U.S. residents (individuals or entities) owning a share of a foreign entity or foreign real estate ownership, may be required to file the Form BE-10. Understanding this obligation is important to avoid penalties and ensure compliance with U.S. law. Throughout this article, the term “U.S. resident” will refer to persons or entities who physically reside in the U.S. or are subject to a U.S. jurisdiction.
U.S. resident ownership of non-U.S. rental real estate must be reported on the BE-10, even if not through an entity.
The Bureau of Economic Analysis (BEA) uses data from Form BE-10 filings to gauge the economic significance of U.S. direct investment abroad, to measure changes in such investments, and to assess their impact on both U.S. and foreign economies. This information aids business leaders, policymakers, and researchers in understanding market trends and making informed decisions.
Note that the Department of Government Efficiency has the BEA in its sights. Hence, it may soon be decided that these filings are not required. Until then, it is prudent to prepare to file.
A U.S. resident owning a 10% or greater direct or indirect voting interest in a foreign affiliate or owning real estate to earn a profit (rental or sale), is required to file. A foreign affiliate is an entity incorporated outside of the U.S. or unincorporated, if it fulfills certain requirements, one of which is paying income taxes abroad. Foreign affiliates that are private funds and meet certain criteria are exempt from filing the BE-10 survey. The obligation to file Form BE-10 is not contingent upon being contacted by the BEA.
This survey is conducted every five years, with the next cycle covering the 2024 fiscal year and due on May 31, 2025 or June 30, 2025 if the U.S. resident owns more than 50 foreign affiliates.
Several specific forms comprise the BE-10 survey. Filing requirements will depend on the nature of the foreign holdings:
- Form BE-10A must be filed by all U.S. residents with any foreign affiliates. This form requests information about total assets, sales, and net income resulting from this ownership.
- Form BE-10B must be filed by each majority-owned foreign affiliate with assets, sales, or net income exceeding $80 million.
- Form BE-10C must be filed by majority-owned foreign affiliates with assets, sales, or net income between $25 million and $80 million, and for minority-owned entities that surpass the $25 million threshold.
- Form BE-10D must be filed by any foreign affiliate with $25 million or less in assets, sales, or net income.
- Form BE-10 Claim for Not Filing – is filed if the BEA has contacted the U.S. resident, who believes they do not meet the reporting requirements.
Failing to comply with these reporting requirements can lead to serious consequences. Civil penalties for not filing can range from $2,500 to $59,000. If the failure is deemed wilful, the penalties become steeper, and individuals may face prison time for non-compliance.
The BEA does allow for extension requests. Such requests must be made before the deadline and are not guaranteed. Of course, filing on time is best. Accurate financial records related to foreign affiliates will enable smooth and efficient filings.
The Act which created this survey specifies that the data provided may only be used for statistical and analytical purposes. The BEA is prohibited from granting another agency access to the data for tax, investigative, or regulatory purposes. In addition, data reported on the BEA’s surveys are not subject to Freedom of Information Act (FOIA) requests.
In conclusion, if in 2024 a U.S. resident owned 10% or more in a non-U.S. entity or in real estate located outside the U.S. which is held for profit, such resident must file certain information with the BEA before the end of May, 2025. It is prudent to seek legal counsel as to whether and how to complete and file such filings. Our office would be happy to advise on these issues.
Contact: o.haleli@shibolet.com with any questions or inquiries.
