An overview of little-known mandatory BEA foreign investment surveys

Many U.S. companies with foreign affiliates are unaware that they may be subject to mandatory filing requirements with a little known agency of the U.S. Department of Commerce, the Bureau of Economic Analysis (“BEA”). In effect, one must report all covered inbound and outbound foreign investments on BEA survey forms. The threshold for filing is only a 10% voting stake either outbound by a U.S. company in a foreign affiliate or inbound by a foreign company in a U.S. affiliate, so most such international investments are covered. There are initial filings upon investment, periodic filings, event filings, and a substantial 5-year benchmark filing. The BEA collects the data on a confidential basis to prepare statistical reports that are used in evaluating and setting US economic policy. Companies should be aware that a failure to file required forms, particularly if willful after having been alerted of the filing obligation by the BEA, is subject to substantial fines and even criminal penalties. While a large part of the forms consists of financial reporting, companies regularly seek our assistance to determine which filings must be made, set up calendars of due dates, navigate through the process, and advise on related legal issues.

The following is an overview of the filing requirements for outbound and inbound foreign direct investment. 

What is the BEA?

The BEA is a federal agency that prepares economic statistics, including on U.S. direct investment abroad (outbound direct investment) and foreign direct investment in the U.S. (inbound direct investment) based on surveys.

Are surveys mandatory and subject to penalties for failure to file?

Yes. Failure to file may lead to civil penalties between approx. $2,500 and $50,000, and criminal penalties (for willful violations), if an individual, up to one year in prison. Historically, penalties have not been strictly enforced.

How are surveys filed?

Electronic online (preferred), fax or mail filing is available.

Outbound U.S. Direct Investment Abroad

Who must file BEA surveys on outbound U.S. direct investment abroad?

All U.S. persons that own, directly or indirectly, 10 percent or more of the voting securities of an incorporated foreign business enterprise or an equivalent interest in an unincorporated foreign business enterprise, with the exception of certain foreign private funds.

What surveys on outbound U.S. direct investment abroad must be filed?

• Quarterly Survey (Form BE–577) on positions and transactions between a U.S. reporter and its foreign affiliates must be filed for:
  • each directly owned foreign affiliate with total assets, annual sales or gross revenues, or annual net income of more than $60 million (positive or negative);
  • each indirectly owned foreign affiliate that meets the $60 million threshold and has an intercompany debt balance with the U.S. reporter that exceeds $1 million.
  • BE–577 Certification of Exemption must be filed for foreign affiliates that do not meet the above thresholds.

• Annual Survey of U.S. Direct Investment Abroad (Form BE–11) on annual financial and operating data.
  • Only entities that are contacted by BEA are required to report.
  • Five different forms BE-11 A through D and a BE-11 Exemption form exist. The applicable form depends on the relationship (e.g., majority/minority ownership) to and size (e.g., assets, sales, income) of the foreign affiliate.

• Benchmark Survey of U.S. Direct Investment Abroad (Form BE–10)
  • Conducted every 5 years, required whether or not entities are contacted by BEA.
  • Five different forms BE-10A through D and a BE-10 Exemption form exist, applicable form depends on relationship to (e.g., majority/minority ownership) and size (e.g., assets, sales, income) of foreign affiliate.

Inbound Foreign Direct Investment in the United States

Who must file BEA surveys on Foreign Direct Investment in the United States?

All U.S. business enterprises in which a foreign person (e.g., company) owns, directly or indirectly, 10% or more of the voting securities of an incorporated U.S. business entity or an equivalent interest of an unincorporated U.S. business enterprise. This includes foreign ownership of improved and unimproved real estate except residential real estate held exclusively for personal use.

What triggers obligation to file surveys on foreign direct investment in the U.S.?

• Survey of New Foreign Direct Investment in the United States (Form BE–13 A, B, D, E or Claim For Exemption must be filed within 45 days after completion of any of the following transactions:
  • Form BE–13A: for a U.S. business enterprise when a foreign entity acquires a voting interest (directly or indirectly through an existing U.S. affiliate) in the enterprise, segment, or operating unit, and the acquisition meets the following criteria:
    • The total cost of the acquisition is more than $3 million; and
    • at least 10 percent of the voting interest in the acquired enterprise is now owned, directly or indirectly, by the foreign entity.
  • Form BE–13B: for a U.S. business enterprise when a foreign entity or an existing U.S. affiliate of a foreign entity establishes a new legal entity in the United States, and the establishment of the new entity meets the following criteria:
    • The projected total cost to establish the new legal entity is more than $3 million; and
    • At least 10 percent of the voting interest in the newly established business enterprise is now owned, directly or indirectly, by the foreign entity.
  • Form BE–13D: for an existing U.S. affiliate of a foreign parent when it expands its operations to include a new facility where business is conducted, and the projected total cost of the expansion is more than $3 million.
  • Form BE–13E: for a U.S. business enterprise that previously filed form BE–13B or form BE–13D, and the established or expanded entity is still under construction.
  • Form BE-13 Claim for Exemption: must be filed if a U.S. business enterprise was contacted by BEA or if it meets all requirements except the $3 million reporting threshold for filing one of the other forms.

What other surveys on foreign direct investment in the U.S. must be filed?

• Quarterly Survey of Foreign Direct Investment in the United States (Form BE–605)

• • Purpose: Report positions and transactions between U.S. affiliate and its foreign parents and between U.S. affiliate and foreign affiliates of the foreign parents.
  • Who must file: Form BE–605 is filed for a U.S. affiliate that has total assets, annual sales or gross operating revenues, or annual net income (not just the foreign parent’s share) of more than $60 million (positive or negative).

• BE–605 Claim for Exemption. This section of the BE–605 form is filed if a foreign affiliate meets the following criteria for exemption.
  • U.S. affiliate’s total assets, annual sales or gross operating revenues, and annual net income are each $60 million or less (positive or negative.); or
  • U.S. affiliate is foreign-owned indirectly through another U.S. affiliate, and it has no direct transactions with the foreign parent(s) or the foreign affiliates of the foreign parents.

• Annual Survey of Foreign Direct Investment in the United States (Form BE–15)
  • Purpose: Report annual financial and operating data of U.S. affiliates.
  • Who must file: Only entities contacted by the BEA.
  • Type of Form: Form BE-15A, B, C, or Claim for Exemption depends on type of ownership (e.g., majority/minority) and size of the investment (e.g., assets, sales, gross revenues or net income)

• Benchmark Survey of Foreign Direct Investment in the United States (Form BE–12)
  • Purpose: Comprehensive survey of foreign direct investment every 5 years.
  • Who must file: All entities subject to the reporting requirements of the BE–12, whether or not they are contacted by BEA.
  • Type of Form: Form BE-15A, B, C, or Claim for Exemption depends on type of ownership (e.g., majority/minority) and size of the investment (e.g., assets, sales, gross revenues or net income)
  • Claim for Not Filing: Filed if a U.S. affiliate does not meet the requirements for filing the BE–12A, BE–12B, or BE–12C and was notified by BEA to file.

Please contact Florian von Eyb or Steven H. Thal with any questions concerning your BEA reporting obligations. We look forward to hearing from you.