E-1 for services: when consulting and software count as trade

Say "treaty trader visa" and most people picture pallets, bills of lading and customs stamps. The E-1 covers that case, but it has long since stopped being a visa just for importers. The statute expressly mentions trade in services and trade in technology, and the regulations list engineering, management consulting, accounting and technology transfer as items of trade. For an engineering firm, a consultancy or a software company from Europe, the E-1 can therefore be exactly the right route. Whether it fits, though, depends not on your industry but on how your business flows between the two countries. This page shows where the line is drawn.

1What the law means by trade

The Immigration and Nationality Act grants the E-1 to a national of a treaty country who comes to the US to carry on substantial trade, and it adds in parentheses what that includes: trade in services and trade in technology, principally between the US and the country of the applicant's nationality. So the most important question for service providers is answered in the statute itself. You don't have to ship any goods across the Atlantic.

The immigration agency's regulation gets more specific. Items of trade include, without the list being exhaustive, goods, services, international banking, insurance, money, transportation, communications, data processing, advertising, accounting, design and engineering, management consulting, tourism, technology and its transfer, and some news-gathering activities. Goods are defined there as tangible commodities with intrinsic value, and services as legitimate economic activities that provide something other than tangible goods.

Consulates work from their own, shorter list in the State Department regulations, which is also not exhaustive. The Foreign Affairs Manual sums up the approach in one sentence every service provider should remember: essentially any service commonly traded in international commerce qualifies.

2Three tests: exchange, border, item of trade

Before industries even come into it, every E-1 application faces the same three requirements. The Foreign Affairs Manual lists them like this: trade must be an exchange, it must be international, and it must involve qualifying activities.

A genuine exchange. Something of value must flow between the two treaty countries in return for payment, and that flow must be traceable and identifiable. Title to the item of trade passes from one party to the other. With goods, that goes without saying. With a service, it means a client receives a specific service and pays for it, and both can be shown in contracts, invoices and payments.

A border. The exchange must take place between the US and your treaty country. If you only serve the American market from the US, that is domestic trade, and the E-1 does not cover it, however successful you are.

An item of trade. Whatever is exchanged must be among the qualifying items. The table below shows what both regulations name.

There is also a timing condition: the trade must already be underway. You can't apply for the E-1 in order to go looking for clients in America. Binding contracts that call for an immediate exchange do, however, count as existing trade.

3Goods: the classic case

Trade in goods is the easiest to document. A European manufacturer makes machine parts and sells them to its own US distribution company, which resells them to American customers. Or a European trader buys in the US and sells into Europe. Either way, goods cross the border, and the paperwork creates itself: purchase orders, invoices, bills of lading, customs declarations, warehouse receipts, proof of insurance, letters of credit.

An online seller in Europe selling to American customers through a major marketplace is also trading in goods. What matters is that the number of transactions and the direction are right: many sales over time, with the larger share between your treaty country and the US. How to calculate that is explained on the page about the E-1 requirements.

Services play a role in trade in goods too. Installation, maintenance and training that come with a delivered machine are part of the deal. For the E-1, though, what counts is what your company actually sells and invoices.

4Services: when the service itself is the product

For service providers, one sentence from the Foreign Affairs Manual matters more than anything else on this page: for a service to count as E-1 trade, providing it must be the purpose of the business, and the service itself must be the item the business sells to clients. A consultancy sells consulting, an engineering firm sells design, an agency sells advertising. That fits. An accounting department that only serves its own group, or a managing director commuting between two companies, sells nothing to clients.

The Foreign Affairs Manual gives international banking, insurance, transportation, tourism, communications and news gathering as recognized examples, and stresses that these are only examples. It even explicitly reminds officers that in an economy shifting ever more toward services, many service-based business models can benefit from the E-1, whether they appear on the list or not.

How does a service cross a border? Typically in one of three ways. The company in the treaty country provides services to clients in the US. The US company provides services to clients in the treaty country. Or the US subsidiary buys services from the parent company, such as design, development or project management, and resells them in the US. In every case you must be able to show who delivered what to whom, and who paid for what.

The Foreign Affairs Manual spells out one trap: the fact that revenue from services performed in the US ends up in an account in the treaty country does not by itself prove an exchange if that money supports no business activity there. If you work in America for Americans and wire the profit home, you have generated US revenue, but you haven't created trade between two countries.

5Technology, licenses and software

Technology and its transfer are expressly on the immigration agency's list. This covers technical knowledge, processes or rights that a company passes across the border and gets paid for: licenses for patents or processes, transfer of know-how to a manufacturing partner, technical documentation, contract development work.

Software as a service, meaning a subscription platform, is not named word for word in either regulation. That doesn't rule it out; it simply has to pass the same tests as any other service: a traceable exchange for payment, between the US and your treaty country, with many transactions over time. A European software company that sells licenses to numerous US businesses and bills monthly has strong evidence for this. A US company that sells the same software only to American customers and exchanges nothing with the parent company has, in E-1 terms, only domestic business.

With technology, it pays to structure contracts and invoices so the exchange is visible. An intercompany license that is actually paid, or development work the US subsidiary orders from the parent company, is trade. How such services are properly charged between parent and subsidiary for tax purposes belongs in the tax plan, not just in the visa file.

6How trade in services is counted

Trade is substantial when it ensures a continuous flow between the US and the treaty country. The regulation has numerous transactions over time in mind. A single transaction is never enough, however long it runs or however much it is worth. There is no minimum amount per transaction. Monetary value counts, but numerous transactions of higher value carry more weight. For smaller companies, it is a plus if the trade earns enough to support the trader and their family.

For service providers, this means one big two-year project is weaker for the E-1 than many ongoing engagements with regular invoices. If you work on a project basis, you should be able to show that projects recur and that billing runs through many individual items.

Then there is the 50 percent rule. More than half of the trader's international trade must take place between the US and the treaty country. It is measured at the level of the legal entity acting as the trader. For a branch, that is the entire company it belongs to; a subsidiary is assessed on its own. A consultancy with clients in many countries can therefore be better placed with a US subsidiary than with a branch, if the subsidiary trades mainly with the parent company and clients in the home country. The detailed calculation is in the E-1 requirements.

7Evidence that works for service businesses

The State Department's document list for proving trade sounds like it was written for goods, but it contains exactly what a service business needs: service contracts, client lists, accounts receivable and accounts payable. On Form DS-156E, you tick services and technology as the type of business and enter imports and exports in the trade table, with dollar value and number of transactions. For services, these are the services billed between the US and the treaty country.

Your file becomes convincing when it shows the flow in both directions:

• Master agreements and individual orders with US clients or between parent and subsidiary, with a description of services and fees.
• Invoices in sufficient number, with date, service and amount, plus the matching incoming payments.
• A breakdown of your total international revenue by country that shows the 50 percent share.
• Proof of performance such as project reports, acceptance records, license certificates or timesheets.

How to build and submit the file is explained under Applying for the E-1.

8What does not count as trade

Some setups fail again and again, no matter how well the business is doing:

• Purely domestic business. If you build a market in the US without anything being exchanged between the countries, you are not engaged in E-1 trade.
• Trade that has yet to happen. The E-1 is not a visa for finding clients.
• A single large deal. Even a contract worth millions will not carry the E-1 if it remains the only one.
• Internal activities without clients. Administration, controlling or management for your own group are not services sold.
• Journalism. For representatives of foreign media, the consulate first looks at the I visa for media representatives.

A special rule for dual citizens: if you acquired a citizenship through an investment and are applying for the E visa for the first time, the law requires you to have lived in that country continuously for at least three years. For most European citizens who hold their citizenship by birth, this makes no difference.

9When the E-1 is not a fit

Many service businesses realize during this review that their business is international, but not mainly with America, or that their US business has yet to be built. Then the E-1 is the wrong route, and that is not bad news. If you want to build a company in the US and invest capital in it, look at the E-2 investor visa. If you own a company in your home country that can send you over, look at the L-1. And if you want to send employees, read E-1 for employees. Which US company fits which visa, whether a corporation or something else, is set out in writing in the visa roadmap for company formation. For an overview of the whole visa, see the guide to the E-1 treaty trader visa.

In short

• The law explicitly names trade in services and technology; the regulations list, among others, engineering, management consulting, accounting, advertising, data processing and technology transfer.
• All trade needs three things: a real, traceable exchange for payment, a border between the US and your treaty country, and an item of trade that changes hands.
• For services, the service itself must be the product your company sells.
• What counts is many transactions over time; more than 50 percent of international trade must be with the treaty country.
• Purely domestic revenue in the US is not trade, even if the profit flows home.

How we help you

• Visa Roadmap for Company FormationFormation and visa in one plan, so the company carries the visa.
• Visa RoadmapIn writing: which visa fits you and your family, prepared with the immigration attorney on the firm's team.
• Visa and Green Card ConsultationWhich route to the USA fits you, settled in one conversation.
• Form a CorporationThe US corporation (Inc) for growth, investors and your visa.
• Tax structureA clean structure between parent company and US subsidiary, or between you and your US company, coordinated with your accountant.