Required BEA report filings under U.S. LAW
By Edward G. Kluiters, Haynsworth Sinkler Boyd, P.A.
The United States Bureau of Economic Analysis (BEA) requires surveys on U.S. direct investment abroad and foreign direct investment in the United States. The term investment includes the ownership of real estate. The BEA uses these surveys to produce statistics concerning international transactions and direct investment positions, activities of multinational enterprises, and new foreign direct investment in the United States.
The data collected is held confidentially, and the BEA conducts rigorous nondisclosure analysis to ensure that an individual reporter is not identifiable. Furthermore, the data cannot be used for tax, investigatory or regulatory purposes. Using the surveys, the BEA is able to produce a report that paints a picture of the scale of global business activity and its impact on the U.S. enterprises and foreign host economies, as well as the amount of foreign-controlled business activity in the United States and its impact on the economy. The report can be found on the BEA website, www.bea.gov, and in the September issue of the BEA’s monthly electronic journal, The Survey of Current Business.
Foreign Direct Investment in the U.S.
All U.S. business entities in which a foreign person owns 10 per cent or more of the voting securities of an U.S. business enterprise (such entities are deemed “U.S. affiliates”) are required to report foreign direct investment in the United States. This reporting requirement includes the foreign ownership of real estate, improved and unimproved. However, an exception does exist for foreign ownership of residential real estate held exclusively for personal use and not for profit-making purposes.
The survey of new foreign direct investment in the United States is Form BE-13 and its purpose is to capture new investment transactions when foreign investment is created or expanded in the United States. Responses are required by all entities subject to the requirements within 45 days after the investment transaction occurred. The reporting threshold is USD 3 million and certain investments with a total cost of less than US$ 3 million can qualify for an exemption. In addition to the BE-13 survey, there are also quarterly, annual, and benchmark surveys for foreign investment in the United States. The quarterly survey is found in Form BE-605 and it reports positions and transactions between a U.S. affiliate and its foreign parent. It is required for any U.S. affiliate that was established, acquired, liquidated, sold or became inactive during the reporting period. Entities required to report will be contacted by the BEA and must file within 30 days after the close of a calendar year or fiscal quarter, or 45 days after the close of the financial year. The annual survey is Form BE-15, and entities required to report will be contacted by the BEA concerning their financial and operating data.
The most comprehensive benchmark survey of foreign direct investment in the United States is found in Form BE-12 and is conducted once every five years in lieu of the annual survey, the most recent of which occurred after the 2012 fiscal year. A response for this survey is required of all entities, whether or not they are contacted by the BEA. For each survey, there are different available forms, and the reporting entity selects the one that matches their business. More information on the surveys and correct forms can be found at www.bea.gov/surveys/fdiusurv.htm.
U.S. Direct Investment Abroad
Reports concerning U.S. direct investment abroad are required from all U.S. persons (including corporations, trusts, or other organisations) that own 10 per cent or more of the voting securities of an incorporated or unincorporated foreign business enterprise (these entities are deemed “U.S. reporters”). This includes both U.S. persons and affiliates located outside the United States where a U.S. person holds the necessary voting interest.
The BEA’s most comprehensive survey of U.S. investment abroad is the BE-10 benchmark survey that is conducted once every five years, the most recent one of which occurred following the 2014 fiscal year. All entities subject to the reporting requirements are required to submit a response without being contacted by the BEA. Annual surveys, Form BE-11, are required in years where no BE-10 survey is taken in order to report annual financial and operating data of the U.S. reporter and its foreign affiliates. If an entity is required to report this annual survey of direct investment abroad, it will be contacted by the BEA. In addition to the BE- 10 and BE-11 surveys, the BEA conducts a quarterly survey to report positions and transactions between a U.S. reporter and its foreign affiliates. This BE-577 Form must be filed within 30 days after the close of the entity’s calendar or fiscal quarter, or within 45 days if it is the final quarter in a fiscal year. As with the BE-11, the BEA will individually contact those entities that are required to report Form BE-577. Similar to the surveys regarding foreign investment in the U.S., for each survey, there are multiple forms, and an entity should submit that one which is most applicable. More information on the surveys and correct forms can be found at www.bea.gov/surveys/ diasurv.htm.
Companies can submit their surveys via fax, mail, or electronic filing at the BEA website. Failure to submit required surveys can result in civil fines up to USD 25,000 or criminal penalties of USD 10,000 and up to one year imprisonment.
Edward G. KluitersHaynsworth Sinkler Boyd, P.A., South Carolina, USA
T: +1 803.540.7955
Edward Kluiter is a shareholder in the Columbia, South Carolina, U.S.A. office of Haynsworth Sinkler Boyd, P.A. His practice focuses primarily on assisting U.S. and foreign-owned businesses with locating, expanding and operating in South Carolina. Since the early 1990s, he has worked closely with State and local development authorities and governments in advising businesses and industries on various economic incentives, site acquisition, tax-exempt and conventional financing, and addressing business, contract, and other issues as they arise. Mr. Kluiters also regularly represents lenders and borrowers in financing transactions and real estate matters. The author gratefully acknowledges the assistance of Ms. Clara Elizabeth Weston in preparing this article.
Published: October 2015 l Photo: SeanPavonePhoto - Fotolia.com