Every five years the Bureau of Economic Analysis (“BEA”) performs a benchmark survey of U.S. Direct Investment Abroad (“USDIA”) called the BE-10. The purpose of the survey is to collect data about USDIA and provide comprehensive analyses to policymakers.
Although BE-10 reports are only statistical surveys (non-tax forms), taxpayers holding an interest in foreign affiliates will most likely be required to make the filing. Failure to report the information required by the due date may result in a U.S. reporter (see below for definition) being subject to penalties of between $2,500 and $25,000, as well as injunctive relief requiring a U.S. reporter to comply with the filing requirements. Additional penalties apply for willful violations.
This alert addresses surveys of USDIA. BEA conducts another series of surveys regarding foreign direct investment in the U.S., which is not addressed in this alert. All entities required to respond to the investment in the U.S.-mandatory survey will be contacted by BEA.
Who must file?
Form BE-10 is required of any U.S. person that had a foreign affiliate at the end of the 2019 tax year.
- A U.S. person may be a company (i.e., Corporation, S-corporation, Partnership or Limited Liability Company) that had a foreign affiliate during the 2019 fiscal year, but also individuals, estates, trusts and nonprofit organizations are included.
- A foreign affiliate is defined by BEA as “a direct or indirect interest of at least 10 percent of the voting stock of an incorporated foreign business enterprise, or an equivalent interest in an unincorporated foreign business enterprise, at the end of the U.S. person’s 2019 fiscal year.”
If one would naturally consider incorporated and unincorporated activities for-profit as falling under the definition of “foreign business enterprise,” other activities might also fall within the definition. For instance, ownership of real estate outside the U.S. is considered a business enterprise, unless the real estate is residential and held for personal use.
Which form do they have to file?
A U.S. person with one or more foreign affiliates is referred to as a “U.S. reporter.”
- Form BE-10A – This form covers information about the U.S. reporter. A full Form BE-10A must be filed by any U.S. reporters that had more than $300 million at any time during the 2019 fiscal year in (i) assets, (ii) sales or gross receipts (“revenues”) or (iii) net income. All other U.S. reporters file a simplified Form BE-10A.
- Form BE-10B – This form is filed for each foreign affiliate that any one of the following items was greater than $80 million at any time during the affiliate’s 2019 fiscal year: (i) assets, (ii) revenues or (iii) net income.
- Form BE-10C – This form is filed for:
- Each majority-owned foreign affiliate that any one of the following items was greater than $25 million and none of the items was greater than $80 million at any time during the affiliate’s 2019 fiscal year: (i) assets, (ii) revenues or (iii) net income
- Each minority-owned foreign affiliate that any one of the above mentioned items was greater than $25 million at any time during the affiliate’s 2019 fiscal year
- Each foreign affiliate that none of the above mentioned items was greater than $25 million at any time during the affiliate’s 2019 fiscal year that is a foreign-affiliate parent of another foreign affiliate being filed on BE-10B or BE-10C
- Form BE-10D – This Form is filed for all foreign affiliates that none of the above mentioned items was greater than $25 million at any time during the affiliate’s 2019 fiscal year and that is not a foreign-affiliate parent of another foreign affiliate being filed on BE-10B or BE-10C.
Note that if someone is notified by BEA to file a BE-10 survey but his/her business does not meet the filing requirements as listed above, he/she should still respond to the notice by submitting a Form BE-10 Claim for Not Filing.
When does one have to file?
Form BE-10 reports for 2019 are due on May 29, 2020 for U.S. reporters who file fewer than 50 Forms BE-10B, BE-10C and/or BE-10D (or June 30, 2020 if one files more than 50 forms).
How does one file?
BEA provides electronic filing via its website. As of today, the link is not available yet, and U.S. reporters should gather the required information in the meantime to be ready to file.
If you have any questions about BE-10 reports or any questions regarding your foreign investments, please contact your tax adviser or the GHJ International Tax Practice. The link below can be used to obtain more details regarding this filing.
Source: Bureau of Economic Analysis, U.S. Department of Commerce, https://www.bea.gov/