The United States has long monitored foreign investment in businesses and real estate. To capture this information, Congress passed, in 1976, the International Investment and Trade in Services Survey Act. This law requires U.S. entities that are 10% or more owned by foreign entities or foreign persons to file certain reports with the U.S. Department of Commerce. The law is administered by the Bureau of Economic Analysis (BEA), which has a number of forms, depending on the amount of the investment and the nature of the investment. The reports include: a) a report on an initial investment of a foreign person or foreign entity in a U.S. business enterprise, including real estate; b) quarterly balance of payments reports; c) annual reports; and d) benchmark survey reports. The reports are confidential and used for analytical or statistical purposes.
We know that this report is often overlooked, as we sometimes begin maintaining the records of an existing company owned by a foreign parent, only to find that the International Investment Survey was never completed. Recently, we represented a client with a foreign parent in the acquisition of real estate. When we reported the acquisition, as required, the BEA responded that they had no record of an initial report. Since we were not involved in the original establishment of the client, we had to go back and correct this omission.
Our experience and contact with the BEA has been positive and they are accessible for questions and clarifications. In addition, the BEA website (http://www.bea.gov/surveys/fdiusurv.htm) is very helpful with FAQ's, memoranda, and downloadable and fillable forms. If you are concerned that your entity has not filed a report, as required by law, we suggest contacting your legal counsel. There are civil and criminal penalties for failure to report. In our experience, the BEA is more concerned about bringing companies into compliance than assessing harsh penalties. But any entity not in compliance should work with its legal counsel to correct the problem, rather than ignore the problem.