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EB-5 Investor Immigration and Tax Planning 1

Key words: EB-5 Investor Immigration; Financial Planning; how to avoid double taxation in US and China; Green Card

Article One

As China's economy leaps and bounds, more and more people come abroad, causing waves of immigrants. Nowadays, investor immigration to the United States becomes the most popular topic among Chinese elite, and people who has some free capital. Chinese community in the U.S. has also been focusing on helping their parents or other family members to immigrate to the U.S. A few years ago, you might say selling a real estate property located within the second ring in Beijing as investment capital to immigrate to the U.S. was not that realistic, however, more and more Chinese by making this realized their American immigration dream. In All, we believe there are mainly two following reasons:

First of all, let’s see China’s side first. In 2008, Premier Wen Jiabao announced four trillion Chinese yuan of "quantitative easing", a move to keep the momentum of economic growth in China from the affect of the U.S. financial crisis. At the same time, due to the immaturity of Chinese capital market, a lot of capital flew into the real estate market as a result of limited investment channels, leading to inflated real estate prices and housing bubble.  Starting from early 2011, Chinese government has begun to take strong action to suppress the real estate prices, and by the end of 2011, the housing market has fallen sharply especially in metropolitan areas. However, the government's determination to suppress housing prices is still firm. Is this going to lead to the similar consequences of the U.S. 2007 subprime crisis by causing house price fall sharply? No one knows for sure until it really happens. As a result, some people started to seek a way out as they would rather sell their property at a high point and hold the cash on hand than facing a risk of shrinking property value.

Secondly, with regard to the U.S. side, in order to cooperate with Present Obama’s economic policies to stimulate the job market, USCIS has greatly relaxed the threshold for investment immigration policy from previously $1 million investment fund and creating more than 10 employment opportunities to currently $500,000.00 investment fund with direct or indirect potential employment opportunities within the specific regional center, which makes it easier for the investor to get a green card. Moreover, the investor's spouse, unmarried children can also get a green card and legal residence in the United States to take advantage of a variety of social welfare.

In addition, in order to encourage the application of investment immigration, USCIS greatly accelerated the speed of processing time. The processing time can be as short as one year, which is much faster compared to other types of immigration cases. It seems like USCIS has opened a special door for the rich.

To sum up, considering the superior natural environment of the United States, good social welfare system, high-quality education systems, and the full respect and protection of personal property, investment immigration to the United States is undoubtedly a good life investment, not only for yourself, but also for your children’s the future career development and international network.

However, what is the burdensome complexity of U.S. immigration policy and application process? How to avoid the double taxation from both China and the United States when the U.S. tax laws also become applicable to the investors the moment a green card is issued?  How to manage financial planning before immigration to avoid paying the high “green card maintenance fee”?

We will continue this topic in the following articles. 

By Joe Zhenhong Zhou, Caine Yu, CPA and Stanley Liang, CPA