Facebook co-founder renounces U.S. citizenship

Facebook’s co-founder, Eduardo Saverin, is giving up his US citizenship to become a resident of Singapore, where residents pay no capital gain taxes.

Brian Sullivan and Amanda Drury

Eduardo Saverin, one of four co-founders of Facebook, has renounced his U.S. citizenship.

The move may reduce his tax bill following the initial public offering that values the social-network powerhouse at as much as $96 billion, according to Bloomberg.

Facebook expects to raise as much as $11.8 billion through the IPO. Saverin’s stake in the company is about 2 percent, according to The Wall Street Journal. His holdings are not listed in Facebook’s regulatory filings.

Saverin, a Brazilian-born resident of Singapore, helped Mark Zuckerberg start Facebook while at Harvard University. Saverin was pushed out early on, with his stake in the company diluted from 34 percent to less than 10 percent, according to The Wall Street Journal. After selling some shares and more dilution, that stake has thinned more. Even so, he stands to profit handsomely from the IPO…

…Singapore does not have a capital gains tax.

Renouncing one’s U.S. citizenship well in advance of an IPO is “a very smart idea,” from a tax standpoint, Reuven S. Avi-Yonah, director of the international tax program at the University of Michigan’s law school, told Bloomberg. “Once it’s public you can’t fool around with the value.”…

…“It’s a loss for the U.S. to have many well-educated people who actually have a great deal of affection for America make that choice,” Richard Weisman, an attorney at Baker & McKenzie in Hong Kong, told Bloomberg. “The tax cost, complexity and the traps for the unwary are among the considerations.”…

Read the complete article at MSNBC.

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