For Dutch nationals investing in a US business on an E-2 visa

E-2 Investors From The Netherlands: Tax on the Business, the Investment and You

Investing in a US business from the Netherlands on an E-2? The visa is about immigration, but the tax questions start the day you fund the company: which entity, how the money goes in, and when the US starts taxing you on everything.

E-2 treatyForm 1120Form 5472BE-13Tax residence
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Quick answer

Is an E-2 investor from the Netherlands a US tax resident?

Usually yes, once living in the US for most of the year. E-2 is not an exempt-individual category under IRS Pub 519, so your days count under the substantial presence test, and a resident is taxed on worldwide income. If the Netherlands also treats you as resident, Article 4 (Resident) of the treaty breaks the tie. Your company files its own returns: Form 1120, and Form 5472 while it is foreign-owned.

Prepared by Illuminous Accounting · Sources checked November 11, 2026

At a glance

E-2 treaty with Netherlands
In force since December 5, 1957 (State Department)
Company
US corporation (Form 1120) or LLC; Form 5472 while foreign-owned
Your tax residence
Substantial presence test; E-2 days are not excluded
Treaty tie-breaker
Article 4 (Resident)
Social security agreement
Yes, since November 1, 1990

The E-2 treaty with the Netherlands

The E-2 route for the Netherlands rests on a treaty that has been in force since December 5, 1957 (State Department list). According to USCIS, the investor must be a Dutch national (for this treaty), must put a substantial amount of capital at risk in a real US business, must not be running a marginal enterprise, and must hold at least 50% or operational control. There is no published minimum amount (USCIS).

Immigration questions belong with your immigration lawyer. We handle the tax side: the company, the money you put in, and your own US returns.

The company: corporation or LLC

Most E-2 businesses are a US corporation or an LLC.

  • Corporation: files Form 1120 every year, with or without taxable income (IRS). While a foreign person owns 25% or more, it also files Form 5472 for transactions with related parties, including loans to or from you; the penalty for missing it is US$25,000 (IRS).
  • LLC: classified under Treas. Reg. section 301.7701-3. One owner means a disregarded entity and two or more a partnership, unless it elects corporate treatment (IRS).
  • BE-13: generally due within 45 days when a foreign person sets up or buys a US business (BEA rule).

Capital or loan

The money you bring from the Netherlands can go in as capital (shares or membership interest) or as a loan to the company. For tax reporting, the difference matters: while the company is foreign-owned, loans from you, the balance outstanding and any interest are related-party transactions on Form 5472 (IRS). Keep a loan agreement and bank records for every transfer.

Taking money out before you are resident

While you still live in the Netherlands, dividends and interest from your US company are not reported on a US return the usual way: the company withholds, at 30% unless the treaty gives a lower rate (IRS Pub 515).

Payment to a resident of the NetherlandsGeneral treaty rate (IRS Table 1)Treaty citation
Dividends from a US corporation15%Article 10(2)
Interest on a loan you made to the company0%Article 12(1)

Rates from IRS Tax Treaty Table 1 (Rev. May 2023). The IRS notes the table is not a complete guide to eligibility; the treaty's conditions, including any limitation on benefits, must be met. Once you are a US resident these rates no longer apply to you.

Residence: when the US taxes you on everything

E-2 status does not make you an exempt individual: IRS Pub 519 limits that to foreign government-related individuals, teachers and trainees on J or Q visas, students on F, J, M or Q visas and certain athletes (IRS Pub 519). So your days in the US count under the substantial presence test in Code section 7701(b), and most E-2 investors become US tax residents in the first year they live here. That first year is usually dual-status.

If the Netherlands also treats you as resident, Article 4 (Resident) of the treaty is the tie-breaker; relying on it on a US return needs Form 8833 under Treas. Reg. section 301.7701(b)-7 (IRS).

For social security, the US and the Netherlands have an agreement in force since November 1, 1990 (SSA); a certificate of coverage can keep you in one system (Pub 519).

Once you are resident: the yearly list

  • Form 1040 on worldwide income every year you are resident, including income from the Netherlands.
  • FBAR and Form 8938 for accounts you keep in the Netherlands; see FBAR and FATCA and Form 8938.
  • Form 5471 if you keep control of a company in the Netherlands: a US person controlling more than 50% of a foreign corporation is a Category 4 filer, with a US$10,000 penalty per year for not filing (IRS). See Form 5471.
  • Funds held in the Netherlands can be PFICs; see PFIC and Form 8621 for how the rules work.
  • Once you are a US resident you are no longer a foreign person for Form 5472, which the IRS defines as an individual who is not a citizen or resident (IRS). Whether the company still files depends on who else owns it.

Where the rules come from

Treaty

  • The IRS lists the 1992 income tax treaty, signed December 18, 1992, amended by a 2004 protocol. General effective date (IRS Table 3): treaty Jan. 1, 1994; protocol Jan. 1, 2005 (IRS treaty documents for Netherlands; treaty text; IRS Table 3).
  • Residence and tie-breaker: Article 4 (Resident).
  • Article 7 (Business Profits), business profits.
  • Article 10 (Dividends), dividends.
  • Article 25 (Methods of Elimination of Double Taxation), relief from double taxation.

US law and E-2 rules

  • E-2 status: State Department treaty countries (E-2 with the Netherlands in force since December 5, 1957); USCIS E-2 Treaty Investors, 8 CFR 214.2(e).
  • Tax residence: Code section 7701(b) (Pub 519). Treaty residence: Treas. Reg. section 301.7701(b)-7 and Form 8833 (IRS).
  • Company filings: Code section 6038A and Treas. Reg. section 1.6038A-1 for Form 5472 (IRS); Treas. Reg. section 301.7701-3 entity classification (IRS); 15 CFR 801.7 BE-13 (eCFR).
  • Foreign companies you control: Form 5471 (IRS).

The tax rules of the Netherlands on leaving or keeping assets there also apply; a local adviser covers that side.

How we help

Gurleen Kaur, CPA licensed in British Columbia and Washington State, prepares the E-2 company's returns (Form 1120 or the LLC filings, Form 5472, BE-13) and your own first-year and ongoing US returns. Immigration filings stay with your lawyer. Written quote first.

E-2 investors from other countries

All countries: E-2 investor tax by country. From Canada: E-2 taxation for Canadian founders. Moving without an E-2: moving to the US, by country.

Common questions

What counts as a substantial E-2 investment from the Netherlands?

USCIS does not set a fixed minimum. The investment must be substantial in relation to the total cost of the business, and the lower the cost, the higher the proportion expected. The enterprise may not be marginal. Your immigration lawyer advises on this.

Does an E-2 investor from the Netherlands pay US tax on worldwide income?

Usually yes, once resident. E-2 is not an exempt-individual category, so the substantial presence test applies, and a US resident is taxed on worldwide income from the residency starting date.

What if the Netherlands also treats me as resident?

Article 4 (Resident) of the treaty decides residence for treaty purposes; claiming it on a US return needs Form 8833.

Does the E-2 company file Form 5472?

A US corporation that is 25% or more foreign-owned files Form 5472 with Form 1120, and a single-member LLC files it while its owner is a foreign person. Once you are a US resident you are no longer a foreign person for this purpose.

Sources

Every rule and figure on this page links to the IRS, CRA or other official source it comes from. Amounts change; we re-check them before each engagement.

Gurleen Kaur, CPA licensed in British Columbia and Washington State. Last updated November 11, 2026. This page is general information, not tax or legal advice for your situation.

Related guides: E-2 for Canadian founders, For immigration lawyers, Moving from The Netherlands.

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