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

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

Investing in a US business from Turkey 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 Turkey 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 Turkey 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 Turkey: In force since May 18, 1990 (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: None on the SSA list

The E-2 treaty with Turkey

The E-2 route for Turkey rests on a treaty that has been in force since May 18, 1990 (State Department list). According to USCIS, the investor must be a Turkish 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.

Structuring the E-2 business from Turkey

The structure you choose in the US decides the filings, not the visa. A corporation files Form 1120 every year (IRS). An LLC follows Treas. Reg. section 301.7701-3: disregarded with one owner, a partnership with more, or a corporation if it elects (IRS). Foreign ownership adds Form 5472 and its US$25,000 penalty (IRS), and a new business set up by someone from Turkey generally needs a BE-13 within 45 days (BEA rule).

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 Turkey 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).

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

Funding the business

Before you wire money from Turkey, decide whether it is equity or a loan and record it that way. While a foreign person owns the company, loans from the owner and interest paid on them are related-party items for Form 5472 (IRS). Clean records also help with the E-2 file, which your immigration lawyer manages.

Taking money out before you are resident

While you still live in Turkey, 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 Turkey	General treaty rate (IRS Table 1)	Treaty citation
Dividends from a US corporation	20%	Article 10(2)
Interest on a loan you made to the company	15%	Article 11(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.

Once you are resident: the yearly list

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

Sources for E-2 investors from Turkey

Treaty

The IRS lists the 1996 income tax treaty, signed March 28, 1996. General effective date (IRS Table 3): treaty Jan. 1, 1998 (IRS treaty documents for Turkey; treaty text; IRS Table 3).
Residence and tie-breaker: Article 4 (Resident).
Article 7 (Business Profits), business profits.
Article 10 (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 Turkey in force since May 18, 1990); 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 Turkey 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 Turkey: 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

What counts as a substantial E-2 investment from Turkey?

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 Turkey 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 Turkey 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.

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