Post by Sapphire Capital on Jan 10, 2015 7:11:49 GMT 4
The United States tracks foreign investment in the USA. It does this through the Bureau of Economic Analysis (BEA). BEA has reinstated a requirement for foreign owners of U.S. businesses to file a form and report annually. (Click here for a link to BEA rules and formslink.) For several years, reports were not required. The requirement is back, and the deadline is January 12, 2015. Penalties for not filing include fines of up to $32,500 and even jail time in wilful cases.
What needs to be reported? All the following, including investment in new facilities of long-existing U.S. subsidiaries:
If a foreign owner acquires a U.S. business enterprise that remains a separate legal entity and
the acquisition cost exceeds $3 million
the U.S. entity will operate as a separate legal entity, and
direct or indirect foreign ownership is at least 10% of the subsidiary’s voting interests.
If a foreign owner establishes a new U.S. business entity and
projected cost to establish the new entity is more than $3 million (total cost defined to include costs from past years and projected costs for current and future years, plus the cost of acquiring equity interests), and
direct or indirect foreign ownership is at least 10% of the subsidiary’s voting interests.
If a foreign owner acquires and merges a U.S. entity into an existing U.S. affiliate and
the existing U.S. affiliate acquires another U.S. business that is merged into its operations and the cost to acquire the other entity is more than $3 million.
If the existing U.S. affiliate of a U.S. business entity expands operations
to include a new facility where it conducts business, and
the projected total cost of expansion is more than $3 million.
If a foreign owner or affiliate is not required to report any of the above items solely because the amount is under the $3 million threshold, but one of the conditions listed above is met, an exemption form must still be filed.
There will be questions whether a Form BE-13 should be filed. For example, if an existing facility of a foreign owned U.S. business expands, is a filing required? Answer – no, because it is not a “new” facility. The facility must be “separate” for a filing to be required (either Form 13D if the cost exceeds $3 million or the Exemption Form if less).
BEA information is gathered for U.S. analytical and statistical purposes only. Information provided on BEA forms is treated as confidential and may not be shared with other U.S. Government agencies, such as the IRS or Department of Justice.
What needs to be reported? All the following, including investment in new facilities of long-existing U.S. subsidiaries:
If a foreign owner acquires a U.S. business enterprise that remains a separate legal entity and
the acquisition cost exceeds $3 million
the U.S. entity will operate as a separate legal entity, and
direct or indirect foreign ownership is at least 10% of the subsidiary’s voting interests.
If a foreign owner establishes a new U.S. business entity and
projected cost to establish the new entity is more than $3 million (total cost defined to include costs from past years and projected costs for current and future years, plus the cost of acquiring equity interests), and
direct or indirect foreign ownership is at least 10% of the subsidiary’s voting interests.
If a foreign owner acquires and merges a U.S. entity into an existing U.S. affiliate and
the existing U.S. affiliate acquires another U.S. business that is merged into its operations and the cost to acquire the other entity is more than $3 million.
If the existing U.S. affiliate of a U.S. business entity expands operations
to include a new facility where it conducts business, and
the projected total cost of expansion is more than $3 million.
If a foreign owner or affiliate is not required to report any of the above items solely because the amount is under the $3 million threshold, but one of the conditions listed above is met, an exemption form must still be filed.
There will be questions whether a Form BE-13 should be filed. For example, if an existing facility of a foreign owned U.S. business expands, is a filing required? Answer – no, because it is not a “new” facility. The facility must be “separate” for a filing to be required (either Form 13D if the cost exceeds $3 million or the Exemption Form if less).
BEA information is gathered for U.S. analytical and statistical purposes only. Information provided on BEA forms is treated as confidential and may not be shared with other U.S. Government agencies, such as the IRS or Department of Justice.
