2014 Benchmark Survey of U.S. Direct Investment Abroad

The Bureau of Economic Analysis (BEA) of the U.S. Commerce Department is conducting its quinquennial (every five years) survey of investment in foreign entities. The BE-10 Benchmark Survey (BE-10 Survey) is the most comprehensive survey of U.S. investment abroad. The collection of this information allows the BEA to publish statistics on U.S. direct investment abroad and on foreign direct investment in U.S. companies. These statistics can be used to measure the scale of global business activity of multinational companies and its impact on the U.S. and foreign economies.

The 2014 survey is the first time that all persons with at least a 10% stake in a foreign company or similar entity must file the report. For previous surveys, reporting was mandatory only for those companies contacted by the BEA. A U.S. company (U.S. Reporter) must file on a fully consolidated domestic business enterprise basis. Its filing must include each foreign affiliate, whether held directly or indirectly. The BE-10 Survey may be submitted by mail, fax or efiling. See the International Investment and Trade in Services Survey Act, 22 U.S.C. §§ 3101-3108.

All persons meeting the definition of a U.S. Reporter are required to file a BE-10A, the benchmark report and, depending on the percentage of ownership and the value of the foreign affiliate, either Form BE-10B, -10C or -10D. The forms are lengthy and comprehensive and collect information on operations, not just financial and tax information that is reported on Form 5471, which must continue to be filed with a tax return. Filing any of the BEA forms does not obviate the need to file any required tax or other Treasury Department form.

The filing deadline for the BE-10 Survey is June 30, 2015. A U.S. Reporter may obtain one extension to July 31 or August 31, 2015, based on the number of foreign affiliates it must report. Requests for extensions must be received by the BEA before June 30, 2015.

Civil penalties for failure to file the BE-10 Survey in a timely manner range from $2,500 to $25,000. Criminal penalties for intentional failure to file are also possible and may be asserted against an individual.

Survey of New Foreign Direct Investment in the U.S.

Although there has been a comprehensive BEA survey every five years of foreign direct investment in the U.S. (BE-12), if a foreign company expanded its investment in the U.S. either through creating a new direct investment in the U.S., by establishing a new U.S. legal entity or acquiring a U.S. business enterprise for the fiscal year ending in 2014, the U.S. business must file a BE-13. Where a foreign entity acquires a voting interest, directly or indirectly, in a U.S. business enterprise, segment or operating unit and it meets specific value thresholds, the U.S. business enterprise must file a BE-13A. As with the BE-10 Survey, there are a number of different forms for the BE-13 (BE-13B through E), the applicability of which depends on the type of investment (new or expanded) and its value in U.S. dollars. All U.S. business enterprises in which a foreign entity acquires or increases its interest are subject to these reporting requirements.

There is also an annual survey of foreign direct investment in the U.S. (BE-15). The purpose of the BE-15 is to report annual financial and operating data of U.S. affiliates. Only entities contacted individually by the BEA have a BE-15 reporting responsibility.

Special Rules for Trusts and Other Intermediaries

The instructions recognize that a trust is not a business enterprise and is treated as an intermediary for purposes of BEA reporting. The trust’s beneficial owners generally have the responsibility of determining the existence of direct investment unless there is a reversionary interest or a corporation has created a trust with the shareholders as beneficiaries. In those cases, the creator of the trust is the owner of the trust investments and is required to report.

An intermediary generally will report for its principal unless the intermediary requires its principal to report.

Special Guidance for Funds

Special guidance is provided for private funds to assist a fund in determining whether the fund needs to file a BE-10 survey. This special guidance is in the form of frequently asked questions (FAQs), which may be found on the BEA website. Because private funds are not operating companies, many questions do not appear to apply to a fund.  If a question does not apply, a fund may mark the question as “n.a.” or not applicable and provide explanations about the nature and operations of the entities to which the question does not apply in the “Remarks” section of the form. Note that an investment manager may be required to report if certain criteria are met.