US Beneficial Owner Reporting: Over 70,000 Non-US Companies Will Need to Comply
The key question for all entities is whether the entity was created or registered to do business in the US by filing a document with a US secretary of state or similar office.
As discussed in our last blog, the US Treasury’s Financial Crimes Enforcement Network “FinCEN” implemented requirements on many US companies and non-US (“Foreign”) companies doing business in the US to register and report their beneficial owners. Most US non-public companies are subject to this regime and are known as “Reporting Companies.” FinCEN has estimated that this will include more than 70,000 non-US companies.
US Reporting Companies include
- Non-exempt corporations, LLCs, and other entities created by the filing of a document with a US secretary of state or similar office;
- Non-exempt companies registered to business in the US
However, there are 23 exemptions that apply which include:
- Banks
- Tax exempt entities
- Government organizations
- Certain large companies, and
- Publicly traded companies
A full list of exemptions can be found here
It is relatively clear whether a US company will be a Reporting Company, but it isn’t as straightforward for all non-US companies to determine their registration requirements. These requirements are determine at the individual state level and may not be clear as they are often interpreted by case law which looks at facts and circumstances.
Certainly some fact patterns are easier than others, if Greggs starts selling sausage rolls in Times Square it will need to register. However, if EasyJet established a small marketing office in Atlanta it may not. One thing that seems clear is that US corporations formed to block US effectively connected income will need to comply.
Entities that determine they need to comply will have to register and report this year. Existing companies will have until the end of the year but newly formed companies will have 90 days (which reduces to 30 days in 2025).
What needs to be reported will be the subject of our next blog.
