gift of funds for EB-5 purposes is allowed as long as the donor (you in this case) can prove that the funds were lawfully obtained by you and transferred to your parents as a gift. There are documentary requirements (source of funds and path of funds) for this type of a transaction. It is recommended (as best practices) for the gifted funds to be transmitted to the investor personally so that it is clear who is making the investment. In other words, you should transfer the funds to your parents, whether they have a bank account in the United States or in their home country.
Each investor must make an investment of personal funds, but those funds can be gifted from family members. The specific mechanics of these transfers should be prepared by an EB-5 immigration attorney.
There are three issues here: 1. Immigration: Yes, you can gift funds earned in the United States to your parents and send them to their bank account. It is preferable that at some point the funds are in their personal account instead of being invested directly in a regional center. 2. Taxation: Since it is a gift to your parents, under the Indian law it is not taxable. 3. Remittance: *Under the remittance laws of India, if a resident Indian receives a gift outside of India, the same has to be remitted to their account in India and then used however they want. *If they intend to remit the funds back to the United States after receiving them in India, they are both allowed to remit $250,000 per financial year (April to March). However, RBI notification in the third quarter of 2015 has put restrictions on the remittance for immigration. I highly recommend involving a dual qualified professional or a cross border tax planner. Non-compliance of remittance laws may lead to penalties sometimes up to 300 percent.
You can provide the funds as a gift to your parents. It must be sourced back as lawfully obtained, however.
You may pay directly from the United States to the investment account in their name without sending the money back to India first. Of course, your source of funds must be proven for EB-5 eligibility before you could gift it to your parents.
John J Downey
A gift to your parents will qualify, but you must transfer the funds to their account in India. They must then invest the money from their account. Make sure you have copies of all wire transfers. You must be ready to verify the sources of the funds that you transferred to them.
It would be recommended that you structure this as a formal gift to your parents. Your parents would then make the investment from their personal bank accounts (whether that account is in the United States or in India) into the corporate account of the EB-5 investment project they have selected. For more detailed guidance, I recommend you contact a qualified immigration lawyer.