News
News
Individual One-On-One Webinars USA
H. Roske & Associates LLP, 3rd December 2021.Exclusively for your company.
From company formation to corporate risk management.
Choose your own topic.
As part of the German American Trade Association's webinars, we now offer webinars exclusively for your company. Choose your own topics and a desired date and we will organize a webinar tailored to your needs via Microsoft Teams on various topics concerning market entry in the USA or corporate risk management.
We support German speaking companies in their entry into the American market, these would be the most important topics first of all:
Company Formation | Henry Roske | Details
Capitalization & Taxes | Henry Roske | Details
Contractual Aspects / Sales Structure & Reps | Henry Roske | Details
Tasks for Product Liability Protection | Henry Roske | Details
Visa & Work Permits | Moritz Masberg | Details
Employment & Further Practical Aspects | Henry Roske | Details
Launch of Beauty and Personal Care Products in the USA | Moritz Masberg | Details
Not to be underestimated for companies with existing US business, is the entire area of corporate risk management to ensure liability protection:
Introduction to U.S. Risk Management | Henry Roske | Details
Product Liability Protection | Henry Roske | Details
Avoidance of Piercing the Corporate Veil | Henry Roske | Details
Contractual Risk Management | Henry Roske | Details
Corporate Governance | Henry Roske | Details
Representations and Warranties | Henry Roske | Details
Employment | Henry Roske | Details
UCC Liens | Henry Roske | Details
Please register directly on the GATA website or send us a message via the contact form below.
U.S. Government Publishes Effective Date for New Entry Regulations
H. Roske & Associates LLP, 20th October 2021.It’s November 8, 2021! The U.S. government has now followed up on its initial comments last month and announced that from this date on, all travelers will once again be allowed to enter the country as long as they
a) Are fully vaccinated
b) Have a valid visa or ESTA
c) Have a negative Covid test (not older than 3 days).
Upon the effective date, the lengthy process of applying for a National Interest Exception (NIE) will no longer be required. For more information on the new regulations, in particular a list of permitted vaccines as well as further answers to the most frequently asked questions, please refer to our newsletter of September 30.
If you have any further questions, please do not hesitate to contact Moritz Masberg, Rechtsanwalt & Attorney-at-Law (mmasberg@hr-ny.com).
New Regulations for Travelers from Schengen Area
H. Roske & Associates LLP, 30th September 2021.The good news first: As you may have probably noticed in the press, the U.S. Government will allow travel from Schengen countries from November on without requiring a National Interest Exception (NIE). Even though this news is a huge step forward towards the desired normality in travel, there are still some things to consider until then and afterwards. We have summarized the most pressing questions for you:
When exactly will the new regulations take effect?
The White House Coronavirus Response Coordinator said he expects the new regulations to be in place by early November. However, the government has not yet set a specific date.
What exactly are the requirements as of November?
Provided the information published by the White House about the upcoming regulations is accurate, Schengen nationals will be able to enter the U.S. as long as they are fully vaccinated. A NIE will no longer be required. Whether someone is “fully” vaccinated depends on the vaccine used. BioNTech/Pfizer and Moderna, for example, require two vaccine doses, while others such as Johnson & Johnson require only one. At least 2 weeks must have passed since the last dose. In addition, a negative Covid test (not older than 3 days) is required, as well as e-mail address and telephone number, so that travelers can be reached in case of possible contact with Covid infected persons. Lastly, valid ESTA or visa are still required for almost all foreigners.
What about "EU vaccines" that are not approved by the U.S. Food and Drug Administration (FDA)?
Under the new regulations, the U.S. will accept other vaccines as well, such as AstraZeneca, Sinopharm or Sinovac, if they are at least authorized by the World Health Organization. A list of all accepted vaccines can be found here.
What if I am not (fully) vaccinated? Can I continue to enter the country with an NIE as of November?
No. Beginning in November (exact date unknown), all travelers who are not U.S. citizens must be fully vaccinated. Certain exemptions have been announced for children, and few others.
What is the situation until November?
The NIE will continue to be required until the new policy is in effect. Detailed information on this can be found in our last newsletters. In summary, essential support or business management tasks related to economically significant activities or essential infrastructure sectors are required. The purpose of the travel cannot be achieved remotely.
In the meantime, is there a need for vaccination? What about testing?
Corona vaccination is not a requirement for issuance of a NIE. However, negative Corona tests (no older than 3 days) are required for entry now and in the near future.
As soon as the U.S. government announces reliable information, we will provide updated information through a new newsletter.
Good news for holders of National Interest Exceptions ("NIE")
H. Roske & Associates LLP, 10th July 2021.On July 6, 2021, the Department of State announced that the validity period of NIEs is being extended to 12 months from the date of approval. The original validity period was only 30 days. Moreover, NIEs are no longer single-entry permissions to enter the U.S., but can be used for multiple entries. Travelers using their NIE, however, must use it for the same purpose under which they were granted. Even though this new guidance from the Department of State does not provide immediate release for travelers, it takes substantial pressure off for the U.S. Consulates making resources free for new applications and – hopefully – will lead to a reduction of Visa and NIE processing times.
For new applications, the existing regulations, last updated on May 27, still apply. Essentially, eligible are “those traveling to provide vital support or executive direction to critical infrastructure” or for “significant economic activity in the United States”. A more detailed overview of what is needed to support your NIE application successfully was outlined in our last newsletter on the matter on June 6, 2021.
If you have any questions, feel free to contact Moritz Masberg (mmasberg@hr-ny.com).
News on USA Entry Restrictions for Business Persons - continuing stricter restrictions on National Interest Exception ("NIE")
H. Roske & Associates LLP, 6th June 2021.After the new U.S. administration initially further tightened the ability to travel to the U.S. on business compared to the previous administration, the scope of permitted individuals was expanded again at the end of May 2021. Furthermore, all travelers, whether business travelers with ESTA, B1/B2 visas or those with U.S. work permits (exception: Green Card), require a "NIE". We summarized the current situation for you below. The documents required for a NIE are as follows:
1. copy of valid ESTA confirmation or visa
2. copy of passport
3. current curriculum vitae
4. letter of justification from the company in Germany/Austria/Switzerland on whose behalf you want to enter the country, as well as
5. letter of invitation from a U.S. company
The last two letters (#4 and 5), must meet the following criteria:
(i) The trip must serve either an industry that can be classified as one of the "critical infrastructure industries" (including their suppliers) or a "significant economic activity" in the United States. We have included a list of these industries at the end of this. Currently, there are sixteen in total. The alternative - a significant economic activity - has not yet been defined. From experience, consular staff tend to interpret the U.S. Department of State's requirements broadly.
(ii) The purpose of travel must mean a "vital" support. Vital support is best evidenced by threat(s) of loss of contract, breach of contract, claims for damages, layoffs, etc. In addition, support by executives and members of management is now also permitted as long as one of the previously mentioned requirements (i) is met.
(iii) The specific activity must be described, including reasons why there is no suitable personnel available in the U.S. for this purpose. For travelers providing vital support, the U.S. Embassy recommendations are as follows: "Your letter should describe how technical experts and specialists are required to install, service, maintain, or receive training for vessels, machinery and other specialized equipment used by U.S. and foreign firms with a substantial investment in the United States." To date, there are no specific requirements regarding management travel. We recommend that the justification carefully addresses the urgent need for the travel.
(iv) It must be justified why the activity cannot be carried out by telephone or e.g. by video call.
(v) The expected duration of the stay must be stated.
The NIE can then be applied for by email at the respective U.S. consulate. The current processing time is a few days to a week.
Critical Infrastructure Sectors:
- Chemical Sector
- Commercial Facilities Sector
- Communications Sector
- Critical Manufacturing Sector
- Dams Sector
- Defense Industrial Base Sector
- Emergency Services Sector
- Energy Sector
- Financial Services Sector
- Food And Agriculture Sector
- Government Facilities Sector
- Healthcare And Public Health Sector
- Information Technology Sector
- Nuclear Reactors, Materials, And Waste Sector
- Transportation Systems Sector
- Water And Wastewater Systems Sector
For questions or to apply for an NIE, please contact Moritz Masberg (mmasberg@hr-ny.com).
Never say Never!
H. Roske & Associates LLP, 31st March 2021."NIE," the German word for "never," is an abbreviation for the National Interest Exception. Applicants must prove and justify that their entry into the United States is a matter of national interest in order to be exempted from the U.S. entry bans and get a waiver. It requires a 1 - 1.5 page letter, which should include the following points:
- Existing Agreement between with U.S. company
- U.S. company is part of critical infrastructure sectors or critical infrastructure-linked supply chain. This includes chemical, communications, dams, defense industrial base, emergency services, energy, financial services, food and agriculture, government facilities, healthcare and public health, information technology, nuclear reactors, transportation, and water systems
- Traveler must seek to provide vital support for this company, which can be supported by possible loss of profit leading to existential threats to company or employees.
- You need to provide a detailed description of the work. From the consular guidelines: “your letter should describe how technical experts and specialists are required to install, service, maintain, or receive training for vessels, machinery and other specialized equipment used by u.s. and foreign firms with a substantial investment in the united states."
- You must show why the work cannot be done remotely (e.g. by telephone or videocall).
- Provide an estimate of the time you need to spent in the U.S.
New Loans through Paycheck Protection Program "PPP"
H. Roske & Associates LLP, 18th of January 2021.with the current article we would like to answer the most important questions of our clients regarding the second round of the PPP. As last year, loans under the PPP are applied for through banks. The Small Business Administration oversees the process. Please contact us, your accountants and especially your banker early to participate in time.
The most important points first:
- Most banks will begin taking applications on January 19, 2021
- The deadline for participation in the current PPP is March 31, 2021. However, Federal funds might run out earlier.
- Your company must have been active since February 15, 2020.
- You need a Tax Identification Number of the applicant’s (foreign) owner (SSN for individuals/EIN for entities); we can help with the applications; the processing times vary between a few days and weeks.
First Time Applicants
If you are applying for the loan for the first time, the "old" conditions will continue to apply, i.e.:
- No more than 500 employees worldwide in the group
- No more than $10 million
Second Time Applicants
If your U.S. subsidiary already received a PPP loan last year and you now want to participate in the program again, the following conditions apply:
- No more than 300 employees worldwide in the group
- The first loan is already (or will be) spent in full
- At least 25 percent decline in revenue since comparable prior-year quarter (new business-carve-out rule)
- Businesses in the food service / hospitality industry (NAICS code 72) can apply for a loan of 3.5 times average monthly payroll costs
- For all other businesses, the previous factor of 2.5 applies
- Maximum loan amount: $2 million
New Loans through Paycheck Protection Program "PPP"
H. Roske & Associates LLP, January, 18th 2021.With the current article we would like to answer the most important questions of our clients regarding the second round of the PPP. As last year, loans under the PPP are applied for through banks. The Small Business Administration oversees the process. Please contact us, your accountants and especially your banker early to participate in time.
The most important points first:
- Most banks will begin taking applications on January 19, 2021
- The deadline for participation in the current PPP is March 31, 2021. However, Federal funds might run out earlier.
- Your company must have been active since February 15, 2020.
- You need a Tax Identification Number of the applicant’s (foreign) owner (SSN for individuals/EIN for entities); we can help with the applications; the processing times vary between a few days and weeks.
First Time Applicants
If you are applying for the loan for the first time, the "old" conditions will continue to apply, i.e.:
- No more than 500 employees worldwide in the group
- No more than $10 million
Second Time Applicants
If your U.S. subsidiary already received a PPP loan last year and you now want to participate in the program again, the following conditions apply:
- No more than 300 employees worldwide in the group
- The first loan is already (or will be) spent in full
- At least 25 percent decline in revenue since comparable prior-year quarter (new business-carve-out rule)
- Businesses in the food service / hospitality industry (NAICS code 72) can apply for a loan of 3.5 times average monthly payroll costs
- For all other businesses, the previous factor of 2.5 applies
- Maximum loan amount: $2 million
U.S. Congress approved new relief package
H. Roske & Associates LLP, December, 29th 2020.The U.S. Congress has agreed on new measures to mitigate the disastrous effects of the pandemic on the U.S. economy. The total volume of the measures is about $900 billion. The legislation, which is a supplement to the federal budget for the coming year, is expected to take effect this week. As with the last stimulus package in March, the CARES Act, a variety of measures are being introduced in an attempt to provide some relief to smaller businesses and workers in particular.
These are the most important measures at a glance:
- - New funds ($284 billion) for the Paycheck Protection Program (PPP), which was already set up in the CARES Act; companies that already participated in the PPP in the spring/summer can participate again, provided their sales have fallen by at least 25%.
The PPP allows the issuance of "forgivable loans", i.e. loans with the possibility of subsequent cancellation of the repayment obligation. Individual loans can amount to a maximum of $10 million, but generally to 2.5 times the monthly salary costs of the company. To qualify for loan forgiveness, the money must be used for the following purposes, among others:
- at least 60% to maintain salaries
- rent payments
- servicing mortgages
- expenses for independent contractors/freelancers
is expected that the submission of Payroll Journals, EIN, Ultimate Beneficial Owner documentation, and an Authorized Person with Social Security Number will be required to complete the PPP-application. We advise you to contact your American bank, which is administering the program, in order to prepare the appropriate documents. - Tax breaks, e.g. costs paid through a PPP loan will be tax deductible (this has been subject of much dispute between Republicans and Democrats) and a tax break on corporate meal expenses.
- One-time payment of $600 to persons below an income limit of $75,000 per year. Individuals with incomes up to $99,000 per year will receive a smaller amount; those with higher incomes will receive no payment.
- $20 billion for Economic Disaster Loans (like the PPP also administered by the Small Business Administration).
For the sake of completeness, it should be mentioned that there are also various new measures for laid-off employees, e.g. an extension of unemployment benefits of $300 per week until mid-March 2021.
Threat to investor visas due to corona-related business losses
H. Roske & Associates LLP, April, 22nd 2020.The central criterion of the E-2 Investor Visa is the willingness - in relation to the entire project - to risk significant costs. This is achieved by at least a partial investment - usually in form of start-up and travel costs, marketing, lease, etc. In addition to the financial benefit to the U.S. economy, this criterion demonstrates the seriousness of the business project.
However, this initial success in obtaining an E-2 visa is often only the first step, especially if long-term stays are necessary. E-2 Investor Visas are initially issued for a maximum of 5 years, but can be extended at will, provided the investment (business) is financially sound and creates additional jobs. In addition, the visa status is not only linked to the success of the company, but also to the position within the company itself. A change to another employer is practically impossible. Once you have managed to live and work in the USA on an E-2 visa, whether you can stay depends on the stability of your own job as well as the success of the business as a whole. This includes so-called "E-2 Dependent Visa" of family members.
From this point of view, the current burdens on the US economy are a particular challenge. E-2 companies need to be aware that while the visa authorities will be sympathetic to any imbalance in the company's fortunes due to current events, a loss of employment or closure of the company will also mean the end of the E-2 visa. And not only that: Even the conversion of an E-2 employee to short-time work means a violation of the conditions for the issue of the E-2 visa and risks the withdrawal of the visa.
It remains to be seen how the US government will react to these new challenges for companies and "expatriates", in particular whether apologetic measures will be taken to rescue E-2 visas that were lost due to Corona.
2 Trillion $ Care Act for Companies and Employees
H. Roske & Associates LLP, March, 31st 2020.With the "Coronavirus Aid, Relief and Economic Security Act" or "CARES Act", U.S. Congress has - at first glance - provided generous and far-reaching funds for relief for troubled American businesses and households. Despite a total volume of almost 2 trillion dollars (!) the funds are likely to be exhausted faster than expected, given the extent of the financial damage caused by the rampant pandemic, It is therefore worthwhile to examine the available instruments offered by the new law as early and as quickly as possible. Whilst there are aid programs at state level in all 50 states, including at municipal level, this article is intended to provide a quick overview of the CARES Act as far as it affects our main target group, small and medium-sized enterprises and their employees.
FOR COMPANIES
Probably the most important and attractive program under the CARES Act is the Paycheck Protection Program through the issue of "Forgivable Loans", i.e. loans with the possibility of subsequent cancellation of the repayment obligation. Individual loans can amount to a maximum of $10 million, but generally up to 2.5 times salaries (less withholding taxes, FICA, paid sick leave and others) over the last 12 months before the loan is granted and must be used for the following purposes:
- Continuation of payment of salaries, with higher paid employees only being eligible for up to $100,000 (although there is for those relief elsewhere through tax relief under the Families First Coronavirus Response Act)
- Rent payments
- Servicing of mortgages
- Expenditure for independent contractors/freelancers
- The law provides for a so-called "Tax Credit", i.e. a fully refundable tax credit for companies of any size that are closed down or are in trouble. The aim is to rehire dismissed employees or otherwise ensure that they can return to their previous jobs. The amount of the tax credit is 50% of the salaries that will continue to be paid during the Covid-19 crisis, provided the business has been partially or fully discontinued and revenues have decreased by at least 50% compared to the same quarter last year.
- Payment of employers’ social security contributions (6.2% of salary) is deferred for a total period of 2 years, with the first half to be paid by 31.12.2021 and the second half by 31.12.2022.
- Losses from the previous years 2018, 2019, 2020 can be offset for the past 5 years ("carried-back").
- Companies can claim up to 50% of interest-related expenses for tax purposes instead of only 30% as before.
FOR EMPLOYEES
- U.S. employees with incomes under $75,000 will receive a check for $1,200. Families with children will also receive $500 per child. For higher incomes, but below $99,000, this amount decreases gradually. For incomes above that, these benefits are not available.
- There are also further ”unemployment benefits” in addition to those that are being paid at state level. Here, the federal government adds up to $600 per week. This program is currently limited to 4 months.
Can I change my US colleagues to short-time work because of the Covid 19?
H. Roske & Associates LLP, March, 23rd 2020.The attorney answer most hated is "it depends". Nevertheless, unfortunately it does matter here, because the answer depends on the type of employment contract. Many Americans, including executives, have no written contracts at all. A comparable high number have a so-called "at will" employment contracts. This is a written agreement (employment contract), but it does not specify a notice period. This, combined with the fact that no reason for termination is required in the USA, means that the employee can be dismissed overnight. True to the old advocate's motto "Argumentum a Maiore ad Minus", in both these cases it is possible to switch to short-time working unilaterally. This is the minus compared to the dismissal, i.e. if I may already give notice, then I definitely can pay even less and order short-time work.
If the employment contract has a notice period -- often 3 to 6 months for managers -- then I can only order short-time work after the same short-time work has expired.
An amicable, written agreement, which takes into account the Covid 19 circumstances, is possible in all 3 cases.
What about delayed delivery because of Covid 19?
H. Roske & Associates LLP, March, 23rd 2020.If the delivery contract or the general terms and conditions -- both can have the same goal -- are based on common law, which is the international standard and is also recommended for companies from the DACH region, then the so-called Time-is-of-the-Essence clause is important. This is a business slang term in the USA for default and the clause is one of the 5 pillars of international contractual risk management and is probably included in all major corporate policies of American companies as an absolute 'must'.
"In the event that the parties agreed upon a specific time for delivery, however, time shall not be of the essence, and seller shall only be obligated to deliver within a reasonable time after such delivery date".
One can see that the clause should actually be rather called Time shall not be of the essence.
What is a 'reasonable time' depends on the case law in the respective industry segment, combined with its commercial practices. In the automotive supply sector with its just-in-time deliveries, it has almost never been possible to enforce the clause, in other sectors you get about 1 week to 10 days grace period, and in today's corona time we do not know because there are no decisions on this yet. In any case it is good to use such a clause, otherwise you are fully liable for all damages caused by delay.
What effect does the corona virus have on deliveries to the USA
H. Roske & Associates LLP, March, 23rd 2020.
Deliveries from the DACH region to the USA are usually based on a contract or general terms and conditions combined with Order & Acceptance. If something unforeseen happens afterwards, the question arises what will happen to the order. There are two obligations, i.e. delivery of goods and payment. There is no precedent for Covid 19, but it is likely that its rapid expansion and the associated consequences will be considered 'unforeseen'.
If the contractual agreement of the parties follows the international standard and applies a common law -- UK or a US state -- then there is usually a force majeure clause combined with a so-called The-Deal-is-The-Deal clause (... "this agreement shall constitute the entire agreement......."). In this case only the force majeure provision applies. If it is applied, the parties are released from their obligations.
If US law is applicable, but there is no force majeure clause, the Uniform Commercial Code (UCC) is available to the parties with the same effect, as a kind of gap filler. This is one of the rare examples where the Americans agreed upon a codified law, as in the old world e.g. the HGB. All 50 states have now ratified the UCC.
Force majeure must be invoked. A written notice to the trading partner is therefore necessary.
Disaster Relief Credit Program for US small businesses
H. Roske & Associates LLP, March, 23rd 2020.
If the current and for the time being probably continuing restrictions due to the coronavirus put your U.S. company in an unstable situation, the following information could be a relief. The Small Business Administration (SBA) has set up an aid credit program, which promises to quickly and easily grant favourable loans.
The prerequisite is that the company is located in a state recognized as particularly hard hit and has to cope with substantial economic losses due to the current corona situation. The following states are currently included: Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Illinois, Indiana, Louisiana, Maine, Maryland, Massachusetts, Michigan, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Virginia, Washington, and West Virginia.
The loans can be up to $2 million and have specified uses, including servicing continuing obligations, salaries, suppliers and other invoices. The interest rate is 3.75% for those companies that do not receive loans elsewhere. The term can be up to 30 years, with individual terms renegotiated from contract to contract, depending on the financial strength of the borrower.
For further information, especially regarding the availability of the loan at your location, please contact the SBA Disaster Assistance Customer Service Center or our team.