May 11, 2020

Reminder: Form BE-10 Mandatory Filing Requirement for U.S. Persons with Non-U.S. Investments

By Douglas Nakajima, International Tax Co-Leader

Reminder: Form BE-10 Mandatory Filing Requirement for U.S. Persons with Non-U.S. Investments International Tax

We are fast approaching the May 29, 2020, filing deadline to provide the U.S. Department of Commerce Bureau of Economic Analysis (“BEA”) with information to be used in BEA’s benchmark survey of U.S. direct investment abroad, for producing statistics on changing trends in the investment activities of U.S.-owned foreign businesses. Thankfully, this survey is conducted only once every five years. Unfortunately, on top of coping with COVID-19 and a multitude of tax information filings in 2020, this is the year.

Who does it apply to?

Any U.S. person (any U.S. individual, corporation, partnership, trust, or estate) that has a 10 percent or greater direct or indirect voting interest in a foreign business in 2019, regardless of size. It should be noted that ownership of non-U.S. real estate investments not held for personal use are deemed to be foreign affiliates subject to BE-10 reporting.

What are the thresholds?

The specific BE-10 filings are based on each foreign entity’s sales, net income (loss), and total assets for 2019 as follows:

  • Form BE-10A – U.S. person that has a 10 percent or greater interest in a foreign affiliate
  • Form BE-10B – if more than 50% U.S.-owned and any of the above attributes exceed $80 million
  • Form BE-10C – if all of these are under $80 million, but any is over $25 million
  • Form BE- 10D – if all of these are under $25 million

What is the due date?

Generally, the stated due date for Forms BE-10 is May 29, 2020, for U.S. reporters filing fewer than 50 BE-10s and June 30, 2020, for U.S. reporters filing 50 or more BE-10s. BEA’s standard rules allow it to grant extensions if the requests are received by the original May 29 (June 30) deadline. However, due to the COVID-19 situation, BEA is being extremely flexible in granting extensions to August 31, 2020. To be clear, under current guidance, the extension is not automatic and must be requested and received by BEA by the original May 29, 2020, deadline.

Marcum note: Although the original due date has not been changed and BEA’s online form indicates that the August 31, 2020, extension date is available only for filers meeting the 100-plus form count requirement, we were advised by BEA’s Chief of Foreign Operations Section that U.S. reporters may still choose the August 31, 2020, extended due date and, because of the COVID-19 crisis, BEA will grant the August 31 extension date.

What should Marcum clients do?

The Forms BE-10 are required and due for U.S. persons meeting the filing requirements regardless of whether they have been notified by BEA. This is not an income tax filing, as it is administered by the Department of Commerce. However, like many tax information filings, failure to file carries a heavy penalty. Clients should prepare Forms BE-10 or extensions for their affected foreign investments to ensure they are received by May 29, 2020.

Marcum’s International Tax Group is available to provide guidance on the BE-10 requirements or assist in meeting the BE-10 obligations (if any). Please reach out to your Marcum professional with any questions.