The U.S. Department of Commerce Bureau of Economic Analysis (BEA) requires all U.S. persons (individuals and businesses) that owned an interest in a foreign affiliate during their fiscal year 2014 to file a Form BE-10 to report the ownership. The filing requirements have been interpreted broadly to include a U.S. private fund with a foreign investment. The form is required to be filed by May 29, 2015 for U.S. persons reporting fewer than fifty affiliates and by June 30, 2015 for those reporting fifty or more affiliates.
Annual Benchmark Reports
The purpose of the BE-10 is to provide a benchmark to the Department of Commerce of the economic activity between U.S owners and their foreign affiliates. The complete survey is conducted once every five years and compliance is mandatory. Further, the BEA may request certain U.S. persons to file quarterly or annual benchmark reports. The filing requirement applies to U.S. persons with direct or indirect ownership of:
- at least 10% of the voting stock of an incorporated foreign business, or
- an equivalent interest in an unincorporated foreign business
In addition to the BE-10, the BEA requires reporting for the “covered transactions” of a foreign enterprise with a U.S. investment. These transactions are reportable on Form BE-12 within 45 days of the transaction and include the following transactions:
- acquisition or mergers resulting in a 10% or more ownership of a U.S. business by a foreign person (individual or entity)
- a capital contribution by a foreign person to an existing U.S. affiliate
- the acquisition by a U.S. affiliate of a foreign person of another U.S. business
Furthermore, annual and/or five-year benchmark information for foreign investors in U.S. businesses is required to be reported on Forms BE-15 or BE-12, respectively.
The BEA filing requirements are complicated and tedious, and penalties of up to $32,500 may be imposed for the failure to fail any of these forms. If you have questions about BE-10 or any matter involving international taxation regulations and compliance, speak with a Barnes Dennig consultant by reaching out to us here.