by Edward Beshara, Managing Partner, Beshara PA
Perhaps one of the most important considerations Regional Centers and other EB-5 stakeholders should have when contemplating entering the Brazilian market is that Brazilians are sophisticated and knowledgeable to the various visa options available to them, including the EB-5 Program.
Currently, Brazil has over 211 million people. According to the 2017 World Wealth Report , the number of millionaires in Brazil rose from 148,500 in 2015 to 164,500 in 2016, above the global average of 7.5 percent.
If one looks at the growing number of high net worth individuals in Brazil, it would be safe to assume that Brazil has substantial growth potential as an EB-5 market. At the most recent EB-5 Industry Forum hosted by AILA/IIUSA in Chicago, Mr. Charlie Oppenheim, Chief, Visa Control & Reporting Division at the U.S. Department of State, provided critical updates on visa numbers and retrogression for 2019 and beyond. (Read IIUSA’s comprehensive data report here). In FY2018 the Brazilian EB-5 market used 388 visas making it the sixth largest investor market, accounting for 4% of the total EB-5 visa allocation.
Certainly the Brazilian market has EB-5 investor potential; however, there are some key considerations Regional Centers should note before they decide to enter the Brazilian market:
Who to work with in country: Currently there is no EB-5 agent or broker-dealer infrastructure in place in Brazil, which is contrary to what many Regional Centers may be familiar with that have worked in other markets such as China, South Korea or Vietnam. The important question then becomes, how do you go about finding EB-5 investors from Brazil?
Currently, the most successful approach requires substantial on the ground marketing efforts to develop connections both with investors, financial service providers, attorneys, accountants and tax advisors in country. Perhaps the most tried and successful method for finding investors is to host small-scale events and seminars for the general public or targeting specific and pre-qualified investors. While some groups have attempted to access the market, the lack of a strong local agent/service provider network has made those events less fruitful than similar events hosted elsewhere in the world.
The most logical approach for Regional Centers looking to enter the market would be to work directly with a law firm and other service providers with substantial experience and expertise in working with the nuances of the Brazilian market. They also would be familiar with the EB-5 process as well as the other visa options available to investors from Brazil. An analysis of the alternative visa options and ultimately choosing the EB-5 Regional Center process may be the best approach for the potential investors.
Understanding why a Brazilian desires to pursue EB-5: Brazilians share the same motivations to invest as many of their counterparts across the world. The most common reasons include a stable U.S. economy, a rising valuation of the American dollar, the decrease in valuation of the Brazilian Real, reliable legal system, a high-quality education system for their children, prospects for employment, and a high standard of living.
In addition, the unstable economic and political infrastructures of Brazil will lead to more Brazilians wanting to leave Brazil and relocate to the U.S. Based on the current valuation of the Brazilian Real, it is prudent for the Brazilian investor to lock in the best currency exchange rate before the transfer. The Brazilian economy is currently in a recovery phase and the Real more likely will hold its current value.
Best Practice Considerations: When working in the Brazilian market, it is significantly important for the EB-5 immigration attorney and their Brazilian staff to have the expertise in advising and providing U.S. immigration due diligence to the Brazilian investor. That is, advising on the EB-5 immigration process, including information and documentation of the Regional Center project to be filed with the USCIS.
Transfer of Funds: It is of the utmost importance for all Regional Centers to ensure that they have a strong understanding of currency transfer rules, regulations and restrictions for any country they are working in and this is no different for Brazil. The Regional Center must ensure that the investor is transferring funds out of Brazil with a financial institution licensed by the Central Bank of Brazil. There are specific guidelines that these licensed institutions need to follow in order to authorize a transfer out of Brazil. It is recommended that the financial institution has an understanding of EB-5 specific requirements in order to avoid delays in clients’ transactions.
The transfer of funds from Brazil are dependent upon the source of these funds. Corporate and private individuals are considered two separate entities. For example, a Brazilian corporation would need to have a connection itself with the U.S. in order for funds to leave the corporate account in Brazil directly to the U.S. Since the EB-5 petitioner is a private individual, then funds would need to be sourced from the private individual and funds will need to leave the private individual’s account in Brazil. Therefore, distribution of profit from corporate to the private individual may have to happen in Brazilian territory prior to such individual being able to transfer funds abroad.
The EB-5 Regional Center project timeline goal for the Brazilian investor is once the investor has authenticated their source of personal investment funds, the investor will then immediately transfer their funds from Brazil to their personal account and then to the project escrow account. With the proper planning, this transfer can be accomplished within two (2) business days. We recommend that potential petitioners start seeking confirmation of their authorization to transfers funds abroad in advance. For clients working with major currencies and/or places not considered high-risk jurisdictions, then same day transfers can occur
With the right analysis and advice from experienced professionals with EB-5 expertise, the Brazilian investor can pursue immigration, tax planning, and options for entry into the U.S. Concurrently, they can initiate the legal process for obtaining the EB-5 immigrant conditional permanent residency status for themselves and each qualifying family member.
