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

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

An E-2 move from the Philippines creates two US taxpayers: the company you invest in and, usually within the first year, you. This page sets out both, from official sources, and shows where residence starts.

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

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Quick answer

Is an E-2 investor from the Philippines 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 Philippines also treats you as resident, Article 3 (Fiscal Residence) 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 Philippines: In force since September 6, 1955 (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 3 (Fiscal Residence)
Social security agreement: None on the SSA list

What USCIS looks for

E-2 condition (USCIS)	In short
Nationality	You must be a national of a treaty country; the Philippines's E-2 treaty has been in force since September 6, 1955 (State Department)
Substantial investment	Capital at risk in a bona fide enterprise; no fixed minimum, judged against the cost of the business
Not marginal	The business must be able to earn more than a minimal living for the investor and family
Develop and direct	At least 50% ownership or operational control
Stay	Up to two years at a time, with extensions in increments of up to two years

Sources: State Department treaty countries, USCIS E-2 page.

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).

Putting your money in

Capital or loan? Both fund the E-2 business, but they are reported differently. Amounts the company borrows from a foreign owner, and interest on them, are reportable on Form 5472 while the company has a foreign owner (IRS). Capital stays in the company as equity. Document each transfer from the Philippines so the books and the returns tell the same story.

Taking money out before you are resident

While you still live in the Philippines, 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 Philippines	General treaty rate (IRS Table 1)	Treaty citation
Dividends from a US corporation	25%	Article 11(2)
Interest on a loan you made to the company	15%	Article 12(2)

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 Philippines also treats you as resident, Article 3 (Fiscal Residence) 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).

There is no US social security agreement with the Philippines on the SSA list (SSA), so US social security applies to US work.

Your own filings after the move

FBAR and Form 8938 for accounts you keep in the Philippines; see FBAR and FATCA and Form 8938.
Form 5471 if you keep control of a company in the Philippines: 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 Philippines 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.
Form 1040 on worldwide income every year you are resident, including income from the Philippines.

Treaty and law references

Treaty

The IRS lists the 1976 income tax treaty. General effective date (IRS Table 3): treaty Jan. 1, 1983 (IRS treaty documents for Philippines; treaty text; IRS Table 3).
Residence and tie-breaker: Article 3 (Fiscal Residence).
Article 8 (Business Profits), business profits.
Article 11 (Dividends), dividends.
Article 23 (Relief from Double Taxation), relief from double taxation.

US law and E-2 rules

E-2 status: State Department treaty countries (E-2 with the Philippines in force since September 6, 1955); 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 Philippines on leaving or keeping assets there also apply; a local adviser covers that side.

How we help

Send us the company documents, the funding records and your travel dates. We confirm when you became a US tax resident, prepare the company and personal returns, and coordinate with your immigration lawyer where the records overlap. Gurleen Kaur, CPA licensed in British Columbia and Washington State, signs.

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 Philippines?

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 Philippines 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 Philippines also treats me as resident?

Article 3 (Fiscal Residence) 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.

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