While there are countless amounts of reporting requirements for domestic and international companies, one of the lesser known requirements is mandated by the Bureau of Economic Analysis of the US Department of Commerce (BEA). The BEA conducts research and analysis on foreign and US direct investments quarterly, annually, and every five years.
US investors in foreign businesses should be acquainted with the BE-10, BE-11, and BE-577 forms. The BE-10 is required of any US person that owns a foreign affiliate – that is, had a direct or indirect ownership or control of at least 10 percent of the voting stock of an incorporated foreign business. The BE-10 benchmark survey is the BEA’s most comprehensive survey and is conducted once every five years in place of the BE-11 annual survey. Form BE-10 is due by May 29, 2020. The BE-11 annual survey is conducted during the four years in between benchmark surveys and it is due by May after the close of those years.
Form BE-577 is required for each directly owned foreign affiliate whose assets, sales, or net income exceed $60 million at any time during the year. It is also required for each indirectly owned foreign affiliate with intercompany receivables or payables balances with its US parents of more than $1 million. Form BE-577 is due within 30 days after the end of every calendar or fiscal quarter in which these thresholds are met. The deadline is 45 days when reporting the final quarter of the financial reporting year in which these thresholds are met.
Foreign investors should be familiar with the BE-13 and BE-15 forms. US businesses that are owned or controlled directly or indirectly, by a foreign person, must be in compliance with these requirements. The BE-15 form is due May 31, 2020, or by June 30, 2020 for reports submitted via eFile. The BE-13 form is due no later than 45 days after the acquisition is completed, the new legal entity is established, or the expansion has begun. The specific form that is required to be filed is dependent on two factors. The factors include the type of investment and the total dollar amount of the investment.
While these forms are not difficult to complete, being aware of them is of the utmost importance. The reason why these surveys are so important is far less about the content, but rather the consequences companies face if they do not file these forms. Failure to file these forms exposes any US enterprises to a civil penalty between $2,500 and up to $45,000.