Virtually every economically developed country has unique immigration programs for skilled workers and business entrepreneurs. These programs are offered for obvious reasons; increasing the skill level of the country’s workforce, enhancing its competitive reputation for quality products, initiating the formation of new businesses and stimulating the local economy. To attract the best immigrants, countries enhance and modify their visa programs on a regular basis as Canada has most recently.
Over the past 25 years advising companies entering the U.S., a question that comes up frequently is that of visa requirements and paths to citizenship. Typically, I advise my clients on the current U.S. rules alone but the recent news of Canada modifying its visa program prompted me to look at the question from a different perspective, how does the prospective immigrant choose a country? I wanted to avoid the complexity of politics (e.g., “Give us your rich, your educated”, one criticism of the new rules) so I looked at it from a financial perspective, comparing Canada’s program with the U.S. EB-5 Immigrant Investor Visa, since both are permanent visas and they both provide a path for citizenship.
The new Canadian Immigrant Investor Venture Capital program effective January 2015 replaces a 1986 program that was suspended in 2012. The old program offered visas to business people with a net worth of at least $1.6 million who were willing to lend $800,000 to the Canadian government for a term of five years. The new program allows a foreign (to Canada) investor and their family to establish permanent residency and a fast track to citizenship. The requirements include:
- They must have a net worth of at least $10,000,000 that was legally obtained. This net worth must have been accumulated through the operation, control or management of a profitable business, either industrial or commercial.
- They must be willing and able to make a non-guaranteed investment of $2,000,000 over 15 years.
- They must invest in a startup or high growth potential business in Canada.
The U.S. EB-5 Immigrant Investor Visa has been in place since 1990 and is annually re-authorized at which time changes are typically introduced. For example, originally, individuals were required to create a new business but this requirement was changed to allow investment in a new or existing business, further modified to be a “troubled business” and expanded to include 3rd party managed investments. In all cases the visa comes with job creation requirements. The requirements are:
- There is no net worth requirement.
- Individuals must invest $1,000,000 (or at least $500,000 in a “Targeted Employment Area” – high unemployment or rural area).
- Create or preserve at least 10 jobs for U.S. workers excluding the investor and their immediate family.
From a purely financial perspective, cost of entry and size of economy, the U.S. offers a far better deal than Canada. Other factors favoring the U.S. include robust and thriving capital markets, plethora of independent investors, educational system producing highly skilled workers, a country that is a technology leader, and U.S. dollar, a prominent world currency.
You might also want to read my newsletter on Entering the U.S. Market for a broader discussion of the top ten concerns of a business entering the U.S.