Facebook Co-Founder Eduardo Saverin Gives Up U.S Citizenship to Reduce Tax Bills
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May 12, 2012 •
It is really interesting news for all techies and webe surfers; Facebook Co-founder Eduardo Saverin gave up his U.S. citizenship just before an IPO (initial public offering) of the Facebook that values the social network in upward of $90 billion. The latest move by Saverin is actually a big flee from America’s bad income tax system and it would help him in reducing his tax bills to a considerable extant.
The social network giant is looking to to raise massive amount of $11.8 billion through their IPO, which is the biggest one in history for an Internet company. Saverin’s share in the network is about 4 %, according to ‘Who Owns Facebook’ site. In other words, Saverin would hold about $3.84 billion from the biggest pie of the highest IPO valuation. Interestingly, his assets aren’t shown in Facebook’s regulatory filings.
With this leap, the 30 years old Saverin has joined a large group of prominent personalities who are giving up U.S. citizenship, just to cut down their income tax liabilities in the United States.
Eduardo Saverin is a Brazilian by birth and now living in Singapore who is one of the prominent co-founders of Facebook- a social network which has grown up with an amazing pace and now has billions of users around the world. Saverin joined Mark Zuckerberg to float Facebook in a Harvard University dorm and now is ready to reap billions of pretty bucksd after the world’s largest social network holds its IPO.
“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.
Saverin’s name is smiling on a list of the folks who opted to renounce citizenship as of April 30, published by the Internal Revenue Service. Saverin filed his documents in this regard “around September” of last year, according to his spokesman.
Significantly, Saverin will succeed to reduce his tax bills on the income gained through Facebook IPO and would escape from capital gain tax on his future investments. Additionally, Singapore is a state that doesn’t impose capital gains tax on the investors investing billions of bucks in the country.
However, this step of renouncing U.S. citizenship wouldn’t provide a full cover to Saverin for avoiding all U.S. taxes.
Reuven S. Avi-Yonah, director of the international tax program at the University of Michigan’s law school, explains;
Americans who renounce 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.
Renouncing your citizenship well in advance of an IPO is “a very smart idea, from a tax standpoint. Once it’s public you can’t fool around with the value.
Is it a good move by Saverin to save some pretty bucks? Your comments please.
Via: SFGate
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