Mandatory Survey of Foreign Direct Investment Due to BEA by May 31, 2023

The U.S. Department of Commerce's Bureau of Economic Analysis ("BEA") collects data regarding U.S. multinational enterprise investments and prepares official U.S. economic statistics through a series of quarterly, annual, and benchmark surveys of both inbound and outbound direct investment. The benchmark survey, which is conducted every five years, is the most comprehensive survey of business enterprises and their activities. For example, it requires business enterprises to report: (1) financial reporting standards they use; (2) business affiliates on a consolidated basis; and (3) ownership structure, etc.

The next benchmark survey is due May 31, 2023, for fiscal year 2022. In addition, BEA mandates quarterly and annual surveys of U.S. parents and their "foreign affiliates" and of "U.S. affiliates" of "foreign parents" (see definitions below) above certain size thresholds. BEA collects the survey data only for statistical and analytical purposes and restricts other agencies' access to the data for tax, investigative, or regulatory purposes.

This advisory provides foreign and domestic investors and U.S. affiliates an overview of mandatory filing requirements of BEA surveys. (For more information, click here.)

Highlights

U.S. Direct Investment Abroad

Foreign Direct Investment in the United States

Definitions

• "U.S. person" is any individual or business entity that is a resident in or subject to the jurisdiction of the United States.
• "foreign affiliate" is a foreign business enterprise whose voting interest is directly or indirectly owned or controlled by a U.S. person. A limited exemption applies to a foreign business enterprise that is a private fund that does not own an operating company.
• "foreign parent" means a foreign person that owns a 10% or more voting interest in a U.S. affiliate.
• "U.S. affiliate" means a U.S. business enterprise whose voting interest is directly or indirectly owned by a foreign entity.

Surveys of U.S. Outbound Direct Investment

1. Who is required to report?

   All U.S. persons that own, directly or indirectly, 10% or more of the voting interest of a foreign business enterprise are required to report ("U.S. reporter").
   
   

2. Quarterly Survey (Form BE-577)

   A U.S. reporter must file this form for (i) each directly owned foreign affiliate that has total assets, annual sales or annual net income of more than $60 million (positive or negative) at any time during the affiliate's fiscal reporting year, and (ii) each indirectly owned foreign affiliate that meets the $60 million threshold and that has an intercompany debt balance with the U.S. reporter in excess of $1 million.

   A BE-577 Certification of Exemption can be filed if a foreign affiliate meets one of the following criteria: (i) the foreign affiliate does not meet the $60 million threshold for the most recent financial reporting year, and (ii) if the foreign affiliate is held indirectly, neither the indirectly owned foreign affiliate's quarterly payables to the U.S. reporter nor its quarterly receivables from the U.S. reporter exceeded $1 million.
   
   

3. Annual Survey (Form BE-11)

   This annual survey consists of five forms:  Forms BE-11A, B, C and D as well as Claim for Exemption. A U.S. reporter must file one BE-11A on a fully consolidated U.S. business enterprise basis and one or more BE-11B, C, or D forms for each of its foreign affiliates depending on (i) whether the foreign affiliate is majority-owned (i.e., above 50%) or minority-owned (i.e., at least 10% but not more than 50%), and (ii) whether it meets the $60 million threshold.

   If none of BE-11B, C, or D applies to a foreign affiliate, the U.S. reporter may need to file B-11 Claim for Exemption.
   
   

4. Benchmark Survey (Form BE-10)
   
   A BE-10 filing is required from entities subject to the reporting requirements regardless of whether they are contacted by BEA or not.
   
   This benchmark survey generally follows the concept of the annual survey (BE-11). A complete filing includes one BE-10A for a U.S. reporter and one or more BE-10B, C, or D forms for each of the foreign affiliates. If a U.S. person is not required to file any of the foregoing forms, it may still be obligated to file Form BE-10 Claim for Not Filing depending on the individual person's circumstances.

Surveys of Foreign Direct Investment in the U.S.

1. Who is required to report?

   Filing is required of all U.S. business enterprises in which a foreign person owns, directly or indirectly, 10% or more of the voting interest. This includes foreign ownership of certain real estate. Note that: (i) the foreign parent is the first person outside the U.S. in a chain of ownership; and (ii) the private fund exemption may apply.
   
   

2. Survey of New Foreign Direct Investment (Form BE-13)

   This survey is intended to capture new investment transactions when a new U.S. affiliate is created or when an existing U.S. affiliate of a foreign parent establishes a new U.S. legal entity, expands its U.S. operations, or acquires another U.S. business enterprise. The initial report must be filed no later than 45 days after the date of the investment transaction. This survey consists of five forms. Which form should be filed is determined by the following criteria:

   • Form BE-13A is filed for a U.S. enterprise when a foreign parent acquires 10% or more of the voting interest (directly or indirectly through its existing U.S. affiliate) in the enterprise, and the total value of the investment is more than $3 million.
   • Form BE-13B is filed for a newly formed U.S. enterprise when the creation of the new entity meets both the $3 million threshold and the 10% or greater ownership requirement.
   • Form BE-13D is filed for an existing U.S. affiliate of a foreign parent when it expands its operations, and the projected cost of the expansion meets the $3 million threshold.
   • Form BE-13E is filed for a U.S. enterprise that previously filed forms BE-13B or D, and the established or expanded entity is still under construction.
   • Form BE-13 is filed if a U.S. enterprise either was contacted by BEA or meets all filing requirements except the $3 million threshold.
     
     
3. Quarterly Survey (Form BE-605)

   A BE-605 survey is required for any U.S. affiliate of a foreign parent that was formed, acquired, liquidated, sold, or became inactive during the reporting period. Entities subject to reporting obligations will be contacted individually by BEA and must file the report within 30 days after the close of their fiscal quarter, or within 45 days of the final quarter of the fiscal year.

   Form BE-605 is filed for a U.S. affiliate that has total assets, annual sales or gross operating revenues, or annual net income of more than $60 million (positive or negative).

   A BE-605 Claim for Exemption is filed if: (1) a foreign affiliate fails to meet the $60 million reporting threshold; and (2) it is foreign-owned directly through another U.S. affiliate of the foreign parent and has no direct transactions with the foreign parent(s) or the foreign affiliates of the foreign parents.
   
   

4. Annual Survey (Form BE-15)

   Entities required to file an annual report will be contacted individually by BEA and then must file one of the following four forms:

   • Form BE-15A is filed for a majority-owned U.S. affiliate that has total assets, sales or gross operating revenues, or net income of more than $300 million (positive or negative).
   • Form BE-15B is filed for a U.S. affiliate that is either a majority-owned U.S. affiliate that has total assets, sales or gross operating revenues, or net income of more than $120 million (positive or negative) but no more than $300 million (positive or negative) or a minority-owned U.S. affiliate that meets the $120 million threshold.
   • Form BE-15C is filed for a U.S. affiliate that exceeds the $40 million threshold but is below the $120 million threshold.
   • Form BE-15 Claim for Exemption is filed if a U.S. affiliate meets one of the following: (1) the foreign ownership interest in the U.S. affiliate is less than 10%; (2) the U.S. affiliate is fully consolidated in the report of another U.S. affiliate; or (3) it is below the $40 million threshold.
     
     
5. Benchmark Survey (Form BE-12)
   
   The most recent survey covers fiscal years ending in 2022 and is being conducted by BEA in 2023. This survey has four forms. Which form will be filed is determined by the following criteria:

• Form BE-12A is filed for a majority-owned U.S. affiliate that meets the $300 million threshold.
• Form BE-12B is filed for a U.S. affiliate that is either a majority-owned U.S. affiliate that meets the $60 million threshold but is below the $300 million threshold or a minority-owned U.S. affiliate that exceeds the $60 million threshold.
• Form BE-12C is filed for a U.S. affiliate that is below the $60 million threshold.
• Form BE-12 Claim for Not Filing is filed if a U.S. affiliate does not meet the filing requirements of the other three BE-12 forms and was not notified by BEA to file.

The BE-12 forms for the current reporting period are available on the BEA website. Multinational corporations that have investment in the U.S. should prepare, or consult with their legal counsel to prepare, for filing well in advance of the deadline. Which form you are obligated to file is based on a fact-specific analysis.

For further information regarding the BEA surveys, please contact Burt Braverman, and Dsu-Wei Yuen.