Earlier this year, we called your attention to a new legal requirement from the Bureau of Economic Analysis at the U.S. Department of Commerce (“BEA”), pertaining to reporting of investment coming into the United States. The purpose of this alert is to inform you of a separate BEA reporting requirement, pertaining to investment from the United States into other countries, with a deadline of May 29, 2015.
The quick takeaway is this: If you owned or controlled, directly or indirectly, 10% or more of the voting interest in a foreign enterprise at any point during your 2014 fiscal year, then you must file with BEA: (1) a consolidated Form BE-10A for the U.S. business enterprise, and (2) a Form BE-10B, Form BE-10C, or Form BE-10D for each foreign affiliate for which the 10% threshold is satisfied. The due date for these filings is May 29, 2015; however, the due date for a U.S. reporter filing more than fifty BE-10B, BE-10C, and BE-10D forms is June 30, 2015, and extensions can be requested.
A Form BE-10A must be filed for every U.S. business enterprise that owned or controlled 10% or more of the voting interest in a foreign enterprise directly or indirectly, with indirect ownership determined by multiplying voting interests down each ownership chain. However, the Form BE-10A must be filed on a fully consolidated basis, meaning that a single Form BE-10A will cover (1) the U.S. business enterprise whose voting securities are not owned more than 50 percent by another U.S. business enterprise (the “U.S. Parent”), and (2) proceeding down each ownership chain from the U.S. Parent, any U.S. business enterprise (including Foreign Sales Corporations located in the U.S.) whose voting securities are more than 50 percent owned by the U.S. business enterprise above it. U.S. entities that would need to file Form BE-10A but for the consolidated filing by their U.S. Parent instead must file a “BE-10 Claim for Not Filing,” which also must be filed by any U.S. individuals and entities that are contacted by BEA regarding the BE-10 survey but did not satisfy the 10% threshold during 2014.
The most burdensome part of the BE-10 survey is that, in addition to the Form BE-10A, a Form BE-10B, Form BE-10C, or Form BE-10D must be filed for every foreign affiliate for which the 10% threshold is satisfied. Which of these three forms must be filed depends primarily on (1) whether the foreign affiliate is majority- or minority-owned by the U.S. reporter, directly or indirectly, and (2) the size of the foreign affiliate, based on the largest of three components: (i) net assets, (ii) gross operating revenue/sales, or (iii) net income. The following chart outlines the main filing rules for these forms.
|Majority Owned||Minority Owned|
|At least one of the three items is greater than $300 mil. (+ or -)||BE-10B, except Part III||BE-10C|
|At least one of the three items is greater than $80 mil. (+ or -), but no one is greater than $300 mil. (+ or -)||BE-10B, except Part IV|
|At least one of the three items is greater than $25 mil. (+ or -), but no one is greater than $80 mil. (+ or -)||BE-10C|
|All three items are less than $25 mil. (+ or -)||BE-10D|
However, a BE-10C must be filed for a foreign affiliate of this size that owns another foreign affiliate being filed on a BE-10B or BE-10C
All of the BE-10 forms and additional instructions and guidance, are available online at https://www.bea.gov/surveys/respondent_be10.htm. Filers can register on the site and submit the required forms online.
Anyone who fails to file a required report is subject to a civil penalty of not less than $2,500, and not more than $32,500, and to injunctive relief commanding such person to comply, or both. Anyone who willfully fails to report—including any officer, director, employee, or agent of a corporation who knowingly participates in such violations—may be fined not more than $10,000 and, if an individual, may be imprisoned for not more than one year, or both.
This notice is not intended to provide legal advice. If you have questions regarding its content, please contact Ted Posner (Ted.Posner@weil.com, 202.682.7064), John O’Loughlin (John.Oloughlin@weil.com, 202.682.7050), or Timothy Welch (Timothy.Welch@weil.com, 202.682.7132).