{4:23 minutes to read} The L1 visa is also called the Intra-Company Transfer. It is designed for multi-national companies to use in two contexts:

— Foreign companies that recently set up a US subsidiary or branch office in the US (the most common type)

— Existing US companies with foreign subsidiaries or branches that need to transfer personnel back and forth

First, a US company is set up as a subsidiary of a foreign company. At least 50% of the US company must be owned by the foreign entity. Assuming that requirement is met, the foreign company can then transfer managers, executives and other employees who are considered to have what’s called “specialized knowledge” to the US to work for the US subsidiary.

If the US company has existed for less than one year when the application for an L1 visa is submitted, which happens very often in these cases, then they are classified as “new office” visas, which last one year. When the US company has existed for more than one year, a three-year visa can be applied for

It is important to stress that Immigration Service has much higher expectations for renewing L1 visas after one year than they do for the original petition.

The first application should include all the information, documents, and projected numbers for the new company, or the current numbers for an established company. For new companies, the goal is to build a strong foundation for future renewals—as well as for renewals for other L-1 employees.

Here are the top 5 things to do when renewing an L1 visa:

1.Stick to the plan.

When a business applies for an L1, it is usually required submit a business plan with five-year projections for the new US company. That includes hires, jobs that will be created, and revenue. If the business projects revenue and costs for the first year, it should make sure at the outset that there is ample funding to cover those operating costs.

This is vital because the expectations at the renewal stage are higher than at the original granting of the visa. USCIS will be examining the company to determine whether it is self-sustaining. That means it should have have enough money left over after one year to be able to cover all operating costs, including the salaries for the employees that were transferred, the new employees, and the projected employees.

If you want to be very effective with the renewal application, you’ll be able to compare real life numbers for the first year with the projections so that it’s in line with, or exceeding, the projections in the original business plan.

2.Pay the salary you were supposed to pay the managers and executives.

Pay stubs are examined to ascertain continuity and maintenance of status. If those pay stubs reflect a much lower salary, it not only risks making it look like a company is not able to actually cover its operating costs, but it also could be a red flag for potential infringement of labor laws. If a company starts out saying that it intends to pay a manager $75,000 a year, USCIS is going to expect to see proof that the individual received that compensation.

3.Keep things in-house.

A big red flag comes up if a company is somehow paying salaries from the foreign company and not from the US company. It is a common ploy to do so in an effort to minimize taxes, but such a tactic endangers the renewal process significantly.

4.Keep profits in the US company.

Re-investing in the US venture puts it in a position of strength when the time comes to renew the L1 visa. Cash flow, bank accounts, etc. should all show that the revenue is staying in the US company. When examining a case for renewal, USCIS is keen on weeding out companies that are merely a means to make a foreign company more profitable. If the US economy is not benefitting from the presence of a subsidiary of a foreign company operating within the US, USCIS is less likely to approve the renewal. Contracts, vendor agreements, and accounts payable should all based from the US company and not the foreign one. If a company is using its US subsidiary as a conduit to handle money, it will not be looked upon favorably.

5.Hire American workers as W-2 employees.

It is preferable to use W2 staff members—not 1099 contract workers. Many companies have tendencies to outside contract on a project-by-project basis, but the immigration service expects companies to utilize full-time W2 employees.

For any L-1 visa or other business/investor visa questions, please contact Steve Maggi at smaggi@smalawyers.com

 

Steve Maggi, Esq.
SMA Law Firm
U.S. Immigration & Consular Law
212-402-6885