August 16, 2018 / North America
Few people have heard of the U.S. Bureau of Economic Analysis (BEA), an agency of the Commerce Department. The BEA provides the U.S. government with statistical information regarding the U.S. economy. To aid in this endeavor, it does periodic surveys of cross-border investments (U.S. investments abroad and foreign investments in the U.S.).
Since 2014, the BEA has required U.S. entities to report certain transactions if a foreign person owns a 10 percent or greater voting interest in the entity, directly or indirectly by attribution. These forms are generally required to be filed by the U.S. entity when (i) a foreign person crosses the 10 percent threshold, (ii) the U.S. entity forms or acquires a new U.S. subsidiary, or (iii) expands its operations to include a new facility.
Additionally, the BEA requires foreign persons to file in certain instances. One such situation is where the foreign person forms or acquires a U.S. branch (or the branch expands its operations to include a new facility). Foreign persons are also generally required to file if the person acquires a 10 percent or greater interest in U.S. real estate that is held for profit (or begins significant construction on such real estate).
A U.S. entity or foreign person meets the reporting requirements by filing a Form BE-13 within 45 days of the reportable transaction. Technically, there is an exemption for transactions that are $3 million or less. However, a form must be filed to establish the exemption. The BEA will entertain reasonable requests for extension. Extensions are available by calling the BEA.
Respondents who fail to file a required report are potentially subject to a civil penalty of $4,450-44,539. Injunctive relief is also available to the BEA. Criminal penalties are also a possibility in the case of a willful failure. BEA personnel have stated informally that it is rare for them to invoke penalties (civil or criminal).
The filings with the BEA are confidential and cannot be shared with other government agencies. They can only be used by the BEA for analytical or statistical purposes. The information cannot be used in a manner that would allow a respondent to be identified without the respondent’s prior written permission. The information collected by the BEA cannot be used for the purposes of taxation, investigation, or regulation and are immune from legal process.