The Bureau of Economic Analysis (the “BEA”) is a branch of the U.S. Department of Commerce that collects statistical information about the American economy. One function of the BEA is to record statistics for all foreign direct investment in the United States, as authorized by the International Investment and Trade in Services Survey Act.
Ongoing Reporting Obligation
The BEA requires U.S. business enterprises to report foreign direct investment in the United States on Form BE-13. As a general rule, Form BE-13 must be filed by any U.S. business enterprise within 45 days after:
(i) the acquisition by a foreign parent of at least a 10% direct or indirect voting interest in such U.S. business enterprise;
(ii) the establishment of such U.S. business enterprise by a foreign parent with at least a 10% direct or indirect voting interest therein; or
(iii) an expansion of a foreign parent’s business in the United States (each, a “Reportable Event”).
If a Reportable Event in which a foreign parent invests less than $3 million in the United States occurs, the affected U.S. business enterprise may file a Form BE-13 Claim for Exemption. No filing is required upon the occurrence of a Reportable Event if there is no foreign parent who holds at least a 10% direct or indirect voting interest in the U.S. business enterprise.
Periodic Reporting Obligations
In addition to the ongoing reporting obligations imposed by the BEA, U.S. business enterprises in which a foreign parent holds at least a 10% direct or indirect voting interest may be required to file quarterly reports on Form BE-605 or annual reports on Form BE-15 in order to update their earlier filings. Fortunately, no U.S. business enterprises have quarterly or annual BEA filing obligations unless they are specifically requested by the BEA.
Finally, the BEA also conducts a five-year benchmark survey of all foreign direct investment in the United States. Unlike the BEA’s quarterly and annual surveys, each U.S. business enterprise in which at least a 10% voting interest could be traced to a foreign parent at the end of fiscal year 2017, regardless of whether such entity was contacted by the BEA, has an affirmative obligation to complete and file the benchmark survey on Form BE-12.
Form BE-12 must be filed with the BEA by May 31, 2018, however the filing deadline is automatically extended to June 30, 2018 for respondents who use the BEA’s eFile system.
Similar to the ongoing Form BE-13 filing obligations, any U.S. business entity in which a foreign parent owned at least a 10% voting interest (directly or indirectly) at the end of fiscal year 2017 must file Form BE-12.
The BEA only tracks the control of a U.S. business enterprise by a foreign parent, not in a foreign parent’s beneficial interest therein. In determining voting interest, the BEA deems that (i) voting interest in a corporation is apportioned based on voting securities; (ii) voting interest in a limited liability company is apportioned based on membership interests; and (iii) voting interest in a partnership is apportioned 100% with the General Partner unless the Partnership Agreement specifically gives voting control to the Limited Partners.
A private fund is exempt from reporting as long as (i) it does not own, directly or indirectly through another business enterprise, an operating company in which a foreign parent owns at least 10% of the voting interest therein, and (ii) if the foreign parent owns a private fund indirectly (through one or more other U.S. business enterprises), there are no U.S. operating companies between the foreign parent and the indirectly-owned private fund.
Form BE-12 must be filed on a consolidated basis by the highest U.S. affiliate of a foreign parent that cannot be consolidated into another U.S. affiliate of such foreign parent. Each U.S. business enterprise will need to file a different Form BE-12 based on its size and ownership structure. The most basic Form BE-12C may be filed by any U.S. business enterprise that is an affiliate of a foreign parent and has total assets, sales or gross operating revenues, or net income of $60 million or less. The more in-depth Form BE-12B must be filed by affiliates of foreign parents with total assets, sales or gross operating revenues, or net income between $60 million and $300 million, and the most burdensome Form BE-12A must be filed by U.S. business enterprises that are majority owned by foreign parents and which have total assets, sales or gross operating revenues, or net income of more than $300 million.
A Form BE-12 Claim for Not Filing may only be filed by a U.S. business enterprise who is asked by the BEA to file Form BE-12 but who is not at least 10% directly or indirectly owned by a foreign parent, or who is otherwise not subject to Form BE-12 filing requirements. Unlike with respect to Form BE-13, there is no de minimis $3 million investment below which an exemption from filing may be claimed.
Any failure to report shall be subject to a civil penalty of not less than $4,527 and not more than $45,268, and to injunctive relief commanding such person to comply, or both. Whoever willfully fails to report shall be fined not more than $10,000 and, if an individual, may be imprisoned for not more than one year, or both. Any officer, director, employee, or agent of any corporation who knowingly participates in such violations, upon conviction, may be punished by a like fine, imprisonment or both.
Survey data collected by the BEA is confidential and may only be used for statistical and analytical purposes, and the BEA is prohibited from granting other agencies access to its data for tax, investigative, or other regulatory purposes. Statistical data reported on Form BE-12 is not subject to Freedom of Information Act requests.