Submission deadline extended to June 30, 2015, for "new" filers

On November 20, 2014, the Commerce Department's Bureau of Economic Analysis (BEA) issued its final rule regarding the requirement for US companies with investments via affiliates abroad to participate in the quinquennial "Benchmark Survey of U.S. Direct Investment Abroad." 79 Fed. Reg. 69014 (Nov. 20, 2014).  79 Fed. Reg. 47599 (Aug. 14, 2014).1 The authority and purpose for the BE-10 survey is set forth in the proposed rule:

The BE-10, Benchmark Survey of U.S. Direct Investment Abroad, is a mandatory survey and is conducted once every five years by BEA under the International Investment and Trade in Services Survey Act, 22 U.S.C. 3101-3108 (the Act). Section 3103(b) of the Act provides that “with respect to United States direct investment abroad, the President shall conduct a benchmark survey covering year 1982, a benchmark survey covering year 1989, and benchmark surveys covering every fifth year thereafter.” In Section 3 of Executive Order 11961, as amended by Executive Orders 12318 and 12518, the President delegated responsibility for performing functions under the Act concerning direct investment to the Secretary of Commerce, who has redelegated it to BEA.

79 Fed. Reg. 47600.  While previous BE-10 survey responses were required only from companies contacted by BEA, a submission for the 2014 Survey is now required from  all entities "subject to the reporting requirements . . . whether or not they are contacted by BEA." 79 Fed. Reg. 69041.

Although the rule established a May 29, 2015, deadline for submission of BE-10 reports for US Reporters with less than 50 forms to file (and June 30, 2015 for those with 50 or more forms to file), on the eve of that deadline, BEA posted a notice on its website that the deadline for "new filers" had been extended to June 30, 2015.   BEA defines a "new filer" in its responses to the Frequently Asked Questions (FAQs) as "a U.S. Company or person that is required to file on [sic] the BE-10 survey but has never filed any BEA survey of U.S. direct investment abroad, including the BE-10, BE-11, and BE-577 surveys."  BEA has not announced an extension of the current June 30, 2015, deadline for persons and entities that must file 50 or more forms.  In addition, the extension does not apply to entities that had previously filed a BEA survey concerning US direct investment abroad, although the BEA website does include a Request for Extension form that asks BEA to approve a 30-day extension of the existing filing deadlines.  Because the BEA guidance states that a Request for Extension should be received by BEA "before the due date" of the relevant report, entities not qualifying as "new filers" should have submitted an extension request already.

Although the reinstatement of the BE-13 filing received a fair amount of attention, the BE-10 announcement did not.  As a result, many US entities with one or more foreign "affiliates" (defined by the rule as "direct or indirect ownership or control of at least 10 percent of the voting stock of an incorporated foreign business enterprise, or an equivalent interest in an unincorporated foreign business enterprise, including a branch") appear to be unaware that the final rule added a new section to 15 C.F.R. § 801 mandating that the BE-10 must be filed whether or not a request was made by BEA.  15 C.F.R. § 801.8(a).  This departure from prior practice has resulted in some confusion and uncertainty as to the applicability of the BE-10 filing requirement.

US businesses entities, whether public or private, are affected by this greatly expanded reporting requirement.  Below, we provide several key considerations to help determine whether your company should prepare and file the 2014 BE-10 filing.

  1. First, if your business was contacted by BEA and requested to file the form, you must file the BE-10A U.S. Reporter Form and any necessary foreign affiliate forms (forms BE-10BBE-10C, or BE-10D).
  2. If your business previously filed a BE-10, BE-11 or BE-577 survey, you must file the relevant BE-10 forms for fiscal year 2014.
  3. If your business was not contacted by BEA, and has not previously submitted a BE-10, BE-11 or BE-577, you are a "new filer" and must submit the 2014 BE-10 filings if you had a "foreign affiliate" at any timeduring your 2014 fiscal year.
  4. A "foreign affiliate" is one that is "legally or functionally separable from the domestic operations or activities" of the US Person.  BEA guidance advises that factors to look at when determining whether the foreign entity is a "foreign affiliate" include: whether the entity pays foreign income taxes; has a substantial overseas physical presence; maintains separate financial records; takes title to the goods it sells; or receives funds from customers for its own account for services rendered.
  5. Exactly which forms you must file depends on several factors, including the nature of the US owner of the affiliate (corporation, individual, trust, etc.), and the total assets, gross sales and/or net income of the foreign affiliate.

The BEA website provides guidance, written and video, instructions and all of the required forms.  For the most part, the completion of the BE-10 forms is a financial and corporate exercise that can be handled without too much difficulty. If you have questions concerning your reporting obligations or any of the more specific aspects of the reporting requirement, the Dentons team is ready to assist you.