As a result of this difficult period in Mexico’s history, a significant number of our clients and their families are relocating to the U.S. under E-1/E-2 Visas, EB-5 Visas or other visas.  Mexican nationals have several options for entering the U.S., either on a temporary or permanent basis.  This article provides a general overview of the main categories of U.S. visas available to Mexican nationals and certain of their requirements and implications.

U.S. immigration status may create additional obligations, such as U.S. income tax on an individual’s worldwide income and U.S. tax on gifts and inheritances.  It is critical to understand, assess and plan for these additional obligations before deciding which U.S. immigration option to pursue.  Although this article contains a general description of the potential U.S. tax effect of each visa option, the specific tax implications for each individual entering the U.S. will vary depending on his or her personal circumstances.  You should not make any immigration decision based solely on this article; please consult an attorney.

1. B-1 Business Visitor (non-immigrant).
   • Authorized Periof of Entry: up to 180 days.
   • Authorized Activities: may engage in “business” but cannot work in the U.S.; cannot receive wages or salary from a U.S. source; may enter U.S. to plan prospective U.S. investments, attend business meetings, serve on the board of directors of a U.S. corporation and negotiate contracts.
   • SpecialRequirements: none.
   • U.S. Tax Effect: you will not become a U.S. resident for tax purposes.
2. E-2 Treaty Investor (non-immigrant).
   • Authorized Periof of Entry: 1-year visa, which authorizes entry for 2-year periods, with unlimited renewals.
   • Authorized Activities: enables entry to “direct and develop” a U.S. business and enterprise that is at least 50% owned and controlled by Mexican nationals; spouse and dependent children under age 21 can accompany you to the U.S. (spouse may apply for work authorization); Mexican employees of the U.S. business may also obtain E-2 Visas if they are executives, supervisors or skilled workers.
   • Special Requirements: requires substantial and committed cash investment in a U.S. business; U.S. business must be at least 50% owned and controlled by Mexican nationals.
   • U.S. Tax Effect: you may become a U.S. resident for tax purposes depending on the duration of your entry period.
3. E-1 Treaty Trader (non-immigrant).
   • Authorized Periof of Entry: same as E-2.
   • Authorized Activities: same as E-2.
   • Special Requirements: requires the U.S. business to be primarily engaged (i.e., more than 50% of its activities) in continuous and substantial trade in goods, services or technology between Mexico and the U.S.; the U.S. business must be at least 50% owned and controlled by Mexican nationals; the U.S. business should have revenue or be immediately capable of generating revenue.
   • U.S. Tax Effect: same as E-2.
4. L-1 Intracompany Transferee (non-immigrant).
   • Authorized Period of Entry: authorizes entry for an initial 1-year period (for U.S. companies in existence for less than 1 year) or 3-year period (for U.S. companies in existence for more than 1 year); visa is renewable for a total of 7 years (for executives or managers) or 5 years (for employees with essential skills).
   • Authorized Activities: authorizes work in the U.S.; spouses and dependent children under age 21 can accompany you to the U.S. (spouse may apply for work authorization if the L-1 transferee is an executive- or manager-level employee; spouse cannot work in the U.S. if the L-1 transferee is an employee with an essential skill).
   • Special Requirements: requires employment outside the U.S. for 1 full year during the last 3 years with a Mexican company that has a U.S. parent, subsidiary, affiliate or branch office.
   • U.S. Tax Effect: you may become a U.S. resident for tax purposes depending on the duration of your entry period.
5. H1-B Specialty Occupation (non-immigrant).
   • Authorized Periof of Entry: authorizes entry for 3 years, renewable for 1 additional 3-year period.
   • Authorized Activities: authorizes work in the U.S.; spouse and dependent children under age 21 can accompany you to the U.S. (spouse cannot work in the U.S.).
   • Special Requirements: requires a U.S. job offer in a specialty occupation, meaning a job that requires a Bachelor’s degree (or equivalent) in a specific field, such as engineering, accounting, etc. and the applicant must possess such degree.
   • U.S. Tax Effect: you may become a U.S. resident for tax purposes depending on the duration of your entry period.
6. TN NAFTA Visa (non-immigrant).
   • Authorized Period of Entry: authorizes entry for an initial periof of 1-3 years, renewable for 1 additional 3-year period.
   • Authorized Activities: authorizes work in the U.S.; spouse and dependent children under age 21 can accompany you to the U.S. (spouse cannot work in the U.S.).
   • Special Requirements: requires a U.S. job offer in one of the 63 occupations listed in Appendix 1603.D.1 of the NAFTA; applicant must have the university degree or other credentials required by the NAFTA for the listed occupation.
   • U.S. Tax Effect: you may become a U.S. resident for tax purposes depending on the duration of your entry period.
7. F-1 Student Visa (non-immigrant).
   • Authorized Period of Entry: authorizes entry for the period of enrollment in a full-time academic program (including college, university, conservatory, private academic high school, etc.) plus any periods of authorized practical training and a 60-day grace period.
   • Authorized Activities: full-time study; on-campus work only (limited to 20 hours per week) that does not displace U.S. residents, which should be part of a fellowship, scholarship or postdoctoral research appointment.
   • Special Requirements: requires enrollment in a full-time academic program.
   • U.S. Tax Effect: you are unlikely to become a U.S. resident for tax purposes, but you may depending on the duration of your entry period.
8. EB-5 (permanent resident).
   • Authorized Period of Entry: 2-year period of Conditional Permanent Resident (CPR) status, after which you may apply for Lawful Permanent Resident (LPR) status.
   • Authorized Activities: spouse and dependent children (under 21) can obtain the same status to live and work in the U.S. permanently; spouse and dependent children (under 21) receive all rights and privileges of Lawful Permanent Residents of the U.S.
   • Special Requirements: requires an investment of at least $1,000,000 (or $500,000 in certain rural or high unemployment areas) in a U.S. business creating at least 10 full-time jobs for U.S. workers; investor MUST “actively manage” the U.S. business on a daily basis; within 90 days of expiration of CPR status, investor must apply for LPR status and prove that the investment has created 10 full-time jobs for U.S. workers.
   • U.S. Tax Effect: you will become a U.S. resident for tax purposes.
9. EB-5 Regional Center Program (permanent resident).
   • Authorized Period of Entry: same as EB-5.
   • Authorized Activities: same as EB-5.
   • Special Requirements: same as EB-5 except, importantly, the investor is NOT required to “actively manage” the U.S. business; the investor is required to attend shareholders’ meetings but the investor may reside anywhere in the U.S., whether or not near the U.S. business in which the investor has invested.
   • U.S. Tax Effect: same as EB-5.
10. O-1 Extraordinary Ability (permanent resident).
    • Authorized Period of Entry: immediate Lawful Permanent Resident Status (no period of Conditional Permanent Resident status required).
    • Authorized Activities: spouse and dependent children (under 21) can obtain same status to live and work in the U.S. permanently; spouse and dependent children (under 21) receive all rights and privileges of Lawful Permanent Residents of the U.S.
    • Special Requirements: requires proof of extraordinary ability in business, science, education, athletics or the arts, as demonstrated by sustained national or international acclaim; must prove intent to continue working in the area of extraordinary ability; no U.S. employer or investment required.
    • U.S. Tax Effect: you will become a U.S. resident for tax purposes.

I thank my partners Brian Graham (immigration), Julian Nihill (international tax) and David Cibrian (corporate) for their contributions to this article.

International tax aficionados should plan to attend the 2011 University of San Diego Law School/Procopio International Tax Institute on October 24-25, 2011, at the University’s Joan B. Kroc Institute for Peace & Justice in San Diego.  This year’s topics include:

• FATCA (Foreign Account Tax Compliance Act) – Foreign Financial Institutions Duties in Identifying “U.S. Persons”
• EB-5 Visas and the Myriad of U.S. and International Tax Consequences
• Proposed Regulations for Spontaneous Information to Foreign Tax Authorities for Nonresident Alien U.S. Bank Deposit Accounts
• Conflicts of Law Issues of Foreign Law and FATCA Requirements
• Tax and Legal Issues of Doing Business in China
• Mergers & Acquisitions of Hotels and Shopping Malls in the U.S.

The conference agenda includes both U.S. and Mexican speakers from private practice, government and academia.

There are some great topics this year, including a segment on the U.S. and international tax consequences of EB-5 Visas, which are of keen interest to many of our high net worth clients seeking to permanently relocate the U.S.  It can be a shock for a foreign client to hear that his or her worldwide income will become taxable in the U.S. upon becoming a U.S. resident for tax purposes, whether under an EB-5, an E-1/E-2 or a different category of visa.  Of course, no immigration plan should be undertaken without a full understanding of the tax consequences and proper tax planning before immigration is essential.

I also expect that the segment on tax and legal issues of doing business in China will be very interesting to U.S. businesses with China operations or seeking to enter the Chinese market.  In this regard, I would like to mention my friend Dan Harris of China Law Blog, which has years of excellent blog posts on this subject.

Mexico Law Blog is a sponsor of the Procopio International Tax Institute.