Facebook co-founder renounces US citizenship pre-IPO
Smart tax move for Eduardo Saverin
Eduardo Saverin, a co-founder of Facebook, has abandoned his American citizenship ahead of the social networking company's possibly oversubscribed IPO in May.
“Eduardo recently found it more practical to become a resident of Singapore since he plans to live there for an indefinite period of time,” his spokesman Tom Goodman told Bloomberg.
Brazilian-born Saverin made the initial investment of $1,000 in Facebook when he and Zuckerberg were students together at Harvard, in exchange for 34 per cent of the company. Saverin claimed his ownership holding was diluted down to a fraction of a per cent at one stage and instituted legal action, as well as putting his side of the story in a best-selling book on the topic, the film version of which won three Oscars.
The two subsequently reached a settlement and Saverin's not talking any more, but part of the deal was to return his name as co-founder on the corporate masthead and he also bagged a suspected five per cent stake in the company, which would be worth around $3bn if the IPO is successful.
Singapore has no capital gains tax, so renouncing his citizenship ahead of the IPO is a very smart idea, according to Reuven S. Avi-Yonah, director of the international tax program at the University of Michigan’s law school. "Once it’s public you can’t fool around with the value." He'll still get a hefty bill from the IRS, but it shouldn't be too hard to swallow.
The Wall Street Journal reports that Saverin moved to Singapore in 2009 and has become the darling of the celebrity nightclub circuit, spending his evenings drinking Cristal Champagne and Belvedere vodka at the city's most fashionable hotspots in the company of models and local celebrities. His spokesman said Singapore was a "home base" for monitoring his investments in Asia and Brazil. ®
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