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

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

An E-2 move from the United Kingdom 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
Request a QuoteResidence Rules

Quick answer

Is an E-2 investor from the United Kingdom 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 United Kingdom also treats you as resident, Article 4 (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 United Kingdom
In force since July 3, 1815 (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 (Residence)
Social security agreement
Yes, since January 1, 1985

E-2 from the United Kingdom: the basics

The United Kingdom is on the State Department list of E-2 treaty countries; the E-2 treaty with the United Kingdom entered into force on July 3, 1815 (State Department). USCIS sets out the main conditions (USCIS):

  • you must be a national of the treaty country;
  • you must have invested, or be actively investing, a substantial amount of capital in a real, operating US enterprise. USCIS does not state a fixed minimum: the amount is judged against the total cost of the business, and the lower the cost, the higher the proportion expected;
  • the enterprise may not be marginal, meaning it must have the capacity to earn more than a minimal living for you and your family;
  • you must be coming to develop and direct it, shown by at least 50% ownership or operational control.

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

ChoiceYearly federal filingSource
US corporationForm 1120; plus Form 5472 while 25% or more is owned by a foreign personIRS, IRS
Single-member LLCDisregarded by default; Form 5472 with a pro forma 1120 while the owner is a foreign personIRS
LLC with two or more ownersPartnership by default (Treas. Reg. 301.7701-3): Form 1065IRS
Any new US business set up by a foreign personBE-13, generally within 45 daysBEA rule

Residence clarity for E-2 investors

QuestionAnswer for an E-2 investor from the United Kingdom
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 yearUsually dual-status: nonresident before the residency starting date, resident after
Resident in both countries?Article 4 (Residence) of the treaty decides; Form 8833 discloses the position
Social securityAgreement in force since January 1, 1985

Sources: IRS Pub 519, Form 8833, SSA.

Capital or loan

The money you bring from the United Kingdom 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.

US withholding on payments to the United Kingdom

Timing matters. Paid to you as a nonresident living in the United Kingdom, 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 the United KingdomGeneral 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 11(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.

Once you are resident: the yearly list

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

Treaty

  • The IRS lists the 2001 income tax treaty, signed July 24, 2001, amended by a protocol and exchange of notes listed for 2001. General effective date (IRS Table 3): treaty Jan. 1, 2004 (IRS treaty documents for United Kingdom; treaty text; IRS Table 3).
  • Residence and tie-breaker: Article 4 (Residence).
  • Article 7 (Business Profits), business profits.
  • Article 10 (Dividends), dividends.
  • Article 24 (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 United Kingdom in force since July 3, 1815); 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 United Kingdom 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

How much must an E-2 investor from the United Kingdom 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 the United Kingdom 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 United Kingdom also treats me as resident?

Article 4 (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.

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

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