Qualifying the Relationship of the Foreign and U.S. Companies
In order to qualify for the L-1, the foreign (transferor) company where the L-1 employee works must have a “qualifying relationship” with a U.S. (transferee) Company in one of the following ways: one must be either a parent; branch office; affiliate; or subsidiary of the other. Common ownership and control of the two companies is the usual scenario. Without one of these requisite relationships between the two companies, the L -1 will not succeed.
Parent: A firm, corporation, or other legal entity which hassubsidiaries.
Branch Office: An operating division or office of the same organization housed in a different location.
Subsidiary: Four (4) scenarios that qualify as a subsidiary:
Legal entity of which a parent owns, directly or indirectly, more than half (50%) of the entity and controls the entity;or
- Legal entity that owns, directly or indirectly, half (50%) of the entity and controls the entity;or
- Legal entity that owns, directly or indirectly, 50% of a 50-50 joint venture and has equal control and veto power over the entity; or
- Legal entity that owns, directly or indirectly, less than half (50%) of the entity, but in fact controls the entity.
Affiliate: Three (3) scenarios that qualify as an affiliate:
- One of two subsidiaries both of which are owned and controlled by the same parent or individual; or
- One of two legal entities owned and controlled by the same group of individuals, each individual owning and controlling approximately the same share or proportion of each entity; or
- Partnership that is organized in the U.S. to provide accounting services along with managerial and/or consulting services and that markets its accounting services under an international recognized name under an agreement with a worldwide accounting organization that is owned and controlled by the member of accounting firms.