The US Department of Commerce’s Bureau of Economic Analysis (the “BEA”) has amended the reporting requirements applicable to US persons (defined below) related to its 2014 BE-10 Benchmark Survey of US Direct Investment Abroad. In particular, the new rule mandates that any US person meeting the reporting threshold of Form BE-10 make a Form BE-10 filing, whether or not requested to do so by the BEA. Depending on the number of a US person’s Foreign Affiliates (described below), the deadline for making the Form BE-10 filing is either May 29, 2015 or June 30, 2015.
Using annual (BE-11) and “benchmark” (BE-10) surveys, the BEA produces statistics on US direct investment abroad. The benchmark surveys are prepared once every five years and provide the BEA with financial and operating data on foreign investments. The data are used to measure the scope and effect of US direct investment abroad and to measure changes in such investment over time. In addition, the data are used to derive estimates of foreign direct investment by US persons in non-benchmark years.
Reporting Threshold and Requirements
Under the revised rule, any US person with a Foreign Affiliate during its 2014 fiscal year must file a BE-10 report.
- A “Foreign Affiliate” is a foreign business enterprise (whether or not incorporated) in which a US person directly or indirectly owns or controls at least 10 percent of the voting stock (or an equivalent interest).
- A US person with Foreign Affiliates is considered a “US Reporter” for purposes of the Form BE-10 filing.
- A “US person” is broadly defined to include individuals, corporations, partnerships and other organizations and governments or agencies thereof that are residents of the United States or otherwise subject to US jurisdiction.
All US persons, private funds included, that meet the BE-10 reporting requirements should file a BE-10 report.
Individuals, estates, trusts and non-profit organizations meeting the BE-10 reporting criteria through indirect ownership or control of a Foreign Affiliate (i.e., through ownership or control of more than 50 percent of a business enterprise rather than through direct ownership) are not required to file on their own behalf; instead, the BE-10 filing would be made by the US business enterprise owned by such individual, estate, trust or non-profit organization.
US Reporters will file a Form BE-10A for themselves and submit data on each of their Foreign Affiliates on Form BE-10B, Form BE-10C or Form BE-10D, depending on the assets, sales and net income of each Foreign Affiliate. The following summarizes the reporting requirements:
- Form BE-10A—submitted for the US Reporter.
- Form BE-10B—submitted for each majority-owned Foreign Affiliate with assets, sales, net income or net losses (each an “economic marker”) greater than $80 million at any time during or for its 2014 fiscal year.
- Form BE-10C—submitted for:
- each majority-owned Foreign Affiliate for which any economic marker exceeded $25 million, but no economic marker exceeded $80 million at any time during or for its 2014 fiscal year;
- each minority-owned Foreign Affiliate for which at least one economic marker exceeded $25 million; and
- each Foreign Affiliate for which no economic marker exceeded $25 million at any time during or for its 2014 fiscal year, but which is a parent company of a Foreign Affiliate being reported on Form BE-10B or BE-10C.
- Form BE-10D—submitted for each Foreign Affiliate for which no economic marker exceeded $25 million at any time during or for its 2014 fiscal year and which is not a parent company of a Foreign Affiliate being reported on Form BE-10B or BE-10C.
- A BE-10 Claim for Not Filing form may be submitted by any US person that is notified by the BEA to make a Form BE-10 filing, but had no Foreign Affiliates during its 2014 fiscal year.
US persons that are more than 50 percent owned by a parent US person are not required to file a Form BE-10A, as such company’s business, financial and operational information will be covered on the Form BE-10A of its US parent.
Penalties for Noncompliance
Both civil and criminal penalties may be imposed for failure to file the applicable BE-10 forms with the BEA.
- The civil penalties include a fine of up to $25,000 per violation and the right of the BEA to seek injunctive relief.
- Criminal penalties, including imprisonment of up to one year, for willful failure to file may be imposed on individuals and officers, directors, employees, or agents of any entity that knowingly participate in violation of the rule.
For US Reporters filing to report fewer than 50 Foreign Affiliates, the filing deadline is May 29, 2015. For those reporting 50 or more Foreign Affiliates, the deadline is June 30, 2015.
The BEA has indicated that reasonable requests for extensions of the deadlines will be considered. An extension request may be submitted to the BEA by a US Reporter via fax to (202) 606-5312, through the BEA’s e-file system or over the phone by calling (202) 606-5566.
For more information on the BE-10 requirements and access to the applicable forms, visit the BEA website.
Finally, the BEA has provided answers to Frequently Asked Questionsissued to private fund filers