Certain U.S. companies and their foreign affiliates should be aware that responses to a mandatory Commerce Department outbound investment survey are due as soon as May 29, 2015. The Commerce Department’s Bureau of Economic Analysis (BEA), under the authority of the International Investment and Trade in Services Survey Act, is conducting the 2014 Benchmark Survey of U.S. Direct Investment Abroad, a broad statistical survey that is conducted every five years. BEA collects survey data through a series of BE-10 forms, and U.S. companies subject to the BE-10 reporting requirements must respond to the survey irrespective of whether they are contacted by BEA. U.S. companies that fail to comply with the BE-10 reporting requirements could be subject to civil penalties of up to US$25,000 or, in some cases, criminal penalties. BEA expects approximately 3,900 companies to respond to the BE-10 survey.
The BE-10 is one of a series of survey forms through which BEA collects data on U.S. direct investment abroad, including Forms BE-11 and BE-577. BEA also conducts surveys of foreign direct investment in the United States – see our client alert on the reinstated Form BE-13 foreign direct investment reporting requirements – and international services.
Who Must Report and Which Forms Must Be Submitted?
The BE-10 reporting requirements apply to any U.S. person that, at any time during the U.S. person’s 2014 fiscal year, had direct or indirect ownership or control of at least 10% of the voting securities of an incorporated foreign business or held an equivalent interest in an unincorporated foreign business (e.g., a branch). As explained in further detail below, a complete BE-10 report consists of a BE-10 form for the U.S. company that holds the voting interest in one or more foreign affiliates and separate BE-10 forms filed by the U.S. company on behalf of its foreign affiliates:
- Form BE-10A. This is the report for the U.S. company (U.S. reporter) that holds the voting interest in one or more foreign affiliates. If the U.S. reporter’s total assets, sales, or gross operating revenues, or net income was greater than US$300 million (positive or negative) in FY 2014, the company must complete the entire form. Otherwise, the U.S. reporter need only complete a portion of the form.
The appropriate U.S. reporter is the “fully consolidated U.S. domestic business enterprise,” defined as:
- The U.S. business enterprise whose voting securities are not owned more than 50% by another U.S. business enterprise; and
- Proceeding down each ownership chain from that U.S. business enterprise, any U.S. business enterprise whose voting securities are more than 50% owned by the U.S. business enterprise above it.
- Form BE-10B. This is the report for majority-owned foreign affiliates with total assets, sales, or gross operating revenues, or net income greater than US$80 million (positive or negative) in FY 2014.
- Form BE-10C. This is the report for:
- Majority-owned foreign affiliates with total assets, sales, or gross operating revenues, or net income between US$25 million and US$80 million (positive or negative) in FY 2014;
- Minority-owned foreign affiliates with total assets, sales or gross operating revenues, or net income greater than US$25 million (positive or negative) in FY 2014; and
- Foreign affiliates for which neither its total assets, sales or gross operating revenues, nor net income was greater than US$25 million (positive or negative) in FY 2014 and that is a foreign affiliate parent of another foreign affiliate for which the U.S. reporter filed on a BE-10B or BE-10C.
- Form BE-10D. This is the report for foreign affiliates for which neither its total assets, sales or gross operating revenues, nor net income was greater than US$25 million (positive or negative) in FY 2014 and that is not a foreign affiliate parent of another foreign affiliate for which the U.S. reporterfiled on a BE-10B or BE-10C.
Deadlines and Regulatory Burden
The BE-10s are due May 29, 2015 for U.S. reporters that will be required to submit fewer than 50 foreign affiliate forms (i.e., BE-10 B/C/D) and June 30, 2015 for U.S. reporters that will be required to submit 50 or more foreign affiliate reports. BEA will consider reasonable requests for extensions if a request is received no later than the original due date of the report(s).
BEA estimates that respondents will spend on average 144 hours fulfilling the BE-10 reporting requirements, but some companies, including multinationals with dozens of foreign affiliates, may find that the regulatory burden is somewhat greater. Among other issues to consider, U.S. companies must determine whether they or another U.S. affiliate company are the appropriate U.S. reporters for the BE-10A, which BE-10 forms they must complete for their foreign affiliates, whether any of their foreign affiliates can consolidate their BE-10 reporting, and whether the U.S. reporter can meet the BE-10 deadline or needs to request an extension from BEA.