BEA Form BE-180, 2014 Benchmark Survey For Financial Services Transactions, is due by November 1st (but extensions may be obtained)
The Bureau of Economic Analysis (BEA) Form BE-180, the 2014 Benchmark Survey of Financial Services Transactions Between U.S. Financial Services Providers and Foreign Persons, is due by November 1, 2015 (30 or 60 day extensions may be obtained), and may apply to many hedge fund managers. The purpose of Form BE-180 is for the BEA to obtain analytical data regarding financial services transactions between U.S. and foreign persons. This newsletter first discusses general aspects regarding the application of Form BE-180 and then more specifically discusses how Form BE-180 applies to hedge fund managers and hedge funds.
Form BE-180 In General
When Form BE-180 applies. Form BE-180 is mandatory for U.S. financial services providers and intermediaries who in 2014 on an accrual basis (i) had combined sales of financial services to foreign persons in excess of $3 million; (ii) had combined purchases of financial services from foreign persons in excess of $3 million; or (iii) had combined sales or combined purchases of financial services of $3 million or less but who were notified by the BEA about the survey. The reporting requirement may apply solely to sales, to purchases, or to both sales and purchases. Form BE-180 generally requires applicable U.S. financial services providers to report their sales and purchases of financial services and to report the countries where the services were sold to or purchased from for 2014. If there were reportable sales of financial management services, the form also requires those services to be listed by the category of the service recipient (e.g., mutual funds, hedge funds, individual portfolios, etc.). Form BE-180 should be filed on a consolidated basis and the above thresholds are determined on a consolidated basis.
BE-180 is a form that is due every 5 years. Form BE-180 is a survey form that is taken every five years and the next one will be taken in 2020 with respect to 2019. Based on the filing of Form BE-180, a person may be notified that they are required to file other BE forms more frequently.
Financial services provider. The instructions provide a comprehensive list of what types of persons (which includes, but is not limited to, individuals, branches, partnerships and corporations) are considered financial services providers and what is considered a financial service for purposes of Form BE-180. The definition of financial services provider includes (but is not limited to): investment advisors and managers, funds, trusts, and other financial vehicles (including mutual funds, pension funds, real estate investment trusts, investors, etc.).
Financial services. Financial services include: (i) brokerage services related to equity transactions, (ii) other brokerage services, (iii) underwriting and private placement services related to equity and debt transactions, (iv) financial management services, (v) credit related services, (vi) credit card services, (vii) financial advisor and custody services, (viii) securities lending services, (ix) electronic funds transfer services, and (x) other financial services. Receipt and payment of interest and dividends, gains from the sale of equity and debt instruments, and foreign currency exchange transactions are not considered financial services transactions.
Due date. Form BE-180 was initially due on October 1, 2015. However, an automatic extension was granted to November 1, 2015, for U.S. reporters that were not notified of Form BE-180 by the BEA and that do not have a BE-180 identification number. For U.S. reporters that were notified by BEA of the BE-180 survey, the filing deadline is extended to either November 1, 2015, or December 1, 2015, depending on the U.S. reporter’s BE-180 identification number. An additional extension can be obtained if an extension is requested by November 1, 2015. The extension will be up to 30 days if the U.S. reporter was notified by the BEA or up to 60 days if the U.S. reporter was not notified by the BEA.
Noncompliance. Penalties exist for U.S. reporters required to file Form BE-180 who do not file.
Confidentiality. Information gathered on Form BE-180 is confidential and may only be used for analytical and statistical purposes by the BEA. The information reported on Form BE-180 cannot be used for purposes of taxation, investigation, or regulation.
Link to Form BE-180. A link to the BEA webpage for Form BE-180, which includes the form and instructions, can be found here: http://www.bea.gov/ssb/be180/
Application to U.S. hedge fund managers and U.S. hedge funds
Unlike many of the BEA forms and TIC forms, the application of Form BE-180 to hedge fund managers and hedge funds makes more sense.
Consolidated basis. U.S. managers should file, if required, Form BE-180 on a consolidated basis with related U.S. general partners and U.S. funds that they manage.
Fees received. They would be required to file if the fees received from offshore funds, offshore master funds or other offshore persons (such as managed accounts for offshore persons) by the U.S. investment manager (i.e., management fees) and by the U.S. general partner (i.e., incentive allocations) equal or exceed $3 million for all of 2014. With respect to the domestic fund, this may depend on where the incentive allocation is allocated (i.e., the offshore master fund or the domestic feeder fund).
Fees paid. Fees paid include payments by the domestic feeder fund, the U.S. investment manager and the U.S. general partner to foreign persons such as foreign brokers, foreign advisors or investment managers (as well as amounts paid to foreign subadvisors, branches or a parent of the investment manager).
Domestic funds managed by offshore managers. Form BE-180 could also apply to domestic funds managed by offshore investment managers and general partners.