Current EB-5 Market in Brazil
Despite having Latin America’s largest economy and largest
population (over 250,000 millionaires reside in Brazil), past
penetration of the EB-5 visa has been incredibly low (less than
50 I-526 applications were received by USCIS in FY 2014).
Sourcing the small number of Brazilian EB-5 investors is
more realistic for smaller EB-5 raises, or, alternatively, for individual investors being referred to EB-5 regional center projects
that require a large raise from China, but can accept individual
investors from other countries.
Reasons for this low penetration center around two
important factors:
i) Until recently, booming economic conditions across Brazil
have not been conducive to attracting EB-5 investors;
ii) There is a complete lack of awareness and understanding
about the EB-5 program. As opposed to other
important EB-5 markets, particularly China, there
is a complete lack of a migration agent structure
in Brazil. Therefore, regional centers have had
to independently spend significant amounts
of time, energy and money to generate a basic
understanding about the key requirements of the
program, timelines and expected outcomes.
Approaching the Market
Whereas the Chinese market has a well-developed network of
migration agents, no such EB-5 agent or broker infrastructure
exists in Brazil. EB-5 projects that require a definite EB-5 raise,
whether it is $500,000 or $50 million or more, can enter into
an agreement with a Chinese agent or broker and be assured of
the supply of EB-5 investors within a definite period of time.
However, this reliable source of Brazilian investors from
agents or brokers does not exist. How does one approach the
Brazilian market?
Hotel seminars that are marketed broadly to local communities are not very effective and rarely lead to new investors,
because they attract potential investors that are at the very
beginning of the educational process about the EB-5 program.
These investors are months, if not years, away from making a
decision, and regional centers can spend a lot of time educating
them about the U.S. immigration system without any return.
Most importantly, truly qualified investors in Brazil have typically already researched the EB-5 program, compared to other
visa options like the L-1 and E-2 visas, and decided to move
forward with the EB-5 visa option. Their final decision typically
involves which U.S. immigration law firm and approved regional center to work with.
The U.S. global taxation regime is also an obstacle. Brazil’s
high net-worth investor community enjoys one of the lowest
effective tax rates around the world. In fact, the top income
tax rate is 29 percent; the inheritance tax (also known as the
death tax) ranges from four to eight percent and the tax rates
on company profit dividends to shareholders could not be any
lower at zero percent. While most Brazilians considering EB-5
have purchased real estate properties in the United States, very
few of them are aware of the global tax on worldwide income
requirement that comes with being a United States green card
holder. Therefore, being able to provide access to proven U.S.
pre-immigration tax experts, ideally with Portuguese language
capabilities, will help accelerate your EB-5 marketing efforts.
Choices for Brazilians
They can direct their own U.S. business
Brazilians have been traveling to the United States as tourists
and doing business for decades. They are of the opinion that
Brazil and the United States both recognize a legal system
which enforces contracts and the traditional European systems
of doing business. That given, Brazilian investors, more so than
their Chinese counterparts, are often willing to establish their
own U.S. business and personally direct their U.S. operations.
In this context the Brazilian investor may desire to invest their
EB-5 investment funds into their own U.S. business and personally direct its operations. However, even though this may
be the intent of Brazilian investors, they will not be able to live
by, work or direct their U.S. EB-5 operation until their I-526
petition and their conditional permanent residency visa have
been approved.
Brazilians by their very nature are an optimistic people - t