Any U.S. person with a foreign affiliate is required to file the 2014 Form BE-10, Benchmark Survey of U.S. Direct Investment Abroad by June 30, 2015 or face civil penalties between $2,500 and $25,000. Further, a willful failure to file can result in a separate criminal penalty of not more than $10,000 and imprisonment for not more than one year. This penalty structure applies to U.S. persons holding investments and to officers, directors, employees or agents who knowingly participate in such failures. The requirement to file Form BE-10 has caught many persons by surprise because the Form was previously only required to be filed upon request. The original filing date of the 2014 Form was May 29, 2015, but was extended to June 30, 2015 for first time filers.
The instructions to Form BE-10A state that any person who is resident in the United States or subject to the jurisdiction of the United States must file Form BE-10A if such person had direct or indirect ownership or control of at least 10 percent of the voting stock of an incorporated foreign business enterprise, or an equivalent interest in an unincorporated foreign business enterprise, at any time during the 2014 fiscal year. If the U.S. person filing Form BE-10A (termed a “U.S. Reporter”) is a corporation, Form BE-10 must cover the fully consolidated U.S. domestic business enterprise.
Note that the definition of “U.S. person” for this purpose is not the same as the definition of a “United States Person” provided for in the Internal Revenue Code in 26 U.S.C.A. 7701(a)(30) for federal income tax purposes. Instead, the instructions to Form BE-10 state that an individual is considered a resident of, and subject to the jurisdiction of, the country in which the individual is physically located, subject to certain qualifications regarding temporary assignments. Thus, it appears that a U.S. citizen who permanently resides abroad does not need to file the current version of Form BE-10A.[1]
A U.S. person’s ownership of foreign real estate, however, is defined as a business enterprise that must be reported as a foreign affiliate, regardless of whether the property is held in a foreign entity. The filing is required unless the property is held exclusively for personal use and not for profit-making purposes. There is some flexibility in the definition of “exclusively” if the property is a personal residence, but is rented out while the U.S. person resides in the U.S.
In addition to Form BE-10A, Forms BE-10B, BE-10C or BE-10D must be filed, as appropriate, for certain foreign affiliates. More than one form may be required to be filed by a foreign affiliate, including for reason that the foreign affiliate operates outside the country of its incorporation. Form BE-13, Survey of New Foreign Direct Investment in the United States, may also be required to be filed in certain circumstances. The completion and filing of Forms in the BE series are overseen by the U.S. Department of Commerce, Bureau of Economic Analysis.
Notes:
