Mandatory Reporting of Foreign Direct Investment (FDI) in the US

Somewhat obscure, the Bureau of Economic Analysis (BEA) is the unit within the US Dept. of Commerce that collects and publishes statistics about the US economy, for example, the familiar gross US domestic product statistic. The BEA’s assigned duties include collecting data about foreign direct investment (FDI) in the US, as well as the converse, US direct investment in foreign countries.   One way the BEA obtains data about FDI is through reports (surveys) filed by US businesses which undergo events triggering the reporting requirement. Some of these reports are mandatory and penalties can result from failure to comply.  This blog addresses the mandatory report of new foreign direct investment in the US (known as the “BE-13 Survey”).

A little background.  The BEA created the BE-13 Survey in 1977 to evaluate the effect of FDI on the US economy. The International Investment and Trade in Services Survey Act gave the BEA authority to create the survey and collect the data. In 2009, budgetary constraints caused the BEA to suspend the BE-13 Survey. Now the BEA has reinstated the BE-13 Survey filing requirements by notice dated November 26, 2014.

Who must file the BE-13 Survey? 
The affected US company is responsible to file the BE-13 Survey.  A US company must file a BE-13 Survey anytime:

•     A foreign direct investment in the US relationship is created
•    An existing US affiliate of a foreign parent establishes a new US legal entity, expands its US operations, or acquires a US business
•    A US business that previously filed a Form BE-13B or BE-13D (forms summarized below) indicating that the established or expanded entity is still under construction

For the purposes of determining whether or not a BE-13 Survey must be filed, “foreign direct investment” means the ownership or control by one foreign person or foreign company of at least 10 percent of the voting securities (interests) of an incorporated US business, or an equivalent interest of an unincorporated US business, including a branch.

While there are certain thresholds that apply to each type of BE-13 Survey submission, e.g., whether the value of the transaction exceeds $3,000,000, the filing requirement is mandatory whether or not the filing threshold is met. (The applicable thresholds appear in the summaries of the various BE-13 Survey forms below.) In any case, if a transaction does not meet the filing threshold the US business still must file for an exemption using Form BE-13 Claim for Exemption.

When must the filings be made?
The initial BE-13 Survey is due no later than 45 days after the date of the triggering investment transaction or event. In addition, the reporting requirement is at least partially retroactive in that all transactions occurring since Jan. 1, 2014 are subject to the reporting requirement. The BEA required retroactive reporting by January 12, 2015 by any entity that crossed a reporting threshold / event occurrence between January 1, 2014 and November 26, 2014.  The BEA has informally suggested that it would not penalize entities that have missed the January 12 deadline for retroactive reporting and which in good faith submit the surveys after the due date.

How are filings made?
The BEA provides six different BE-13 Survey forms for use depending on the circumstances of the specific transaction or event.  These forms may be submitted by mail, fax, or electronically through BEA's electronic filing portal. The forms are:
BE-13A: a foreign entity acquires a voting interest (directly, or indirectly) in a US business and (i) total cost of the acquisition is greater than $3 million; (ii) US business will operate as a separate legal entity, and (iii) acquisition results in the foreign entity owning at least 10 percent of the voting interest in the acquired US entity
BE-13B: a foreign entity, directly or through an existing US business, creates a new legal entity in the US and (i) projected total cost to establish the new legal entity is greater than $3 million, and (ii) the foreign entity owns 10 percent or more of the new business's voting interest (directly or indirectly)
BE-13C: an existing US affiliate of a foreign parent acquires a US business that it then merges into its operations and the total cost to acquire the business is greater than $3 million
BE-13D: a US subsidiary, branch, office, or affiliate in the US expands its operations to include a new facility and the projected total cost of the expansion is greater than $3 million
BE-13E: a US business has previously filed a BE-13B or BE-13D indicating that the established or expanded entity is still under construction (form collects updated cost information and is collected annually until construction is complete) 
BE-13 Claim for Exemption (or Claim for Not Filing): (i) BEA contacts the US business but the filing thresholds are not met, or (ii) the business is not contacted by the BEA and the transaction is otherwise covered but the investment is $3 million or less

Additional Requirements: Other FDI Surveys
The BEA issues four different surveys directed to FDI. Form FE-13 is just one of them.  The others are Quarterly Survey (BE-605), Annual Survey (BE-15) and Benchmark Survey (BE-12).   

1.           Mandatory Benchmark Survey of FDI in the US (BE-12 Survey):
The BEA states that the BE-12 Survey is its most comprehensive survey of FDI in the US. This survey is conducted once every 5 years. The most recent BE-12 Survey covered the fiscal year ending in 2012 so the next one will cover the fiscal year ending in 2017.  This survey is mandatory and must be filed by entities subject to the reporting requirements of whether or not they are contacted by BEA. The reporting requirements are not addressed in this particular blog and may be found in the reference materials linked below. 

2.           Quarterly Survey of FDI in the US (BE-605 Survey):
The BEA states that the purpose of the quarterly survey is to report positions and transactions between a US affiliate and its foreign parent(s) and foreign affiliates of the foreign parent(s). In addition, a BE-605 Survey is required for any US affiliate that was established, acquired, liquidated, sold, or became inactive during the reporting period. Entities required to report will be contacted individually by BEA. The reader will be pleased to know that entities not contacted by BEA currently have no reporting responsibilities for the BE-605 Survey.

3.           Annual Survey of FDI in the US (BE-15 Survey):
According to the BEA, the purpose of the annual survey is to report annual financial and operating data of US affiliates. Entities required to report will be contacted individually by BEA. The reader will be pleased to know that entities not contacted by BEA currently have no reporting responsibilities for the BE-15 Survey.

Penalties for Not Filing
As an incentive to timely file the mandatory and requested surveys, the BEA has authority to impose civil and / or criminal penalties for failure to timely complete the required surveys.  Civil penalties include fines ranging from $2,500 to $25,000 (subject to inflation adjustments) and civil actions such injunctions requiring the US business to furnish information or to otherwise comply with requirements. Criminal penalties may apply for willful failure to file required responses. Such criminal penalties include fines up to $10,000 and / or up to one year imprisonment. Criminal penalties may be imposed against the US business itself and / or any officer, director, employee, or agent of the business.

Additional resources:
Further information is available at the following:
15 CFR 801.7   
BEA Guide to Direct Investment Surveys 
BEA Website