U.S. Persons Owning Non-U.S. Businesses Should Request a Filing Extension Now and Submit Form BE-10 by August 31, 2015, In Order to Avoid Penalties
The Bureau of Economic Analysis (BEA), an agency of the U.S. Department of Commerce, is requiring “first-time filers” (those who have not submitted reports to the BEA in prior years) to file a Benchmark Survey of U.S. Direct Investment Abroad on Form BE-10 by August 31, 2015. First-time filers who did not submit their Forms BE-10 by June 30, 2015, should immediately submit a Request for Extension for Filing to request a filing extension and then submit Form BE-10 by August 31, 2015. Failure to file may result in both civil and criminal penalties, including civil fines of $2,500 to $25,000.
Reporting on Form BE-10 is mandatory for any U.S. person (such as an individual, corporation, partnership, limited liability company, trust, etc.) that had direct or indirect ownership or control of at least 10 percent of the voting stock of an incorporated foreign (located outside of the U.S.) business enterprise, or an equivalent interest in an unincorporated foreign business enterprise, at any time during the U.S. person’s 2014 fiscal year. The 10% voting interest requirement applies regardless of the value of such voting interest.
Form BE-10 does not have a dollar threshold requirement for filing. All non-U.S. business enterprises (subsidiaries or affiliates) that satisfy the ownership or control threshold must be reported. Separate BE-10 forms are used depending on the assets, sales or net income of the non-U.S. business enterprise. U.S. persons also are required to file if during the fiscal year a non-U.S. business enterprise was established, acquired, liquidated, sold or made inactive.
U.S. Parent Companies
A U.S. business that held during its 2014 fiscal year 10% or more of the voting securities of a non-U.S. subsidiary is required to report its ownership of the non-U.S. subsidiary on Form BE-10.
Private Equity Funds
If a U.S. fund owned during its 2014 fiscal year a 10% or greater voting interest in a foreign business enterprise (including a non-U.S. portfolio company or holding company), such U.S. fund must report its ownership. Similarly, a U.S. general partner or managing member that owns 10% or more of the voting securities of a non-U.S. fund must file a Form BE-10. Note that the general partner of a limited partnership or the managing member of a limited liability company generally will be deemed to own 100% of the voting interests of the limited partnership or limited liability company.
Real Estate Holdings
A U.S. person who owns real property located outside of the U.S. is considered to control a foreign affiliate for purposes of the BE-10 filing requirement. However, Form BE-10 need not be filed if such real property is held exclusively for personal use.
Failure to file the required Form BE-10 may result in civil or criminal penalties. Civil penalties include fines ranging from $2,500 to $25,000 along with injunctive relief compelling compliance with the filing requirement. Criminal penalties for willful failures to file, which may extend to officers, directors or employees who knowingly participate in such violations, include fines of not more than $10,000, and for individuals, imprisonment of not more than 1 year.
The information filed on Form BE-10 is confidential and may only be used for analytical and statistical purposes. The BEA is prohibited from granting another government agency access to such data for tax, investigative or regulatory purposes.
Based on our communication with the BEA, first-time filers should submit a Request for Extension for Filing immediately to request a filing extension until August 31, 2015. Once the request is received by the BEA, first-time filers may consider it granted. The applicable Forms BE-10 should then be submitted by the August 31, 2015, deadline.
The Request for Extension for Filing may be found at:
Instructions to Form BE-10 may be found at:
General information along with frequently asked questions regarding Form BE-10 may be found at: http://www.bea.gov/surveys/respondent_be10.htm