A greenfield investment is a form of foreign direct investment in which a company builds an entirely new operation in another country from the ground up rather than buying an existing business. The parent retains full ownership and operational control, and because the project involves new construction on undeveloped land, it runs through a layered set of national security, environmental, tax, immigration, and reporting requirements in the host country. In the United States, that layering is what makes the difference between a project that opens on schedule and one that stalls before a foundation is poured.
Greenfield vs. Acquisition
Foreign direct investment generally takes one of two shapes: a greenfield project or the acquisition of an existing company (sometimes called a brownfield investment). Starting from scratch means selecting a site, constructing facilities, hiring a workforce, and building operations without inheriting anything. Acquiring means buying a business that already has facilities, employees, customers, and revenue.
That choice shapes cost, speed, and risk. Greenfield takes longer to produce revenue because construction and permitting come first. An acquisition can generate returns sooner, but it carries legacy liabilities: existing contracts, outdated equipment, possible environmental contamination, workforce integration. Greenfield avoids all of that, at the cost of a longer runway and a steeper local learning curve. The regulatory path also differs. Acquiring a U.S. business can trigger review by the Committee on Foreign Investment in the United States, and so can a new build if the operation touches sensitive technologies or critical infrastructure.
Why Companies Choose to Build From Scratch
The pull of greenfield is control. The parent designs the facility, selects equipment, sets quality standards, and hires each employee. Infrastructure is purpose-built for the company’s technology, so there are no costly retrofits and no inherited inefficiencies. There is no environmental contamination sitting under the site from a prior owner, no pending lawsuits, no unfavorable long-term contracts to unwind. Many host countries, and the U.S. federal government, offer tax credits and subsidies aimed specifically at new facility construction and job creation. Manufacturing locally can also sidestep tariffs, quotas, and supply chain disruptions that hit imported goods.
The costs sit on the other side of the same ledger. Building from scratch requires more capital up front. Construction, permitting, hiring, and equipment installation can take years before the facility produces anything. Regulatory work runs on multiple tracks at once: zoning, environmental review, building permits, national security screening, federal reporting. And without an acquired company’s institutional knowledge of the local market, labor pool, and suppliers, the investor has more to learn on the ground.
CFIUS National Security Review
A foreign company investing in the United States may need to clear a national security review by CFIUS, an interagency committee chaired by the U.S. Department of the Treasury. The Foreign Investment Risk Review Modernization Act of 2018 expanded the committee’s authority beyond acquisitions to reach certain non-controlling investments that could give a foreign person access to critical technologies, critical infrastructure, or sensitive personal data of U.S. citizens.
When You Have to File
Some transactions require a mandatory declaration. Filing is required when the U.S. business produces, designs, tests, or manufactures critical technologies for which export authorization would be required, or when a foreign government holds a substantial interest in the acquiring entity and the target is involved in critical technology, critical infrastructure, or sensitive personal data.1eCFR. 31 CFR 800.401 – Mandatory Declarations Critical technologies include items on the U.S. Munitions List, items on the Commerce Control List controlled for national security or nonproliferation reasons, nuclear equipment and materials, select biological agents and toxins, and emerging and foundational technologies designated under the Export Control Reform Act.2eCFR. 31 CFR Part 800 – Regulations Pertaining to Certain Investments in the United States by Foreign Persons
Even when no mandatory filing is required, parties often submit a voluntary notice. CFIUS retains authority to review, and potentially unwind, any covered transaction after it closes, so clearance before proceeding is common.
Timeline and Fees
Once a formal notice is filed, CFIUS conducts a 45-day review. If unresolved national security concerns remain, the committee may open a 45-day investigation. In rare cases, the matter goes to the President, who has 15 days to decide.3U.S. Department of the Treasury. CFIUS Overview
Filing fees scale with the transaction’s value:
- Under $500,000: no fee
- $500,000 to $4,999,999: $750
- $5 million to $49,999,999: $7,500
- $50 million to $249,999,999: $75,000
- $250 million to $749,999,999: $150,000
- $750 million and above: $300,000
Penalties for skipping a required declaration or filing false information can reach $5,000,000 per violation, or the value of the transaction, whichever is greater.5eCFR. 31 CFR 800.901 – Penalties and Damages
Land, Environmental Review, and Local Fees
New construction on undeveloped land raises environmental questions that can require formal review before ground is broken. Under the National Environmental Policy Act, any project that constitutes a “major Federal action significantly affecting the quality of the human environment” must include an environmental impact statement analyzing foreseeable effects, alternatives, and irreversible resource commitments.6Federal Register. National Environmental Policy Act Implementing Regulations
NEPA does not reach every private construction project. It is triggered when the project needs a federal permit, such as a wetlands permit from the Army Corps of Engineers or an air quality permit from the EPA, or when federal funding is involved. Even where NEPA does not apply, most local jurisdictions require their own environmental assessments before issuing building permits for industrial facilities, covering stormwater runoff, air emissions, noise, and waste disposal.
Zoning ordinances then dictate what activity is permitted on a given parcel, including height limits, setbacks, noise thresholds, and emission standards. Confirm the intended use is allowed under the local zoning classification, or apply for a variance or rezoning. Securing title (or a long-term lease) and commissioning a professional land survey to verify boundaries and identify easements are standard steps before any design work begins.
Local governments across the country also charge development impact fees, one-time charges on new development to help fund the public infrastructure the project will demand: roads, water lines, sewer capacity, and stormwater systems. Fees are calculated using either a broad formula tied to the cost of expanding capacity or a tailored analysis of the specific demand the new facility will place on existing systems. The amount must be proportional to the infrastructure the development actually requires, and fees must be spent in a timely fashion on the designated improvements.7FHWA – Center for Innovative Finance Support. Development Impact Fees Amounts vary widely by jurisdiction and project size, so budget for them early. Building permit fees, utility connection charges, and the cost of extending roads or utility lines to the site come on top.
Moving Executives Into the New Office
A foreign company opening a new U.S. office will usually need to send executives or managers from the parent to run the launch. The L-1A intracompany transferee visa is built for this. To qualify, the employer must show three things: it has secured physical space for the new office, the employee has worked as an executive or manager for the company for at least one continuous year within the preceding three years, and the new U.S. office will support an executive or managerial position within one year of visa approval.8U.S. Citizenship and Immigration Services. L-1A Intracompany Transferee Executive or Manager
Employees entering to establish a new office receive a maximum initial stay of one year. Extensions may be granted in two-year increments up to a total of seven years. Other transferred employees not opening a new office receive an initial three-year stay.
Federal Reporting Once the Entity Exists
The reporting starts as soon as the new U.S. entity is on the books, and it is separate from ordinary corporate tax filings.
BE-13 Survey
The Bureau of Economic Analysis requires any U.S. business enterprise created through foreign direct investment, defined as a foreign person owning or controlling at least 10 percent of the voting interest, to file a BE-13 survey. For a greenfield project where the expected total cost of establishing the enterprise exceeds $40 million, the entity files Form BE-13B no later than 45 calendar days after the enterprise is established. After the initial filing, cost updates on Form BE-13E are collected annually for three years.9eCFR. 15 CFR 801.7 – Rules and Regulations for the BE-13, Survey of New Foreign Direct Investment in the United States
If the investment falls below the $40 million threshold but the BEA contacts you, file a BE-13 Claim for Exemption rather than ignoring the inquiry. Filing is mandatory regardless of whether the BEA reaches out. It is the entity’s job to determine whether it meets the threshold.
IRS Form 5472
A U.S. corporation that is at least 25 percent foreign-owned must file IRS Form 5472 for each tax year in which it has a reportable transaction with a foreign or domestic related party. Reportable transactions include sales, rents, royalties, interest, and other monetary exchanges listed on the form. A foreign-owned U.S. disregarded entity is treated as a separate corporation solely for this filing requirement and must attach Form 5472 to a pro forma Form 1120 by the due date.10Internal Revenue Service. Instructions for Form 5472
Federal Tax Credits That Offset the Build
Two federal credits can meaningfully reduce the cost of a new manufacturing facility, especially in energy and advanced technology.
Section 48C Advanced Energy Project Credit
The qualifying advanced energy project credit provides a 30 percent investment tax credit for projects that re-equip, expand, or establish manufacturing facilities producing clean energy components, energy storage systems, grid modernization equipment, or other qualifying advanced energy property. The Inflation Reduction Act allocated up to $10 billion in additional credits under this program, with at least $4 billion reserved for projects in communities with closed coal mines or retired coal-fired power plants.11Office of the Law Revision Counsel. 26 USC 48C – Qualifying Advanced Energy Project Credit
Projects that fail to meet prevailing wage and apprenticeship requirements receive a reduced base rate of 6 percent instead of the full 30 percent. Applicants go through a competitive allocation process; the credit is not automatic. A facility claiming the 48C credit cannot also claim the advanced manufacturing production credit under Section 45X for the same investment.
Section 45X Advanced Manufacturing Production Credit
The Section 45X credit rewards what the facility produces rather than what it costs to build. Manufacturers producing eligible components in the United States, including solar cells, wind turbine blades, inverters, battery components, and critical minerals, can claim a per-unit production credit for each component sold to an unrelated party. The credit is claimed on Form 7207 and can be elected as a direct payment against tax liability. Taxpayers must register each qualifying investment using the IRA/CHIPS pre-filing registration tool before claiming the credit.12Internal Revenue Service. Advanced Manufacturing Production Credit
Getting Profits Back to the Parent
When the U.S. subsidiary starts generating profits, moving them to the foreign parent runs into withholding tax. The default U.S. withholding rate on dividends paid to a foreign person is 30 percent of the gross amount, applied broadly to U.S.-source dividend income paid to nonresident aliens and foreign corporations unless a tax treaty provides a lower rate.13Internal Revenue Service. Federal Income Tax Withholding and Reporting on Other Kinds of US-Source Income Paid to Nonresident Aliens
Many U.S. tax treaties reduce the rate on dividends paid by a U.S. subsidiary to a foreign parent that holds a qualifying ownership stake, often to around 5 percent, and some treaties eliminate withholding entirely when additional conditions are met. To claim the reduced rate, the foreign parent must file Form W-8BEN or W-8BEN-E with the U.S. withholding agent. Structuring the ownership chain with these treaty rates in mind can change the overall return on the project.
Where to Get Official Help
Foreign companies weighing a greenfield project in the United States can work with SelectUSA, a program within the U.S. Department of Commerce that facilitates job-creating business investment into the country.14International Trade Administration. SelectUSA SelectUSA connects investors with federal, state, and local resources and helps navigate the regulatory path. Outside the United States, most countries maintain their own investment promotion agencies or ministries of commerce that play a similar role, providing application materials, guiding investors through approvals, and connecting them with local authorities responsible for permits and inspections.