The US Department of Commerce Bureau of Economic Analysis (the "BEA") recently revived a little-known reporting obligation under a US statute called the International Investment and Trade in Services Survey Act (the "Act"). As we explain below, many US companies, US individuals, US trusts and others may be required to file a form known as a BE-10 by May 29, 2015, in order to disclose direct or indirect ownership in non-US business enterprises.
The Act generally requires that the BEA collect data on (a) US investment in non-US business enterprises and (b) non-US investment in US business enterprises. The Act also applies to ownership of real property, although there is an exception for real estate held exclusively for personal use and not held for profit-making purposes. References below to a "business enterprise" include real estate that is held as an investment.
The BE-10: What is it and who must file?
The BE-10 is a survey of US direct investment abroad, and it is due once every five years. A "US Reporter" (which generally includes any individual, company, trust, estate or non-profit entity that is resident, formed or operating in the US, or otherwise subject to the jurisdiction of the US) must file the BE-10 if, at any point during the fiscal year ending in 2014, the US Reporter had direct or indirect ownership or control of at least 10% of the voting interests of a non-US business enterprise. The filing obligation applies regardless of the size of the non-US business enterprise.
A US Reporter that directly or indirectly owned or controlled less than 10% of the voting stock of a non-US business enterprise during its 2014 fiscal year has no reporting obligation. However, if the BEA contacts a company, individual, trust, estate or non-profit entity regarding a BE-10 filing, that person or entity must file a BE-10 Claim for Not Filing.
Generally, the BE-10 must be filed by May 29, 2015. US Reporters who are required to file 50 or more forms for their affiliates may delay the filing deadline to June 30, 2015. The next time this report will be required will be in 2020, with respect to the 2019 fiscal year.
If a US Reporter has a reasonable basis for being unable to file a BE-10 by the deadline, it may request an extension to June 30, 2015. However, the extension request must be filed by May 29, 2015, and the BEA is not obligated to grant the request for an extension.
The BEA may impose civil or criminal penalties for failure to file a BE-10, including fines ranging from $2,500 to $25,000, with harsher penalties generally reserved for a willful failure to file. Further, any officer, director, employee or agent of an entity, trust or otherwise who knowingly participates in a failure to file may be subject to monetary or criminal penalties. Despite the potential deadline penalties, we understand that enforcement actions for failures to file are not typically pursued.
Note that information disclosed in BEA forms is kept confidential, and will not be subject to public disclosure.
Filing a BE-10
Determining whether a US individual, entity, trust or otherwise has a reporting obligation can be complicated. Issues may also arise in determining which entity or entities in a multi-tiered ownership structure have a reporting obligation.
Withers is able to assist clients in confirming whether they have a reporting obligation and, if needed, assist with preparation of a BE-10. Clients should be aware that, together with other information regarding a filing entity's line of business and ownership details, reports filed with the BEA include financial information about the filing entity. Accordingly, your finance staff or accountants are typically necessary parties to the filing process.
If you are concerned that you may have a BE-10 reporting obligation, please contact your regular Withers attorney or any of the attorneys listed on this page.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.