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

E-2 Investors From South Korea: Tax on the Business, the Investment and You

E-2 investors from South Korea often assume a nonimmigrant visa means nonresident for tax. It usually does not. Here is how the company, the investment and your own residence are taxed.

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

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Quick answer

Is an E-2 investor from South Korea 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 South Korea also treats you as resident, Article 3 (Fiscal Domicile) 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 South Korea: In force since November 7, 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 3 (Fiscal Domicile)
Social security agreement: Yes, since April 1, 2001

The E-2 treaty with South Korea

The E-2 route for South Korea rests on a treaty that has been in force since November 7, 1957 (State Department list). According to USCIS, the investor must be a Korean 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.

Which entity, which filings

Choice	Yearly federal filing	Source
US corporation	Form 1120; plus Form 5472 while 25% or more is owned by a foreign person	IRS, IRS
Single-member LLC	Disregarded by default; Form 5472 with a pro forma 1120 while the owner is a foreign person	IRS
LLC with two or more owners	Partnership by default (Treas. Reg. 301.7701-3): Form 1065	IRS
Any new US business set up by a foreign person	BE-13, generally within 45 days	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 South Korea so the books and the returns tell the same story.

Ongoing US filings for an investor from South Korea

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 South Korea.
FBAR and Form 8938 for accounts you keep in South Korea; see FBAR and FATCA and Form 8938.
Form 5471 if you keep control of a company in South Korea: 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 South Korea can be PFICs; see PFIC and Form 8621 for how the rules work.

Residence clarity for E-2 investors

Question	Answer for an E-2 investor from South Korea
Are E-2 days excluded?	No. E-2 is not an exempt-individual category in IRS Pub 519
When do I become a US tax resident?	When you meet the substantial presence test (31 days this year, 183 weighted days over 3 years), usually in your first full year
The first year	Usually dual-status: nonresident before the residency starting date, resident after
Resident in both countries?	Article 3 (Fiscal Domicile) of the treaty decides; Form 8833 discloses the position
Social security	Agreement in force since April 1, 2001

Sources: IRS Pub 519, Form 8833, SSA.

US withholding on payments to South Korea

Timing matters. Paid to you as a nonresident living in South Korea, a dividend or interest from the US company is subject to US withholding (30% by statute, lower under a treaty, IRS Pub 515); paid after you become a US resident, it is simply part of your worldwide income.

Payment to a resident of South Korea	General treaty rate (IRS Table 1)	Treaty citation
Dividends from a US corporation	15%	Article 12(2)
Interest on a loan you made to the company	12%	Article 13(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.

Treaty and law references

Treaty

The IRS lists the 1976 income tax treaty, signed June 4, 1976. General effective date (IRS Table 3): treaty Jan. 1, 1980 (IRS treaty documents for Korea; treaty text; IRS Table 3).
Residence and tie-breaker: Article 3 (Fiscal Domicile).
Article 8 (Business Profits), business profits.
Article 12 (Dividends), dividends.
Article 5 (Relief from Double Taxation), relief from double taxation.

US law and E-2 rules

E-2 status: State Department treaty countries (E-2 with South Korea in force since November 7, 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 South Korea on leaving or keeping assets there also apply; a local adviser covers that side.

How we help

We set up the tax side of an E-2 move from South Korea: the company's yearly returns and Form 5472, the BE-13, and your dual-status first year and resident returns after it. Gurleen Kaur, CPA (BC and Washington), signs. You get a written quote before any work.

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

How much must an E-2 investor from South Korea invest?

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 South Korea 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 South Korea also treats me as resident?

Article 3 (Fiscal Domicile) 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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