New Reporting Requirements Take Effect for U.S. Businesses with Foreign Investors, and Businesses that Invest Abroad

4517840289_e6558e6f0a_z.jpgA little-known federal agency within the Department of Commerce, the Bureau of Economic Analysis (BEA), revived a reporting requirement last year for U.S. companies receiving foreign investments. It also expanded the reporting requirements for U.S. companies that directly invest in foreign businesses. Prior to the recent amendments to these rules, the reporting requirements only applied to companies directly contacted by the BEA. Now they apply to any U.S. company that meets the benchmarks for reporting.

The International Investment and Trade in Services Survey Act authorizes the Executive Branch “to collect information on international investment and United States foreign trade.” 22 U.S.C. § 3101(b). The BEA is charged with carrying out this purpose. It revived Form BE-13, the “Survey of New Foreign Direct Investment in the United States,” in a final rule published in August 2014, after having discontinued the survey in 2009. 79 Fed. Reg. 47573, 15 C.F.R. § 801.7. Another final rule, published in November 2014, changed the requirements for Form BE-10/11, the “Benchmark Survey of U.S. Direct Investment Abroad.” 79 Fed. Reg. 69041, 15 C.F.R. § 801.8.

Information provided in the surveys may only be used “for analytical or statistical purposes” by the federal government, to enforce reporting requirements, and for “augmenting and improving the quality of data collected by the Bureau of the Census.” 22 U.S.C. §§ 3104(c), (d). Failure to file reports as required can result in civil penalties of $2,500 to $25,000, as well as criminal penalties of up to one year’s imprisonment and a fine of up to $10,000. 22 U.S.C. § 3105.

U.S. companies that receive foreign investments, not the foreign investors, are responsible for filing Form BE-13. Only companies involved in transactions of $3 million or more are required to file the survey, but companies who do not meet that benchmark must still file a Form BE-13 Claim for Exemption. The BEA has created five versions of the form for use in different types of investments:
– BE-13A: A U.S. business entity in which a foreign entity acquires a voting interest;
– BE-13B: A new U.S. business entity established by a foreign entity;
– BE-13C: A U.S. business entity acquired by a U.S. affiliate of a foreign entity;
– BE-13D: A U.S. affiliate of a foreign entity that expands to a new facility; and – BE-13E: An entity that previously filed Form BE-13B or BE-13D and needs to update project cost information.

U.S. business entities and individuals must file Form BE-10 or BE-11 if they have invested in a foreign entity and meet a series of benchmarks established by the BEA. The agency has created four different versions:
– BE-10A: U.S. businesses or individuals investing abroad;
– BE-10B: Foreign affiliates of U.S. business entities with assets, sales, or net income of more than $80 million;
– BE-10C: Foreign affiliates of U.S. business entities with assets, sales, or net income of more than $25 million, but not more than $80 million; and – BE-10D: Foreign affiliates of U.S. business entities with assets, sales, or net income of not more than $25 million.

Business law attorney Samuel C. Berger represents business owners and entrepreneurs in the New York City and Northern New Jersey areas. We offer fixed-fee legal-service packages covering a wide range of legal needs, such as business formation, contracts, and various types of regulatory compliance. Contact us today online or at (212) 380-8117 to schedule a confidential consultation with a member of our team.

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Treasury Department Issues New Guidance for Corporations that Transfer Operations Abroad to Reduce Tax Liability, New York & New Jersey Business Lawyer Blog, October 16, 2014
New Jersey Offers Assistance to Small Businesses Selling Goods and Services Internationally, as India Opens Doors to Their Involvement, New York & New Jersey Business Lawyer Blog, February 14, 2013
Photo credit: Colleen Lane [CC BY-ND 2.0], via Flickr.