Facebook co-founder Saverin renounces U.S. citizenship ahead of IPO
(CNET) Facebook co-founder Eduardo Saverin has renounced his U.S. citizenship ahead of the company's IPO, a move likely calculated to help him dodge capital-gains taxes, Bloomberg reported.
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Saverin, one of a handful of people who helped Mark Zuckerberg start Facebook at Harvard in 2004, hasn't been active at the company for many years. He still holds an estimated four percent of Facebook
"Eduardo recently found it more practical to become a resident of Singapore, since he plans to live there for an indefinite period of time," Saverin spokesman Tom Goodman told Bloomberg by email.
Renouncing his U.S. citizenship could shield Saverin from much, though not all, of his U.S. tax liability related to his Facebook holdings. Singapore doesn't have a capital gains tax, although it does tax income earned in the city-state as well as some foreign-source income.
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According to Reuven Avi-Yonah, head of the international tax program at the University of Michigan, Americans who give up their citizenship still owe a sort of exit tax on the capital gains from their stock portfolios, whether they've sold shares or not. But estimating the value of shares in a private company such as Facebook is, shall we say, an exercise with lots of room for interpretation.
Avi-Yonah told Bloomberg that renouncing citizenship ahead of an IPO is "a very smart idea" from a tax standpoint, since once a company is public, "you can't fool around with the value."
Saverin gave up his U.S. citizenship "around September," his spokesman told Bloomberg. Facebook formally filed for its initial offering earlier this month. Saverin was born in Brazil, then moved to the U.S. in 1992 and became a citizen in 1998.
This article first appeared at CNET.
