EB5 Direct Investment – Self-Employment and earning a salary

A question often asked by EB5 investors and entrepreneurs is whether they or their family members can draw a salary. An EB5 direct investment requires that 10 full time jobs be created. The question becomes whether the EB5 investor or dependent family members may be counted as the 10 full time jobs. While there is not a rule against an EB5 investor or there dependent family members from being employed by the new commercial enterprise (provided the EB5 investor and/or family members have immigration status in the US granting them employment authorization), employment by the EB5 investor and family members does not count towards the creation of 10 full time jobs. Consequently, whether the EB5 investor draws a salary becomes more of a business and tax question. The important immigration question that most immigration lawyers will focus on is whether the $1M or $500K investment is going towards the creation of 10 US jobs. It’s important that USCIS see that the EB5 investment go towards the new commercial enterprise and job creation. If the EB5 business has sufficient cash flow to pay the 10 full time employees and other expenses of the company and can still afford to pay the EB5 investor and/or family members, then drawing a salary can be considered. However, if the company does not have sufficient cash flow, it is likely advisable to refrain from drawing a salary so that the EB5 capital investment can be still be considered at risk. It’s important that the EB5 investor stay in close contact with the immigration lawyer and other relevant professionals such as a good tax lawyer.