International entrepreneurs and investors have increasingly turned to U.S. markets. According to the U.S. Treasury Department, foreign holdings of U.S. securities reached $31.3 trillion as of June 2024, including $17 trillion in U.S. equities. While there’s no citizenship requirement for owning shares of American companies, foreign investors must navigate a complex web of reporting requirements that vary based on investment size, structure, and strategic significance. Understanding these obligations is crucial for maintaining compliance and avoiding significant penalties.

The Regulatory Landscape: Multiple Oversight Bodies

Foreign investment in U.S. companies is governed by several regulatory frameworks, each serving different purposes and having distinct reporting requirements. These include the Committee on Foreign Investment in the United States (CFIUS), the Internal Revenue Service (IRS), the Securities and Exchange Commission (SEC), and the Financial Crimes Enforcement Network (FinCEN), among other entities.

Committee on Foreign Investment in the United States (CFIUS)

CFIUS reviews transactions involving foreign investment and real estate involving foreign persons in the U.S. that could result in foreign control of U.S. businesses with national security implications. Not all foreign investments trigger CFIUS review, but the scope has expanded significantly in recent years.

Covered transactions that will be reviewed include:

• acquisitions resulting in foreign control of a U.S. business;

• non-controlling investments in critical technologies, critical infrastructure, or sensitive personal data businesses;

• real estate transactions near sensitive military installations; and

• certain investments in U.S. businesses involved in critical minerals, including aluminum, lithium, nickel, cobalt and rare earth elements.

The Foreign Investment Risk Review Modernization Act (FIRRMA), introduced in 2018, broadened the scope of covered transactions and permitted CFIUS to investigate transactions that may not fall under the old “covered” definition, but which could still pose national security risks. Parties may choose to file voluntarily, even if not required to do so, to have safe harbor from future CFIUS investigation after the transaction is cleared. The review process can be extensive, and if CFIUS determines the transaction has a national security risk, CFIUS may recommend that the President block the deal, as was the case with the recent acquisition of U.S. Steel by Nippon Steel which was blocked by the Biden Administration in 2024 before being permitted as a partnership by the Trump Administration in May 2025.

Internal Revenue Service (IRS) and Foreign Investments

The IRS requires various forms for tax and information reporting purposes, including a Form 1040-NR, U.S. Nonresident Alien Income Tax Return. Foreign investors owning 25% or more of a U.S. corporation must ensure the corporation files Form 5472, which reports information about the foreign ownership and related-party transactions.

While primarily applicable to U.S. persons investing abroad, Form 5471 can also affect international investors who are considered “U.S. persons” for tax purposes or who have U.S. person shareholders or officers. Form 8938, while also primarily aimed at U.S. citizens, might also be required if a U.S. entity is formed for the purpose of, or avails itself to hold, directly or indirectly, specified foreign financial assets. 

Foreign investors in U.S. stocks are subject to withholding taxes on dividends and certain other distributions. The standard withholding rate is 30%, though this may be reduced under applicable tax treaties. For example, the U.S. and India entered a tax treaty to prevent double taxation on income earned by citizens of one country for transactions that occurred in the other. The U.S.-India treaty exempts the portion of social security benefits that is based on earnings from U.S. Federal, State or local government employment from nonresident alien tax if an individual is both a resident and a national of India. To claim the benefit of these treaties, a foreign person needs to file the applicable W-7 forms to verify their country of residence. Tax treaties will only address federal-level taxes; any state and local taxes will need to be addressed separately. 

Securities and Exchange Commission (SEC) and Foreign Investments

The SEC oversees securities law compliance and disclosure requirements for all investments in the U.S., including by foreign investors. Foreign investors who acquire beneficial ownership of 5% or more of a class of equity securities registered under the Securities Exchange Act must file disclosure statements.

Schedule 13D must be filed by investors seeking to influence control of U.S. companies and must be filed within five days of crossing the 5% threshold. This form contains information about the security being purchased, who the purchaser is, and why the transaction is occurring. Schedule 13G, a less intensive alternative form, is available for passive investors not seeking control; it also must be filed within five days of crossing the 5% threshold. When changes in ownership occur, amendments to these forms must be filed.

Foreign investors who become insiders (officers, directors, or 10% shareholders) of U.S. public companies are subject to insider trading restrictions and reporting requirements, including Forms 3, 4, and 5 filings for changes in beneficial ownership.

Financial Crimes Enforcement Network (FinCEN) and Foreign Investments

FinCEN monitors for compliance with anti-money laundering regulations. On March 21, 2025, FinCEN announced that it had removed the requirement for U.S. companies and U.S. persons to report beneficial ownership information under the Corporate Transparency Act, but foreign companies registered to do business in the U.S. still have reporting requirements and need to submit beneficial ownership information (BOI) reports. Foreign companies, however, are not required to report any U.S. persons as beneficial owners, and U.S. persons will not be required to report BOI with respect to any such companies for which they are a beneficial owner.

The Bureau of Economic Analysis (BEA) 

In addition to these agencies, U.S. businesses in which a foreign person has direct investment (i.e., where the foreign person owns or controls, directly or indirectly, 10% or more of the U.S. business enterprise’s voting interests, regardless of the value of the investment) must file a BE-12 survey with the BEA every five years. Other surveys may also be required, including the BE-605, which is required quarterly for any directly owned U.S. affiliate whose assets, sales, or net income (loss) exceed $60 million at any time during the fiscal year. Filing is also required for each indirectly owned U.S. affiliate with an intercompany debt balance with an affiliated foreign entity. The BE-15 survey must be completed annually by U.S. businesses owned or controlled, directly or indirectly, by a foreign person. The BE-13 New FDI survey must be filed by a U.S. business when a foreign person acquires a direct or indirect interest of at least 10%. This survey is also required for a U.S. business when a foreign entity establishes a new legal entity in the U.S. or expands its operations to include a new facility. These surveys are mandatory, and the information collected is confidential.

Note, even if a company does not meet that 10% threshold, the BEA may still contact a business, and that business will need to respond, such as by claiming an exemption from the survey requirement. 

Industry-Specific Concerns

Foreign investment in some industries will draw more concern than in other industries. In addition to sensitive security and defense-related investments, other industries, such as media, are also monitored. The Federal Communications Commission (FCC) restricts foreign ownership in broadcast licensees and common carriers. Section 310 of the Communications Act of 1934, as amended (47 U.S.C. § 310(a), (b)), requires the Commission to review foreign investment in radio station licenses and puts restrictions on who can hold a broadcast, common carrier, or aeronautical radio station license. The FCC announced in April 2025 that it is in the process of streamlining its rules and codifying practices to allow for easier compliance. Until new rules are formally adopted, the present rule is still in effect. Other industries that involve sensitive data regarding U.S. citizens and consumers will also see more scrutiny in the coming years.

Conclusion

The regulatory landscape for international investors in U.S. companies continues to evolve, with increasing complexity and heightened enforcement. Penalties for failing to comply with these requirements can include heavy fines, the cancellation of the transaction, and, in the most serious of situations, criminal penalties. Successfully navigating these filings requires proactive compliance, planning, ongoing monitoring of regulatory changes, and coordination among legal and financial professionals. International investors and founders should conduct thorough diligence on potential U.S. investments and entities, including understanding ownership structure, financial situations, and specific industry regulations. Many of these filings will contain the same information and have intersecting goals of ensuring tax compliance, transparency, and upholding U.S. national security interests. As regulatory scrutiny continues to intensify and new requirements emerge, staying ahead of compliance obligations through proactive planning and diligent record-keeping will only become more essential for international investors and founders looking to enter U.S. markets.

Written by: Samuel Deese