Can an EB-5 investment include a company's retained earnings or undistributed capital from an LLC? For example, could an applicant remotely operate a business for a few years, then submit an application to the EB-5 program showing the $500,000 or $1 million as already invested via built-up undistributed income?
The EB-5 immigration laws require an investment of personal funds at risk from the foreign national's personal bank account. Retained earnings cannot be counted towards the personal investment, as they do not personally belong to the investor. The retained earnings will have to be distributed to the investor before the investor can invest these funds into the EB-5 project.
The short answer is no. The investment must be a PERSONAL investment, not one a corporate entity makes on your behalf.
While part of the existing company can be used and recognized by USCIS, the issue of pre-existing valuation of the company may draw skepticism. In order to address the skepticism, it is advisable that you provide a good economic analysis that details the valuation of the company, capitalization process and a host of other information. Advisably, consult an EB-5 attorney who may in turn bring an economic analyst and other professionals for your I-526, and it should be done prior to filing any petition.
An EB-5 foreign investor must show a lawful source of funds. If the foreign investor has the appropriate ownership interest in the company with sufficient retained earnings and undistributed capital, and the company makes a distribution to the EB-5 investor either as salary or dividends, those funds could be used for the purposes of making a $500,000 or $1 million investment in the United States. In addition, it would have to be shown that as a result of such investment, 10 new jobs for U.S. citizens were created. However, it would not be possible to simply show that a company in which the individual foreign investor had sufficient retained earnings or undistributed capital in excess of $500,000 or $1 million that had been built up and undistributed.
Retained earnings do not qualify as an investment for EB-5 purposes. It is possible to remotely operate a business in the United States and later apply for the EB-5 visa - as long as the other EB-5 requirements are met.
The dollar amount of investment may suffice, but you still have to show job creation.
An EB-5 investment is an investment of minimally $500,000 or $1 million by a foreign national in a new enterprise in which the investor participates and which creates 10 full-time positions in approximately two years. Under the facts you have proposed, it is possible for a foreign national to invest in a U.S. business that earns him or her $500,000 or $1 million. The money earned could then be used to invest in a separate EB-5 enterprise. However, where built-up income would derive from the initial investment of less than $500,000 or $1 million in a new U.S. enterprise, it would not qualify under the definition.
Income must be distributed, all applicable taxes paid and then reinvested to qualify. Also, jobs would need to be created with those funds.
No, you cannot use retained earnings - you need to declare dividends and pay tax.
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