Eduardo Saverin, one of the co-founders of Facebook, has renounced his U.S. citizenship in an effort to lessen his tax load after the social network’s massive initial public offering.
Saverin — who was memorably portrayed as a well-meaning business neophyte in the 2010 film The Social Network — was born in Brazil and is currently a resident of Singapore. Saverin became a U.S. citizen in 1998, but his spokesman told Bloomberg News that he decided to renounce his citizenship “around September” of last year.
The decision will save Saverin a fortune. He holds a roughly 4 percent stake in Facebook, which Bloomberg estimates could be worth as much as $3.84 billion after Facebook’s massive IPO. That money would be subject to taxes in the United States, but Singapore does not have a capital gains tax.
Reuven S. Avi-Yonah, director of the international tax program at the University of Michigan’s law school, told Bloomberg that Saverin’s decision was “a very smart idea,” from a tax standpoint. “Once it’s public you can’t fool around with the value.”
So instead of paying his fair share to the country that helped him make billions, Saverin will spend his cash “lounging with models and wealthy friends at local night clubs,” and “racking up tens of thousands of dollars in bar tabs by ordering bottles of Cristal Champagne and Belvedere vodka.”
Saverin won’t completely escape the IRS; Americans who renounce their citizenship still must pay an exit tax on the capital gains from their stock holdings, even if they don’t sell their shares.
Copyright 2012 The National Memo