EB-5 Visa - USA Citizenship by Investment | FirstPathway ...
EB-5 Investment Immigration to the United States From ... · EB-5 basics > Enacted by US Congress...
27
Baker Tilly refers to Baker Tilly Virchow Krause, LLP, an independently owned and managed member of Baker Tilly International. EB-5 Investment Immigration to the United States From Start to Finish and Beyond 14 - 15 MARCH 2016 CONRAD HOTEL, DUBAI, UAE
Transcript of EB-5 Investment Immigration to the United States From ... · EB-5 basics > Enacted by US Congress...
Baker Tilly refers to Baker Tilly Virchow Krause, LLP,
an independently owned and managed member of Baker Tilly International.
EB-5 Investment Immigration to the United States
From Start to Finish and Beyond
14 - 15 MARCH 2016 CONRAD HOTEL, DUBAI, UAE
Agenda
> Making the Decision
> Making the Investment
> Tax Planning
> An EB-5 Investment Opportunity
Making the Decision
> What is EB-5?
> What is a Regional Center?
> What are the benefits of permanent US
Residency?
EB-5 basics
> Enacted by US Congress in 1990 to stimulate job growth through capital
investment by foreign investors
> Administered by the US Citizenship and Immigration Services (USCIS),
which is part of the US Department of Homeland Security
> Enables investors to obtain permanent residence (“green card”) much more
quickly than via other avenues
> Provides foreign investors with access to permanent US residency (“green
card”) for making an investment that meets job creation and capital
investment criteria
> Investors are primarily motivated by US permanent residency
> USD $1 million basic investment, but reduced to USD $500.000 if within a
targeted employment area (TEA) — creation of 10 new jobs per investor is
required. However, proposed legislation may increase these levels to
$800.000 and $1.200.000, possibly as soon as October 2016.
4
EB-5 Regional Center program
> Created in 1992, a Regional Center obtains designation only after
submitting a detailed application to USCIS.
– Sponsored by municipalities, developers, and private parties (full service
and “rental”)
> A Regional Center professionally manages foreign investments in
designated industries and geographic region.
> Investment offering is subject to US securities laws.
> Key Benefit—Investments through a Regional Center are allowed to
count direct, indirect, and induced jobs as part of the job creation
requirement of 10 per investor. This creates greater certainty of
achieving the job creation target.
5
Increasing popularity of EB-5
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
9 000
10 000
11 000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Number of EB-5 Visa Issued by US Department of State
Number of EB-5 Visa Issued % of the EB-5 Visa Quota Used
# of EB-5 Visa Issued 58 54 45 66 162 502 793 1,443 4,218 1,885 3,463 7,641 8,564 10,692
% of the EB-5 Visa
Quota Used 1% 1% 0% 1% 2% 5% 8% 14% 42% 19% 35% 76% 86% 107%
Adapted from: Li, L. “EB-5 Visa Usage and Market Identification.” Regional Center Business Journal October 2014: p. 36. Modified to include 2014 data from the Visa Office:
http://travel.state.gov/content/visas/english/law-and-policy/statistics/annual-reports.html
6
Benefits of permanent US residency
> One EB-5 investment provides permanent residency for the investor,
their spouse and minor children (under age 21 and unmarried)
> Ability to leave/enter the US without risk of being denied entry
> Attend US universities at “domestic” tuition rate, admission standards,
and apply for government-sponsored financial aid
> Permission to work at any company located in the US
> Permission to start and own a business
> Right to receive social security benefits
> Ability to apply for citizenship after 5 years
Permanent Residents enjoy most of the privileges of a US citizen.
7
Making the Investment
>Who is eligible?
>Choosing the investment – Benefits of a FINRA broker-dealer
>The EB-5 investment process – Source of Funds documentation
– Typical Costs
– Tax Planning
8
Potential Investors
> Given the size of the required investment, EB-5 investors have a high
personal net worth and/or high level of income; general business
sophistication, and:
– Clear criminal record
– Good health
– Legally obtained investment funds (traceable)
> Applicants do NOT have to:
– Actively participate in the business financed by the EB-5 investment
– Live full time in the US
> Investment process takes an average of 12-24 months to gain approval
through USCIS
9
EB-5 investment requirements
> Dollar amount
– USD $500.000 per investor for investments in targeted employment areas
(TEAs)
– USD $1 million if not in a TEA
– Subject to increase based on proposed legislation
> Investment period
– Generally 5-8 years from date of investment (average is 6 years)
> Job creation
– 10 full-time jobs per investor (indirect and induced may count if the investment
is made through a Regional Center)
> At Risk
– Investment must be “at risk” and subject to loss if the project does not perform
> Tracing investment
– The source of funds for each investment has to be documented showing that
the funds originated from a legal source
10
Choosing the Investment
> Review all of the offering materials very closely for disclosure of all
risks, fees and conflicts of interest
> Perform thorough due diligence on the project sponsors and Regional
Center
– The presence of a Regional Center doesn’t necessarily improve the
investment if the Regional Center is affiliated with the project or if the
Regional Center is a “rent – a – center”
– Assess the financial feasibility of the project to succeed and offer a plausible
exit strategy to return your capital
– Carefully review the job creation study to ensure good “cushion” between the
required number of jobs and projected jobs to meet the EB-5 requirements
> A FINRA broker dealer does enhance the quality of the offering since
the licensed broker has an obligation to the investors to perform due
diligence on the project and is accountable to the US Securities and
Exchange Commission (SEC)
11
Baker Tilly’s role & regulatory oversight
USCIS
EB-5 investment
Project
Investors Regional Center
Secured
loan
Equity Management
Approval of investor
Baker Tilly Capital
1. Sources transactions
2. Performs independent due
diligence on the RC and project
3. Assists with review of
investment
4. Coordinates documents with
regional center
Grants Regional Center
authority & oversight
Regulatory oversight
FINRA &
SEC 12
Fiduciary
Duty
The role of Baker Tilly Capital
> Perform due diligence on each transaction to offer projects to investors
that are suitable to them and reasonably ensure job creation and
financial feasibility
> Bring local knowledge and experience to each transaction; all projects
presented will be from experienced sponsors who have an established
track record
> Coordinate the investment process and provide trusted assistance
throughout the investment period to all investors.
Baker Tilly is a known and trusted professional services firm and will
deliver exceptional client service
13
EB-5 process
Escrow Background
check I-526
Consular processing
Conditional permanent
resident I-829
Legal permanent
resident
Investment returned
(subject to risk)
Citizenship (optional)
14
Source of Funds
> EB-5 investors must show documentation acceptable to USCIS that the
invested funds were lawfully obtained
> EB-5 investors must also document the path of funds from the investor
into the investment
> For most investors there are a variety of ways to demonstrate
acceptable source of funds
> Baker Tilly can work with the investor’s financial advisor and
immigration attorney to assist with this process
15
Typical Costs
> EB-5 Investment - $500.000 if made within a Targeted Employment
Area (“TEA”), otherwise $1.000.000
– Subject to increase with new legislation likely to $800.000 and $1,2 million
respectively – potentially as soon as October 2016
> Administrative Fee – est. $40.000 to $60.000
– Used by the regional center and issuer to pay placement fees, and recover
costs to issue and sell the EB-5 securities
> Immigration Attorney – est. $10.000 to $15.000
– Investor to retain their own legal representation to assist with USCIS filings
and source of funds
> Tax Planning – est. $0 to $10.000
– First 10 hours are included for investments made through Baker Tilly Capital
(a $4.000 value)
> Travel to US or to US Consulate for visa interview and processing
16
Tax Planning
> Upon issuance of a conditional EB-5 visa, the investor is subject to
global US taxation (subject to tax treaties & credits)
– Complex federal and state tax laws
– Includes income, capital gain, estate and gift taxes
– Extensive reporting on all holdings
– Steep penalties for non-compliance
> Tax planning should take place before the conditional visa is issued
– Title of assets retained in home country
– Capital gains includes pre-immigration unrealized appreciation
– Consider accelerating recognition of income or gains and deferring losses or
expense recognition
– Consider gifting before immigrating
– All assets, anywhere in the world, are subject to federal estate tax
– Consider offshore irrevocable trusts as a planning tool
> Failing to plan ahead can be costly
– EB-5 investments through Baker Tilly Capital include 10 hours of immigration
tax planning from Baker Tilly Virchow Krause (additional time billed at
standard rates)
17
Baker Tilly Virchow Krause LLP –
International Tax Department
Experienced Professionals providing services to clients who are
taxpayers in the US but still have businesses and income in their home
countries.
Languages spoken:
• Spanish
• Portuguese
• Italian
• Russian
• Arabic
• Chinese
• Greek
• Romanian
• Korean
An EB-5 Investment Opportunity
First Pathway Partners
> 9 projects with I-526 approval, first in 2010
> 4 projects with I-829 approval, first in 2011
> Clients in 20 countries
> Assisted hundreds of immigrant investors through EB-5 program
> Prominent member of Invest in USA (IIUSA) – a trade association for the
EB-5 Regional Center program.
- President’s Advisory Council
- Public Relations Committee
- Board of Directors
20
Location, Location, Location
JW Marriot Garden Walk Hotel structure
Anaheim Hotel
Investment, LLC EB-5
Investors USD $115.000.000
investment
100% ownership FirstPathway
Partners LLC
Manager
GardenWalk Hotel I,
LLC (Project)
Loan USD $115.000.000
Pacifica
Hotels, LLC
Developer
Ajesh
Patel William
O’Connell
Owners/
managers
Majority owners
Prospera
Hotels, Inc
O’Connell
Hotels &
Hospitality,
LLC
JW
Marriot Manager
Ajesh
Patel
William
O’Connell
22
*A mortgage on the land and the property will secure the investors’ USD $115 million
investment. This investment is equal to 40% of the stabilized value* of the hotel.
EB-5 investment structure
EB-5 mortgage
(230 investment units)
USD $115 million
Equity financing from
sponsor and other
sources
USD $50 million
Bank Loan USD $35,5 million
Total investment USD $200,5 million
* PKF Consulting Group independent
appraisal dated December 2013
23
Total EB-5 Investment
Total EB-5 Investors
USD $115 million
230
Jobs created by investment
(direct, indirect, and induced) as
calculated by an economist using
RIMS II modeling software
2.717,8 jobs
11,81 jobs/investor
1,18 times the
minimum requirement
Job creation
24
About Baker Tilly Capital
> Regulated by the US Securities & Exchange Commission (SEC)
> Member of FINRA since 2001
– Specific approval to offer EB-5 investments
> Wholly owned by Baker Tilly Virchow Krause, LLP
– Established in 1931
– One of the top 12 largest accounting and advisory firms in the US
– More than 2,500 professionals
– Projected FY16 total firm revenue over USD $500 million
– Major offices in Chicago, Detroit, Minneapolis, Philadelphia, Pittsburgh, New York,
Washington DC, and throughout Wisconsin
– Largest member worldwide of Baker Tilly International
» 8th largest accounting network in the world
» Members in 141 countries worldwide
– Able to offer international tax advice to EB-5 investors
25
Contact information for the
EB-5 team
Michael Fitzpatrick
Partner
+1 608 240 2609
Tom Holter
Senior Consultant
+1 608 240 6782
26
Gennady Bekasov
Manager – Compliance
+1 608 240 2541
Anna Ferinde
Manager – Tax
+1 212 792 4906
Pietro Stuardi
Senior Manager - Tax
+1 212 792 4827
Disclosures
This information is not an offer to sell, or solicitation of an offer to buy a
particular security. An actual offer or solicitation can be made only with an
offering document, such as a Private Placement Memorandum, or a similar
issuers’ document. Investors should always read such offering documents very
carefully before making a decision to invest. Investors must understand the
offering documents completely; including understanding of all risks involved,
and may be required to meet certain qualifications to be permitted to purchase
these securities.
Due to unique requirements of the United States’ EB-5 visa program, investors
should always seek advice of their own legal counsel in order to understand the
specifics of the program. This material is not intended to provide any information,
advice or recommendation about the EB-5 visa program, or any other legal,
accounting or investment advice.
Securities, when offered, are offered through Baker Tilly Capital, LLC, Member
FINRA and SIPC; Office of Supervisory Jurisdiction located at Ten Terrace Court,
Madison, WI 53718, U.S.A.; phone +1 608 240 2541. Baker Tilly Capital, LLC is a
wholly-owned subsidiary of Baker Tilly Virchow Krause, LLP, an accounting firm.
Baker Tilly Virchow Krause, LLP is an independently owned and managed
Member of Baker Tilly International.
