Facebook co-founder renounces citizenship ahead of IPO
{{#rendered}} {{/rendered}}He lived the American Dream -- and then he packed up and left.
Facebook co-founder Eduardo Saverin, who made billions off the world’s most popular social network, stands to rake in about $3.84 billion from his 4 percent share of Facebook, Bloomberg reported.
American citizens pay several taxes, including taxes on salary and investments. Saverin would be hit with about $600 million in capital gains taxes whenever he sold the Facebook shares (or "realized the income," in financial speak).
{{#rendered}} {{/rendered}}But Saverin may not have to pay -- he's chosen to renounce his U.S. citizenship for residence in Singapore, Bloomberg reported, where there is no capital gains tax.
Tom Goodman, a spokesman for Saverin, told Bloomberg the move was “practical.”
“Eduardo recently found it more practical to become a resident of Singapore since he plans to live there for an indefinite period of time,” said Tom Goodman, a spokesman for Saverin, in an e-mailed statement.
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He filed to renounce his citizenship "around September" of last year,Goodman told Bloomberg.
But even if he’s no longer an America, Saverin may not escape all U.S. taxes, Bloomberg explained. Americans who give up their citizenship owe what is effectively an exit tax on the capital gains from their stock holdings -- even if they don’t sell the shares, a tax specialist at the University of Michigan’s law school told the site.
{{#rendered}} {{/rendered}}Renouncing your citizenship well in advance of an IPO is “a very smart idea,” from a tax standpoint, Avi-Yonah said. “Once it's public you can’t fool around with the value.”
Saverin became a U.S. citizen in 1998, having moved to the country in 1992, Goodman told Bloomberg.
He was chief financial officer and business manager at Facebook, until he was forced out of the company -- a dramatic tale described in the fictionalized account of the company's founding, the 2010 film “The Social Network,” directed by David Fincher.
{{#rendered}} {{/rendered}}He settled out of court with co-founder Mark Zuckerberg for an undisclosed amount of money, but still owns shares in the company. The Facebook co-founder left for Singapore in 2009, where he has invested in several technology companies.
A Facebook spokesman did not immediately respond to requests for more information.
The Brazilian born Internet entrepreneur’s name turned up on an April 30 list published quarterly by the Internal Revenue Service of people who have chose to expatriate.
{{#rendered}} {{/rendered}}The IRS list of Americans who renounced their citizenship is required by law, in accordance with the Health Insurance Portability and Accountability Act (HIPPA) of 1996, the site explains. This listing contains the name of each individual giving up his or her United States citizenship.
There are 460 names on the list, from Nina Aabel to Thomy and Daniel Zund.