IN BRAZIL, EB-5 PROJECTS COMPETE WITH OTHER IMMIGRATION OPTIONS, NOT WITH OTHER PROJECTS
Retrogression and overwhelming competition with other EB-5 projects in China has driven EB-5 funded developers to reach into new markets. And in the investors’ market, a new star in EB-5 has risen – Brazil. With a little over 201 million in population, and a GDP of US$ 11,339.52, wealthy Brazilians did not learn about EB-5 until recently, and they have been flooding the gates with questions about the program.
What’s driving Brazilians out of Brazil?
Brazil’s wealth has recently exploded, given the country’s venture into the oil & gas market. Real Estate Appreciation was abundant, and the number of new millionaires in the country grew by the day. But that is no longer. With a series of corruption allegations and conviction of key political players plaguing the political scenario, recent discovery of embezzlement and bribery in the country’s largest company, Petrobras, made wealthy Brazilians look outside of the country for residency options. The rising violence problem in the country is another strong factor that drives Brazilians family out of the country. Exempt from currency limitations, Brazilians have relatively straightforward source of funds, which make them even more desirable in the eyes of EB-5 projects across the USA. In spite of Brazilian’s interest and wealth, the biggest hurdle EB-5 projects face when selling their investments does not relate to EB-5 competition, but to misconceptions related to other immigration programs, especially the L-1 visa.
L-1 to blame
In the past 10 years, Brazilians who did not have the opportunity to move to the USA through a family-based immigration petition resorted to L-1 visas, or Intracompany Transferee. The L-1 visa although not classified as a nonimmigrant visa, can lead to a green card through a relatively smaller investment than an EB-5.
The L-1 path is, however, a tortuous one. The L-1 petitioner must show that in the past three years the beneficiary of the petition was employed for at least 1 year by the parent, branch, affiliate, or subsidiary of the U.S. petitioning company. Moreover, the beneficiary must continue to work in a managerial or executive capacity, or in a position involving specialized knowledge. The beneficiary’s absence cannot negatively impact the viability of the foreign entity, which is particularly challenging to prove when the beneficiary works/owns a small company abroad. The L-1 period is limited to 7 years, and although the L-1 visa holder can petition for an immigrant visa while maintaining L-1 status, adjudicating trends on L-1 based green card petitions have been discouraging.
Contrary to counsel’s advice, many Brazilians choose the L-1 route based on the success stories of other US-based Brazilian colleagues, family and friends. In recent months, however, I have personally seen a wave of L-1 visa holders exploring EB-5 as a last minute plight to stay in the USA lawfully, after their L-1 based green card petitions were denied.
Another key consideration that is neglected by Brazilian hopefuls of moving to the USA is the fact that the opening of a subsidiary in the USA may adversely impact preferential tax treatments of the parent company in Brazil.
Therefore, when selling EB-5 projects in Brazil, it is key to have an immigration attorney who is versed in both L-1s and EB-5 petition to provide prospective investors with a thorough and candid analysis of both immigration options, and why EB-5 might just be the shortcut and even cheaper option when it comes to lawful residency in the USA.
Reprinted with permission.
Renata Castro, Esq.,who is brazilian, is a project manager with Jafrejo Holdings, a hospitality developer and operator with several EB-5 projects. Renata is also an immigration attorney with Korda Burgess,P.A.