Immigration Law Update
January 2010 |
|
|
|
|
|
| Greetings! |
|
This month we highlight options for obtaining a second or alternate citizenship through investment and will take a closer look at some of the expatriation tax rules and actions required, when someone gives up their U.S. citizenship or lawful permanent resident (green card) status. Finally, we announce an exciting new business cooperation with ICS - International Consular Service, that will allow us to meet your global immigration and visa needs even better.
|
| H-1Bs and Employer-Employee Relationship |
|
H-1B Cap Met
The United States Citizenship and Immigration Service (USCIS) reported that as of December 21, 2009 it had received more than enough petitions for H-1B visas to meet the cap of 65,000. Employers now must consider other options for obtaining professional workers from abroad. Possibilities include O visas for extraordinary ability individuals, E treaty investor/trader employee visas, or even B-1 in lieu of H-1B. On April 1, 2010, employers can once again submit applications for H-1B employees for start dates in the next fiscal year, which begins October 1, 2010.
Employer-Employee Relationship
Those petitioning employers along with those filing H-1B extensions will have to keep in mind recent new guidance issued by USCIS intended to clarify the requirements to establish an employer-employee relationship in the H-1B context. In support of an H-1B petition, a petitioning employer must not only establish that the employee is coming to the United States temporarily to work in a specialty occupation, but also, through documentary evidence, that a valid employer-employee relationship exists between the petitioning employer and the beneficiary and that such relationship will exist throughout the requested H-1B validity period.
To determine whether an employer-employee relationship exists, USCIS will evaluate supporting documents for whether the petitioning employer has a "right to control" the beneficiary's employment. Supporting documents can include: a copy of the signed employment agreement detailing terms and conditions of employment; copy of an employment offer letter describing the nature of the relationship and beneficiary's duties; copy of employer organizational chart showing supervisory chain over beneficiary; or a description of the performance review process.
From now on, employers will have to make sure that these documents or similar supporting documentation is submitted with their petition to evidence that the relationship between the employer and proposed employee is indeed an "employer-employee" relationship, and that this relationship will exist throughout the validity period of the H-1B. |
|
|
|
| Global Citizenship Through Investment |
We have previously highlighted the options for non-immigrant and immigrant visas to the U.S. through investment and employment creation. However, the U.S. isn't the only country with a residence or citizenship-by-investment program; and it may well be that an individual is interested in acquiring a second or alternate citizenship abroad, be it for security, ease of travel, desire to renounce original citizenship, economic or tax benefit reasons.
Many countries offer permanent residence programs to encourage investment and employment creation in their jurisdictions. These countries include Belgium, Canada, Germany, the Netherlands, Switzerland and the U.K. Usually, individuals must make a substantial investment in an enterprise (ranging from €4500 in the Netherlands to £200,000 in the U.K. and $1 million in other countries), and after some years of residence, are eligible for permanent residence and/or even citizenship. In some countries, however, citizenship may be acquired immediately through investment and without any time of physical presence in the country. Countries that have such a program are Austria, Dominica and St. Kitts & Nevis. For example, in Austria, one may acquire citizenship without prior residence by actively and substantially investing in the Austrian economy. (One may also provide an extraordinary scientific or cultural benefit to Austria). The St. Kitts and Nevis citizenship-by-investment program requires either an investment in designated real estate valued at least at US$400,000 or a contribution of US$200,000 (or more based on number of dependants) to the Sugar Industry Diversification Foundation (SIDF), which is a public charity. With any program and in most countries, the application process will be quite extensive.
There is great demand and interest in seeking an additional or alternate citizenship. U.S. citizens considering this option for any of the reasons mentioned above should keep in mind the difficult process if they want to give up their U.S. citizenship, as well as the tax implications of expatriating (see Expatriation discussion below). |
| Tax Tip - This Month: Expatriation, U.S. Tax Obligations and Living Abroad |
|
Filing U.S. Tax Returns when Living Abroad
With a new year comes the same ritual of preparing U.S. tax returns for filing on April 15. If you are a U.S. citizen or lawful permanent resident, your worldwide income will be subject to U.S. income, gift or estate tax, regardless of whether or not you are living in the U.S. Accordingly, you may be required to file a U.S. tax return.
However, if you are currently residing overseas, you are allowed an automatic 2-month extension to file your return until June 15. Nevertheless, any tax due must be paid by April 15 to avoid interest charges. If you are not able to file by June 15, you can request an additional extension to October 15 by filing Form 4868 "Application for Automatic Extension to File U.S. Individual Income Tax Return" before June 15. However, any payments made after June 15 would be subject to both interest charges and penalties for failure to pay.
The IRS Office in Philadelphia provides international tax assistance to individuals who may have questions regarding filing obligations while residing overseas. The Office is available Monday through Friday from 6:00 a.m. to 11:00 p.m. (EST) and can be contacted by phone at: +1 (215) 516-2000 (not toll-free) or by fax at: +1 (215) 516-2555. Assistance is also available at the following embassies and consulates abroad:
More information can be found in IRS Publication 519 and at www.irs.gov.
IRS Internal Revenue Code Section 877A- Expatriation in Detail
As we previously reported (see November 2009 Newsletter), if an individual decides to surrender his or her green card status and depart the U.S., he or she may be subject to severe expatriation tax rules. For example, a person who has been a lawful permanent resident (green card holder) in at least 8 of the previous 15 taxable years before surrendering the green card must complete and file Form 8854 "Expatriation Information Statement" before departing the U.S. He or she must also notify the Department of Homeland Security of the termination of residency.
U.S. citizens or long-term residents who expatriate after June 17, 2008 may be subject to the new expatriation law (mark-to-market regime of section 877A). These expatriates will be treated as having sold all of their property for fair market value on the day before they expatriate and will be subject to tax on the unrealized gain above $600.000. The $600,000 exclusion amount will be annually adjusted for cost of living.
Certain expatriates that renounced their U.S. citizenship or terminated their long-term resident status before June 17, 2008, might be subject to an alternative tax regime under section 877 for 10 years after expatriation, if certain statutory requirements are met.
With some exceptions, the mark-to-market regime will apply to most of an individual's property interests held on the date he or she relinquishes citizenship or terminates permanent residence. In addition, the new law will impose a transfer tax on certain gifts or bequests made to U.S. persons from individuals treated as covered expatriates (see definition below). Items such as deferred compensation, specified tax deferred accounts, and interests in non-grantor trusts are excepted from the mark-to-market regime, but are subject to other rules that may require current payment of tax and/or impose additional reporting requirements.
The new mark-to-market regime will only apply if an individual is a "covered expatriate." A covered expatriate is an expatriate that:
(1) has an average annual net income tax liability for the five preceding years before loss of U.S. citizenship or permanent residence status that exceeds $145,000 (as adjusted for inflation in 2009);
(2) has a net worth of $2 million or more on such date; or
(3) fails, on Form 8854, to certify under penalties of perjury that he or she has complied with all U.S. Federal tax obligations for the preceding five tax years.
The regulations are quite complicated and so it is critical to engage tax counsel along with immigration counsel when considering acquiring U.S. permanent residence or citizenship, and especially in the event one decides to relinquish such status and depart the U.S.
|
| Global Update - India and Switzerland |
India
As a follow-up to previous news about changes in Indian business and employment visa procedures, employers filing for an 'E' Employment Visa are now required to provide a certification statement confirming that the number of foreign workers employed by the Indian Company does not exceed 1% of the total workforce or 20 foreign workers, whichever is less. There are some concessions based on industry, for example for steel and power companies. For those companies, employers may sponsor up to 40 foreign workers total or 1% of their total Indian based workforce, whichever is less, until June 2010. However, as a result of outcries from the business sector and even other governments, the Indian government will be reviewing its visa rules and will revise its Visa Manual to streamline its visa and immigration procedures.
Switzerland
The Swiss Federal Council issued the 2010 quota for the number of non-EU/EFTA nationals who may enter Switzerland to take up long-term employment (B Permit). The number has been reduced to 2,000, which is half the amount from 2009. This quota however only applies to first-time applicants; extensions are not subject to the quotas. |
| Firm News - Announcing New Cooperation |
Cooperation with ICS - International Consular Service
MLH Consular Consulting has recently partnered with the International Consular Service (ICS), based in Berlin and Munich, to provide worldwide visa and document legalization/certification services through the international consulates in Germany. In cooperation with ICS, business and other visas can be secured for over 130 countries in Europe, Africa and Asia. Together, we will be able to better and more efficiently serve the needs of global investors, multinational companies who transfer employees abroad, or individuals with urgent international travel or business requirements. | |
|
For more information, you can go to our website www.consular-consulting.com. Please feel free to forward the newsletter to others who may have an interest in these topics. If you have any questions, comments or suggestions, please e-mail me at mlh@consular-consulting.com.
Sincerely,
|
|
Magdale Labbe Henke
U.S. Attorney-at-Law and
Solicitor of England and Wales (non-practising)
Principal, MLH Consular Consulting
|
|
|
|
|
