Form BE-10 is due May 29 2020. Never heard of it? That’s because it’s only required every five years, and it is not a tax form, so it’s not widely discussed.
So, why are we alerting you to it? Because like many of the foreign forms we deal with, it carries penalties of USD25,000 and up to one year in prison.
Also, since it’s not a tax form, it doesn’t fall under the IRS, and it isn’t covered by the COVID-19 filing extensions. Instead, it’s a survey issued by the Bureau of Economic Analysis (BEA), which is the agency of the US Department of Commerce that tracks statistics, such as the US gross domestic product.
The BEA just released the requirements, due date, and other details of this year’s filing.
Form BE-10 is required by the Bureau of Economic Analysis and is used to collect comprehensive statistics on US direct investment abroad. It is not a tax form and will not be used for tax purposes.
The information requested is authorised by the President and Congress pursuant to the notification provided in the Federal Register and is mandatory. Penalties for failure to comply are provided.
Who Must File
A BE-10 report is required for those involved in any of the following at any time during 2019:
- US owners of foreign real estate held as a rental or for investment. US owners can include individuals, businesses, trusts, estates, and other legal organizations.
- US owners of foreign businesses. This includes US individuals, businesses, trusts, estates, and other legal organisations that conduct for-profit activities outside of the US and that own or have the voting authority of 10% or more of a foreign business. The foreign business can be incorporated or unincorporated.
- US self-employed individuals who perform consulting services or conduct for-profit activities outside the US. Generally, this applies to self-employed US persons who live and work outside the US or who have business assets or office space outside the US.
Clarifications on Filing Requirements
- The filing requirement applies to both direct and indirect ownership interests. So, if you own a company through your LLC, you are not necessarily exempt from filing.
- In certain situations, one US owner may be allowed to file on behalf of others rather than all owners being required to file. Alternatively, a US owner may choose to report only his or her data, if that owner prefers not to obtain data about the other owners.
- A US owner who wholly owns a foreign entity that owns another foreign entity may be able to consolidate all activity of the two foreign entities.
Penalties for failure to report range from USD2,500 to USD25,000 and injunctive measures can be invoked to force compliance. Willful failure to report can also carry a penalty of up to one year in prison. An officer, director, employee, or agent of the US reporter is also subject to the same civil penalties.
May 29 2020
Every five years
Forms may be filed electronically or in hard copies.
What Is Reported
The amount of data that must be reported on the survey is directly correlated with the size of the reportable activity. There are several versions of the survey, the BE-10A, BE-10B, BE-10C, and BE-10D.
In its most simplistic format, the survey requires some basic information about the foreign activity and requests data on its assets, liabilities, sales, and net income. In the more robust versions, questions can include topics on changes in accounting method, values of research and development performed, and cloud computing in the digital economy. Thresholds for reporting range from USD0-USD25 million, USD25-USD80 million, and USD80 million-plus. Entities with losses are also required to file.
Some surveys must be completed in their entirety while others need only be partially completed. Related-party transactions, such as loans from the foreign entity to the US owner and vice versa, need to be disclosed. A foreign entity operating outside of its country of incorporation may need to file more than one survey.
It is important to note that, not only are calendar year filers required to file, but fiscal year filers are as well. Typically, the fiscal period of the foreign entity that ends within 2019 is the period that is required to be reported.
Will I Receive a Notification if I Need to File the BE-10?
Not necessarily. In some cases, BEA is sending notifications in March to inform certain filers of the filing requirement personally. However, they are not sending notifications to many types of filers. Just because you did not receive notification does not mean you do not need to file the survey! And anyone who receives the notification but does not meet the filing criteria still has to file a separate form to state that they do not meet the filing criteria.
What is a Legal Entity Identifier Number?
Most versions of the survey will also begin requesting the taxpayer’s 20-digit Legal Entity Identifier (LEI) number. Simply put, the LEI is a global identifier that acts as a unique identifier that is used to standardize information on legal entities globally.
How do you get one? According to the Office of Financial Research, to register your US legal entity, contact the Global Legal Entity Identifier Foundation (GLEIF) accredited LEI issuing organization of your choice.
How Can The Wolf Group Help?
Since we already assist many clients in reporting their foreign assets and foreign income to the IRS each year, we are accustomed to working with these foreign informational forms. Plus, we assisted numerous filers with their BE-10 requirements when they were last due 5 years ago.
We can help you:
- Determine whether you need to file
- Identify the information needed to complete your filings
- Prepare the filings for submission
- Help you submit them to the BEA
If you would like to discuss your personal situation with regard to the BE-10 requirement, please contact us.
For more information, contact:
The Wolf Group
W: https://thewolfgroup.com/Date: May 2020
From 1 July, it is a priority to deal with the settlement of the social security relationship and the data on the social security relationship of employees in the Hungarian Tax Authority
As of 1 July 2020, Act CXXII of 2019 (hereinafter new Social Security Act) enters into force. For this reason, we would like to draw attention to the fact that it is worth paying more attention to the settlement of the social security relationship from both employee and employer side.
It is worth knowing that the National Health Insurance Fund of Hungary indicates the different conditions with five different lamp colors, based on the instruction from the Hungarian Tax Authority, and the social security number can be valid or invalid.
Lamp colors could be the followings:
- Green means that the legal relationship is settled, the social security number is valid.
- Red means that the legal relationship is unsettled, the social security number is valid.
- Blue means that the person could obtain the medical health care in the European Economic Area (EEA) with a European Health Insurance Card issued by a foreign insurer, the social security number is invalid.
- In the case of a brown, the entitlement is unresolved, the social security number is invalid, the person could use the health services in Hungary only for a specified fee.
- Yellow means limited entitlement, the social security number is a valid, voluntary agreement, a person entitled to full care, excluding transplant benefits, medical treatment abroad, and only emergency dental care is available among the free dental benefits.
Why is all this important? So far, the practice has been that person received the medical care for free of charge in case of the green and red lamps (valid social security number) in the system, however, at red we received a notification about the disorder of the legal relationship. In case of brown and blue lamps (invalid social security number), a person has to pay for the benefits.
At the same time, an important change will take effect on 1 July 2020, namely that the Hungarian Tax Authority will check those who register for the mandatory healthcare contribution and after three consecutive months of late payment, will alert the National Health Insurance Fund of Hungary if the entitlement is still unresolved. Then the lamp will be changed to brown, i.e. invalidating the social security number, so that the persons concerned will not be entitled to free health care. This means that from 1 July 2020, it will no longer be possible to settle the legal relationship by paying the arrears of health insurance service contributions (previously this was a viable option), i.e. the patient, if provided, will have to pay for the service. The paid amount will not be refunded even after the subsequent payment of contributions. However, emergency care still cannot be denied.
The National Health Insurance Fund of Hungary transfers the data of persons receiving unauthorised legal care to the Hungarian Tax Authority. Based on the data, the fulfilment of the reporting and contribution payment obligation is monitored by the Tax Authority. If no contribution data is found, the authority will contact the customer to verify their entitlement to the healthcare. In the absence of a basic legal relationship entitling to health care, a health care service contribution must be paid. If the request is unsuccessful, the health service contribution is prescribed by the tax authority of its own motion.
In addition, based on our experience, although the Hungarian Tax Authority has already paid special attention to the legal relationship of employees, after July 1, it will check more intensive whether the data of employees received during the monthly returns (08) have been properly declared on the T1041 registration form. In the event of a discrepancy, the employer is contacted and a conciliation procedure is initiated. Even with proper notification, the starting date or so-called FEOR number for a given employment relationship may be incorrectly recorded with the authority, or the statement of an outgoing worker may not be recorded. Therefore, it is worth checking from time to time that the data displayed in the Hungarian Tax Authority system is the same as the data in the internal database maintained by the given employer. In the event of a discrepancy, the first step is to contact the Health Insurance Department of the territorially competent Government Agency and agree on further action.
Finally, we would like to draw your attention to the fact that in the case of employees who have worked or studied abroad and have therefore been excluded from the scope of Hungarian social security, it is especially worthwhile to initiate re-validation of their number after moving home. In order to do so, the termination of the foreign insurance relationship and the repatriation to Hungary must be notified to territorially competent Government Agency on the standardised form, and at the same time re-validation of the social security number must be initiated. In the absence of this, despite that the employer notifies the given employee and then pays the necessary employer and employee contributions to the Hungarian Tax Authority, the social security number was not validated automatically. Of course, if this notification is not made in time, the social security number could be validated retrospectively with an employer’s certificate and the notification form.
For more information, contact:
Ferencz Gyöngyi, Partner
Kuntner Andrea, Partner
Thurn Erik, Partner
E: email@example.comDate: July 2020
The unprecedented events caused by the COVID-19 pandemic mean that the context in which companies are planning and reporting is changing rapidly
Directors must proactively consider the practicalities of how they will continue to comply with their reporting and disclosure obligations in this climate.
Entities with December 2019 and early 2020 year-ends must consider COVID-19’s effects on their activities and how these are reflected in their financial statements.
How can you ensure your financial reporting and audit processes are as robust as possible?
1.Consider disclosure obligations regarding business risks related to the impacts of COVID-19 within the context of local regulatory requirements. How is the entity affected by, and responding to, these risks? Disclosures should be specific to individual circumstances.
2. Consider disclosure obligations regarding business risks related to the impacts of COVID-19 within the context of local regulatory requirements. How is the entity affected by, and responding to, these risks? Disclosures should be specific to individual circumstances.
3. Consider whether economic uncertainties and market volatility will affect accounting judgements. Do events occurring after the reporting period, but before the financial statements for that period have been issued, require disclosure or recognition? What disclosures are required to support the Going Concern basis of accounting? Is there an impact on estimates and valuations recorded?
4. Consider the effect on internal control over financial reporting due to the local impact of COVID-19. How are internal controls operating in the new climate, especially with the extent of remote working? And, for those companies with significant global operations, what assurance do you have over controls operated throughout the entity/group?
5. Consider, and plan for, whether you will encounter delayed reporting, filings and communications. What have local regulators done to ease the burden on companies, for example, have there been any extensions to reporting deadlines?
6. Consider how you can work effectively with your auditors to ensure a high quality audit can be conducted despite the likelihood of remote working. How will you be able to provide the audit evidence required? How will you liaise with the auditors and discuss the findings and conclusions of the audit?
If you wish to discuss the implications for financial reporting and audits, please contact your usual Baker Tilly network member or email firstname.lastname@example.org.