Non-U.S. Investors Who Own 10 Percent or More of a U.S. Company Must File an Annual Report with the U.S. Department of Commerce, Bureau of Economic Analysis
All U.S. business enterprises in which a foreign person (in the broad legal sense, including a company) owns directly and/or indirectly a ten-percent-or-more voting interest (or the equivalent) are subject to these reporting requirements. This includes foreign ownership of real estate, improved and unimproved, except residential real estate held exclusively for personal use and not for profit making purposes. A U.S. business enterprise or real estate subject to these reporting requirements is hereinafter referred to as a U.S. affiliate. A foreign person owning a ten-percent-or-more voting interest (or the equivalent) in a U.S. affiliate is hereinafter referred to as a foreign parent.
Reporting to the Bureau of Economic Analysis (BEA) is required pursuant to the International Investment and Trade in Services Survey Act, as amended. Required reporting includes:
I. Quarterly report: For reporting positions and transactions of a U.S. affiliate with its foreign parent(s) and foreign affiliates of its foreign parent(s) on the Quarterly Survey of Foreign Direct Investment in the United States (Form BE-605);
II. Annual report: For reporting financial and operating data of a U.S. affiliate on the Annual Survey of Foreign Direct Investment in the United States (Forms BE-15A, BE-15B, BE-15(EZ), and BE-15 Claim for Exemption); and
III. Benchmark report: For reporting financial and operating data of a U.S. affiliate, as well as positions and transactions of the U.S. affiliate with its foreign parent(s) and foreign affiliates of its foreign parent(s) on the Benchmark Survey of Foreign Direct Investment in the United States (Forms BE-12(LF), BE-12(SF), BE-12 Bank, BE-12 Mini, and BE-12 Claim for Not Filing).
A U.S. affiliate must file on a fully consolidated domestic U.S. basis, including in the full consolidation all U.S. business enterprises in which it directly or indirectly owns more than 50 percent of the outstanding voting interest. The fully consolidated entity is considered one U.S. affiliate.
Copies of the report forms and instructions are available on BEA’s Web site at www.bea.gov/fdi. If you have questions please contact us by telephone (202) 606-5577. If email is more convenient, address your questions pertaining to the quarterly report (BE-605) to firstname.lastname@example.org; address your questions pertaining to the annual and benchmark reports (BE-15 and BE-12) to email@example.com.
Penalties– Whoever fails to report shall be subject to a civil penalty of not less than $2,500, and not more than $25,000, and to injunctive relief commanding such person to comply, or both. These civil penalties are subject to inflationary adjustments. Those adjustments are found in 15 CFR 6.4. Whoever willfully fails to report shall be fined not more than $10,000 and, if an individual, may be imprisoned for not more than one year, or both. Any officer, director, employee, or agent of any corporation who knowingly participates in such violations, upon conviction, may be punished by a like fine, imprisonment, or both (22 U.S.C. 3105).
Good News – There is No BEA Reporting Required for Investments Under $40,000,000
Form BE-15 Claim for Exemption – If foreign ownership in the U.S affiliate falls below 10 percent, the U.S. affiliate is fully consolidated or merged into another U.S. affiliate, or if all of the following three items for the affiliate are $40 million or less (positive or negative) you are exempt from the annual BEA form reporting requirements:
1. Total assets;
2. Annual sales or gross operating revenues; and
3. Annual net income after provision for U.S. income taxes.
To obtain the exemption from filing an annual BEA form you must complete, sign and file a BE-15 Claim for Exemption. This form is due not later than May 31 of the year following year the foreign parent acquired the interest in the U.S. affiliate.
For more on this topic see “Own a Foreign Business? Unraveling a Little‐Known Statute with Excessive Public Burdens.”