If subject to 212(e), the individual must return to the country in which they held permanent residence at the time they acquired J-1 status.
If a person has not traveled from their country of birth, then their country of permanent residence will be the same as their country of citizenship. If a person has traveled outside their country of birth, then their country of permanent residence might be different from their country of citizenship. In that case, the individual must evaluate to which country they had a 'permanent' right to reside at the time their J visa was issued and/or they acquired J status.
It is very common for a scholar to visit the USA from their home country, complete their J program, and then travel to another country where they live for a number of years. For example, a scholar might travel to the USA fro their home country (Utopia) for a J program during their PhD, graduate, and then go work in a new country (Wakanda) for a nunmber of years. Living abroad in Wakanda does not satisfy the 212(e) obligation that they return to their home country of Utopia for two years.
For further advice on determining whether or not a person in J status is subject to the Two Year Home Rule, go to the USDOS FAQ on the Two Year Home Rule and click on "Am I subject to the two-year home-country physical presence requirement?" link to expand the section.
The Exchange Visitor Skills List contains fields of specialized knowledge and skills. Each country decides for itself which skills it considers are necessary for the development of the country in question, and tells the US government so that those skills may be reflected in the Skills List in the way the country wants.
To check whether you are subject to 212(e) on this basis, first confirm whether your country is listed in the Skills List. If your country is not on the Skills LIst, then this basis cannot be applied to you.
If your home country is listed in the Skills List, you then need to compare the CIP Codes listed for your home country against the CIP code listed in your DS-2019. If your DS-2019 CIP code is included in your home country's list of CIP codes in the Skills List, then you are subject to the 212(e) Home Residence Requirement for two years at the end of your exchange visitor program.
An exchange visitor is subject to 212(e) if "participation in the program for which he came to the United States was financed in whole or in part, directly or indirectly, by an agency of the United States Government or by the government of the country of his nationality or of his last legal permanent residence..." 22 CFR 41.63(a)(1)(i)
The terms are specifically defined in the regulations (22 CFR Section 62)-
The question of 212(e) timing relates to two separate moments -
A person becomes subject to 212(e) home residence rule the moment they acquire J-1 (or J-2) status for purposes of a J program that is subject to one of the possible bases above - Skills List, Government Funding, or medical training. The law attaches home residence to the J Exchange Visitor instantly, upon arrival in the USA (or, if they are changing to J status from another visa classification, the moment the USCIS approves the J status). It is not relevant whether the person actually engages in the J activities - the only factor the law considers is whether the person held (even for a moment) the J status.
The obligation to reside in the home country does not begin until the primary J-1 scholar's J program is closed in SEVIS. This normally happens after the J-1 scholar has engaged in their activities in the USA and timely departed back to their home country.
Sometimes, a scholar will depart the USA early. This might be because they completed their program activities early, or it might be because they had to abandon the program in the USA, such as due to a family emergency. Departure from the USA does not by itself trigger the closure of the program in SEVIS. The scholar must advise the International Scholar Services office of their departure and intention to end their program early. Only then will an International Scholar Services counselor go into SEVIS to close the program. Please note - the fact that you do not tell International Scholar Services that you have left the USA does not mean that your J program is in good standing. If you fail to engage in program activities, then the program might need to be closed on that basis anyway.
Time spent outside the USA during the J program does not count toward satisfaction of the home residence requirement. Your 'home' time accumulates only once your program is closed in SEVIS.
It therefore is very much in the scholar's best interests to notify International Scholar Services of the need to depart the USA and close the J program early, as this has the advantage of ensuring that all time spent outside the USA thereafter can count toward satisfaction of the 212(e) home residence obligation.