Reporting Requirements for U.S. Persons on Cross-Border Investment
By Mary Vasilescu
Foreign investments into the U.S. and U.S. direct investments abroad can trigger certain mandatory regulatory reporting for U.S. businesses. The U.S. Department of Commerce through the Bureau of Economic Analysis (BEA) requires a U.S. person to file surveys in two circumstances: when the U.S. Person is owned 10% or more by a Foreign Person, or when the U.S. Person owns 10% or more of a foreign entity. The 2014 surveys must be filed whether or not the entity is contacted by the Commerce Department.
Foreign Direct Investment Surveys
Per bea.gov, the BEA regulations require foreign owned U.S. business enterprises to file mandatory reports with the BEA no later than 45 days of any of the following three reportable transactions:
- A foreign person or business enterprise has acquired a direct or indirect voting interest of 10% or more in the U.S. business enterprise;
- Voting interests in the U.S. business enterprise are directly or indirectly 10% or more foreign owned and the U.S. business enterprise has been newly established; or
- Voting interests in the U.S. business enterprise are directly or indirectly 10% or more foreign owned and the U.S. business enterprise has expanded its operations to include a new facility.
An entity that crosses this 10% threshold must file a Form BE-13 if the cost of acquiring (or establishing) such interest exceeds $3 million. However, participants in transactions having a value of $3 million or less are required to file a claim for exemption from filing.
There are six different BE-13 survey forms covering various types of foreign direct investment.
U.S. Direct Investment Abroad Surveys
A BE-10 report is required of any U.S. person that had a foreign affiliate – that is, that had 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 – at any time during the U.S. person’s 2014 fiscal year. Form BE-10 does not provide for any de minimis exceptions to the filing requirement for entities with limited or no assets or revenues.
The due dates for filing forms BE-10 are May 29, 2015, for U.S. reporters filing fewer than 50 forms and June 30, 2015, for a U.S. reporters filing 50 or more forms.
BEA may impose significant civil and/or criminal penalties for failure to complete required surveys.
U.S. persons should contact their legal advisors for assistance with determining the filing requirement and the information needed to complete the surveys.