Update: Extended deadline for first-time filers of Form BE-10

The Bureau of Economic Analysis (BEA) has extended the deadline from May 29, 2015 to June 30, 2015 for US reporters that are required to file the BE-10 forms but have never filed any BEA forms covering their direct investment abroad, including the BE-10, BE-11 and BE-577 forms.

THE BEA AND ITS SURVEYS

Background

The BEA prepares economic statistics that help gauge the performance of the US economy and the role of the US in the global economy under the authority of the International Investment and Trade in Services Survey Act. To collect the data for these statistics, the BEA conducts 7 mandatory surveys described below on US direct investment abroad and foreign direct investment in the US on a quarterly, annual or five-year cycle.

In November 2014, the BEA announced certain surveys were now mandatory for all US persons that owned 10 percent or more of the voting securities of a foreign entity in 2014, whether the BEA had contacted the US person or not. In addition, the BEA requires filings by US entities in which a foreign person owns 10 percent or more of the voting securities within 45 days of the acquisition of such securities.

Penalties

Failure to submit required surveys may result in civil fines of up to US$25,000. Willful failure to report can result in a US$10,000 criminal penalty and up to one year imprisonment.

Confidentiality

The data collected is held confidentially by the BEA and may be used only for analytical or statistical purposes. It cannot be used for taxation, investigation or regulation. Copies are immune from legal process, and the BEA cannot present the information in a manner that allows the filer to be identified without the filer’s prior written consent.

How to file

All the BEA forms below may be submitted via facsimile, mailed or filed electronically through the BEA’s eFile system.

REPORTABLE US DIRECT INVESTMENT ABROAD

Who must report?

All US persons (US reporters) that own, directly and/or indirectly, 10 percent or more of the voting securities of a foreign entity (foreign affiliate) are subject to the BEA reporting requirements. A US reporter must file on a fully consolidated US domestic business enterprise basis, and separately for each of its foreign affiliates, whether held directly or indirectly.

Mandatory benchmark survey for all US reporters: Form BE-10

The BE-10 benchmark survey is the BEA’s most comprehensive survey of US direct investment abroad and is conducted every 5 years. The current BE-10 forms cover the fiscal year ending in 2014 and are mandatory for all entities subject to the reporting requirements of the BE-10, whether or not they are contacted by BEA. The BE-10 forms consist of:

  • BE-10A – To be completed by the US reporter on a consolidated basis.
  • BE-10B – To be completed by each majority-owned foreign affiliate with assets, sales, or net income greater than US$80 million (positive or negative).
  • BE-10C – To be completed by each (i) majority-owned foreign affiliate with assets, sales, or net income between US$25 million and US$80 million (positive or negative); (ii) minority-owned foreign affiliate with assets, sales, or net income greater than US$25 million (positive or negative); and (iii) foreign affiliate for which assets, sales, and net income did not exceed US$25 million (positive or negative) and that was a foreign affiliate parent of other foreign affiliates filing on form BE-10B or BE-10C.
  • BE-10D – To be completed by each foreign affiliate for which assets, sales, and net income did not exceed US$25 million (positive or negative) and that was not a foreign affiliate parent of other foreign affiliates filing on form BE-10B or BE-10C.

Due dates

  • May 29, 2015 for US reporters who have previously filed BE-10, BE-11 or BE-577 forms and who are filing fewer than 50 forms of BE-10B, BE-10C and BE-10D.
  • June 30, 2015 for all first time filers and all US reporters filing 50 or more forms of BE-10B, BE-10C and BE-10D.
  • Extensions of the filing deadline can be obtained by calling the BEA at +1 (202) 606-5566 or by completing the extension request form on the BEA website.

Practical implications

Many typical company and investment fund organizational structures may trigger a BE-10 filing obligation in several scenarios. Typical scenarios for operating companies, holding companies and private fund structures include:

  • A US company, fund or entity that holds 10 percent or more of the voting securities of a foreign portfolio company, holding company, subsidiary, or other structuring vehicle.
  • A US holding company or other fund structuring vehicle that holds 10 percent or more of the voting securities of a foreign portfolio company.
  • A US portfolio company that holds 10 percent or more of the voting securities of a foreign subsidiary.
  • A US general partner, managing member or similar entity (but not the limited partners, who do not hold voting securities, as addressed above) that owns 10 percent or more of the “voting securities” of a foreign fund (including a US person holding voting shares of a fund organized as a Cayman corporation).

While possible, a registered investment company is less likely to trigger a BE-10 filing obligation unless the registered investment company owns 10 percent or more of the voting securities of any foreign issuer. The BEA has published FAQs regarding the BE-10 forms, which can be found here.

Surveys which are mandatory only for US reporters contacted by the BEA

  • Quarterly Survey of US Direct Investment Abroad (Form BE-577): The purpose of this quarterly survey is to report positions and transactions between a US reporter and its foreign affiliates. Only entities contacted by the BEA are required to file this form.
  • Annual Survey of US Direct Investment Abroad (Form BE-11): The purpose of the annual survey is to report annual financial and operating data of the US reporter and its foreign affiliates. Only entities contacted by the BEA are required to file this form.

REPORTABLE FOREIGN DIRECT INVESTMENT IN THE US

Who must report?

All US business enterprises (US affiliates), whether or not incorporated, in which a foreign person (foreign parent) owns, directly and/or indirectly, 10 percent or more of the voting securities of such US affiliates are subject to these reporting requirements. This includes foreign ownership of real estate, improved and unimproved, except residential real estate held exclusively for personal use and not for profit-making purposes. The foreign parent is the first person outside the US in a foreign chain of ownership.

A US affiliate must file on a fully consolidated domestic US basis, including the full consolidation all US business enterprises proceeding down each ownership chain whose voting securities are more than 50 percent owned by the US business enterprise above. The fully consolidated entity is considered one US affiliate.

Mandatory foreign direct investment survey forms for all reporters

  • Survey of New Foreign Direct Investment in the US (Form BE-13): The purpose of this survey is to capture new investment transactions made when (1) a foreign direct investment in the US relationship is created or (2) an existing US affiliate of a foreign parent establishes a new US legal entity, expands its US operations, or acquires a US business enterprise. A response is required from entities subject to the reporting requirements of the BE-13, whether or not they are contacted by BEA. The BE-13 forms consist of:
    • BE-13A – Report for a US business enterprise when a foreign entity acquires a voting interest (directly, or indirectly through an existing US affiliate) in that enterprise, segment, or operating unit and (i) the total cost of the acquisition is greater than US$3 million, (ii) the US business enterprise will operate as a separate legal entity, and (iii) by this acquisition, at least 10 percent of the voting interest in the acquired entity is now held (directly or indirectly) by the foreign entity.
    • BE-13B  – Report for a US business enterprise when a foreign entity, or an existing US affiliate of a foreign entity, establishes a new legal entity in the US, and (i) the projected total cost to establish the new legal entity is greater than US$3 million, and (ii) the foreign entity owns 10 percent or more of the new business enterprise's voting interest (directly or indirectly).
    • BE-13C –Report for an existing US affiliate of a foreign parent when it acquires a US business enterprise or segment that it then merges into its operations and the total cost to acquire the business enterprise is greater than US3 million.
    • BE-13D –Report for an existing US affiliate of a foreign parent when it expands its operations to include a new facility where business is conducted and the projected total cost of the expansion is greater than US$3 million.
    • BE-13E –Report for a US business enterprise that previously filed a Form BE-13B or BE-13D indicating that the established or expanded entity is still under construction.

Due date

The initial report must be filed no later than 45 days after the date of the investment transaction.

Practical implications

Many typical organizational structures may trigger a BE-13 filing obligation in several scenarios. Typical scenarios include:

  • A US special purpose entity is formed by a foreign acquirer or group to purchase a US business or real estate investment.
  • A foreign entity directly acquires 10 percent or more of the voting securities of a US business or real estate in the US. 
  • A foreign entity initially acquires less than 10 percent of a US business, but through further investment or capital contributions acquires 10 percent or more of the voting securities.
  • A foreign entity establishes a subsidiary, joint venture or branch in the US
  • A US company that is already filing reports acquires a new manufacturing facility.

The BEA has published FAQs regarding the BE-13 forms, which can be found here.

  • Benchmark Survey of Foreign Direct Investment in the US (Form BE-12): The BE-12 benchmark survey is BEA’s most comprehensive survey of foreign direct investment in the US and is conducted once every 5 years. The upcoming BE-12 survey will cover the fiscal year ending in 2017 and will be mandatory for all entities subject to the reporting requirements of the BE-12, whether or not they are contacted by BEA.

Surveys which are mandatory only for reporters contacted by the BEA

  • Quarterly Survey of Foreign Direct Investment in the US (Form BE-605): The purpose of the quarterly survey is to report positions and transactions between a US affiliate and its foreign parent(s) and foreign affiliates of the foreign parent(s). In addition, a BE-605 report is required for any US affiliate that was established, acquired, liquidated, sold, or became inactive during the reporting period. Only entities contacted by the BEA are required to file this form.
  • Annual Survey of Foreign Direct Investment in the US (Form BE-15): The purpose of the annual survey is to report annual financial and operating data of US affiliates. Only entities contacted by the BEA are required to file this form.

CONCLUSION

While the BEA uses up to seven forms to collect data on US investment abroad and foreign investment in the US, only the BE-10, BE-12 and the BE-13 forms are required to be filed by US companies, investment fund organizational structures and individuals whether or not they have been contacted by the BEA. The remainder of the forms require the BEA to contact the filer before reporting obligations arise. Please note that the BE-12 form does not currently require a filing since the next applicable cycle for this form will cover the fiscal year ending in 2017.