Eduardo Saverin, Facebook Co-Founder, Drops U.S. Citizenship, May Sidestep Taxes On IPO Profits

One of Facebook's billionaire co-founders may have found a way to sidestep taxes on the money he’ll get when the social network goes public later this month.

Dropping his U.S. citizenship.

Eduardo Saverin is on an Internal Revenue Service list of Americans choosing to renounce their U.S. citizenship as of April 30, Bloomberg reports. Saverin, who was born in Brazil but now lives in Singapore, decided to give up his citizenship "around September" his spokesman told Bloomberg. Singapore doesn't tax capital gains -- or income earned from other certain types of investments.

When the company goes public later this month, Facebook shares are expected to debut somewhere between $28 and $35 a piece, which would put the social network's value at nearly $100 billion.

Saverin's move isn't the first to raise questions about how taxes related to Facebook's market debut will be handled. The company structured its IPO in such a way that will allow it to sidestep state and federal income taxes on its 2011 earnings, according to a February report from the Citizens for Tax Justice.

If Saverin did indeed give up his U.S. passport in order to avoid taxes on the money he’ll bring in from the Facebook IPO, he'd be far from the first super-rich American to do so. The number of wealthy Americans dropping their citizenship has grown sevenfold in the four years since a whistleblower at UBS prompted a crackdown on tax evasion, according to a separate Bloomberg report.

John Dorrance III, the heir to the Campell’s Soup fortune, ditched his U.S. citizenship and moved to Ireland before selling his stake in the family business, according to Forbes. Dropping citizenship to avoid taxes isn't a phenomenon limited to the U.S. either. Lily Safra, the Brazilian widow of banker Edmond Safra, left her native country for Monaco.

Still, even after efforts from international organizations to crack down on global tax evasion, the practice is still rampant, according to a recent study from two European economists. Bank accounts in tax havens held about $2.7 trillion last year, the same amount as in 2007, even after a slew of international treaties aimed at preventing the practice.

In fact, instead of scaring the super-rich from stashing their cash in accounts where they can avoid paying taxes, the international treaties actually prompted the world's wealthy to move their money to other tax havens in many cases, the study found.

Comments

[brensgrrl]

05:15 PM on 05/20/2012

I hope he takes his whole family with him before his parents get old enough for nursing home care under Medicaid. . .he's the type of clown who would actually be glad to leave them here to become public charges.

[Jonathan Munoz]

06:48 PM on 05/18/2012

Forbes calls him an American hero,

LOL well there gunna have to change that, cuz he;s not american anymore LOL

Love how he's an american hero for not being an american anymore LOL

[USAmerican100]

01:28 PM on 05/17/2012

Wish he would take a few Globalist traitors with him.

[feernandos]

03:46 PM on 05/16/2012

I would do the same if I were not an American born, maybe even being one. Plus: he was already rich before coming to the US, so don't come with this "The USA helped him, he is betraying the USA"; he must have had lots of money spent in the USA, which did helped our economy. He was (and still is) rich as hell, I met him back in 2003, he would buy whatever he wanted and even pay stuff for us.

[jep121212]

08:51 PM on 05/17/2012

from what I understand he was in danger from political retribution and we gave him snacuary. Ungrateful greedy basta rd.

[elmok719]

07:04 AM on 05/20/2012

What a mistake you made wishing my family dead in a car crash. Didn't take long to locate you see you soon.

[aphextwin07]

12:18 PM on 05/16/2012

smart move

[richinkle]

11:56 PM on 05/15/2012

We should be taxing the capital gain, not the individual. If the capital gain is earned in this country, it should be taxed regardless of citizenship.

[thereisonlyoneparty]

10:36 AM on 05/17/2012

Um, the US already does tax capital gains.

And renunciation does not eliminate capital gains taxes. He is required to pay capital gains on all assets as though they are realized. He is just avoided paying even more taxes by doing it when the company is still private and thus worth a lot less than it will be after shares are marketed.

[bgblcklab]

10:53 PM on 05/15/2012

Maybe it is time to do a massive facebook dump before the IPO so this sorry sack of deadbeat MAN nure doesn't suck up another dime. What a vile person.

[soundog]

12:02 PM on 05/14/2012

He shouldn't ever be allowed to re-enter the States again. We gave his family refuge, many opportunities. Just wait until he tires of living in Singapore, or gets kidnapped - F%$@ him.

[aphextwin07]

12:18 PM on 05/16/2012

u jelly?

[jmpw]

06:41 AM on 05/14/2012

The greed ... he doesn't want to pay his tax bill here, in the country where it is possible for college students to become billionaires - a country that is suffering -- really, he couldn't part with a portion of his billions of dollars? Disgusting.

[alumcreek]

09:51 AM on 05/14/2012

When you are only loyal to yourself, you are just a typical sociopath absolutely certain the world owes you everything you will ever want.

[Thaigold]

06:15 AM on 05/14/2012

Since it appears the consensus of opinion here is that this financial freebooter has done no wrong in running away to avoid his taxes, then the State Department should blacklist his sorry backside and ban reentry to the US, or any of its possessions. Justice served on this unfaithful scoundrel.

Hasn't anybody even read the oath he took to gain his citizenship? If I had my way, I'd impress this punk into the USMC, and send his sorry backside to Afghanistan.

[alumcreek]

09:55 AM on 05/14/2012

If you were a right winger you would never imply that very rich people are ever any less than the finest exemplars of humanity. The rich do no wrong. The non-rich always visit wrong upon the rich by expecting them to live like the common man who responsibly pays taxes to his country.

Bah humbug!

[Michael Steaphens]

01:39 AM on 05/14/2012

This is the fault of the bloated,ever growing government and the tax-and-spend liberals who think the government knows what's best as far as how money should be earned or spent.

[soundog]

12:07 PM on 05/14/2012

What hogwash. Our taxes are some of the lowest in the world. Zuckerman isn't leaving, Romney isn't leaving. Our taxes have given us great higher learning, infrastructure - I could go on. Personally I like the fact I don't have to shovel show ten miles to get to work.

[Michael Steaphens]

02:32 PM on 05/14/2012

"Our taxes are some of the lowest in the world." Not according to the liberals who advocate even higher taxes.That's all the Left knows,is raising taxes.Like Illinois has done and California wants to do.

[thereisonlyoneparty]

10:39 AM on 05/17/2012

Likely because they do not have citizenship elsewhere.

Even not rich people who plan on living elsewhere--called expatriates--eventually renounce US citizenship. The US taxes all citizens regardless of residence or origin of income. Then there are the regulations requiring disclosure of all accounts.

US citizenship is a liability for people who want to live elsewhere and can do it (either as foreign non-citizen residents or foreign citizens).

[jep121212]

08:53 PM on 05/17/2012

with you its all about lies!!

[Michael Steaphens]

12:58 AM on 05/18/2012

What lies?Is the government shrinking or expanding?And how many liberal Democrats advocate less spending and lower taxes?

[Marcia Rhinehart]

09:26 PM on 05/13/2012

I guess I am just an old fashion American but there is nothing, and I do mean NOTHING, that would make me renounce my citizenship to the USA.

[thereisonlyoneparty]

10:42 AM on 05/17/2012

Good for you.

Not everyone feels the same way. Especially those who live outside of the US.

They are still required to pay US taxes, and are required to disclose their bank accounts to the US Treasury (look up FBAR). Not just accounts that they have funded. Any account with their name on it. That means disclosing joint accounts that can be funded mostly by another party who is not a US citizen.

US tax law is horrid. It punishes those who live outside of the US. No other nation does it. Well, one nation does: the paradise that is Eritrea. Look it up.

[Ayesha Khan]

04:30 PM on 05/13/2012

You don't stop doing things cause they are difficult, you sell your assets in dire straits, and not your identity. A person's priorities defines its true character, but those who are characterless are not worth discussing, I have no idea how Face Book will take up the matter, but surely it will go against it if this person still remains as a holder of a big chunk with Face Book in whatever capacity---------

[Mark Cormier Arizona]

02:35 PM on 05/13/2012

Just another reason to change out convoluted tax code.......Just like what is happening in France, our attempt to overtax the rich to pay our bills will backfire....they will find a way around it.
Repeal the 16th Amendment, eliminate the IRS and implement the Fair Tax.....a consumption tax everyone pays....including this guy when he comes back to the USA.

[hmp49]

02:44 PM on 05/13/2012

The poor consume every penny they make, the rich a tiny fraction.

un"Fair tax" - a Great way to deepen the wealth and income gap.

[Mark Cormier Arizona]

06:23 PM on 05/13/2012

So rather than do what is right for the nation you would rather do whats fair for the poor. If you read the Fair Tax Act you would see that everyone (depending on family size) would get whats called a prebate check in the mail monthly to prepay the 23% consumption taxes. If a family of 4 made less than $40K they would pay zero consumption tax because the prebate would equal it out. After that, the scale slides off and the rest pay the taxes.
The good part is it would bring an estimated 40 million new taxpayers into the system by eliminating cheats, loopholes, special interests, drug money, criminal money, international travelers, illegals.
Read the plan, then criticize.

[Repo 105]

05:54 PM on 05/13/2012

If we did your plan every retailer in America would be out of business in 5 years.

[Mark Cormier Arizona]

06:16 PM on 05/13/2012

Yet another who has not read the plan......no understanding of whats in it what so ever.
Let me get this straight......first of all, under the Fair Tax you would get ALL of your paycheck....then if bread went from $1.50 to $1.80 you would stop buying bread???
If a teeshirt went from $10.00 to $12.25 you would stop buying it...even though your paycheck had increased by 30%??
READ THE PLAN, THEN YOU CAN BE CRITICAL.

[1dabut1]

09:49 PM on 05/13/2012

not walmart, we would all be poor, and thats were we would have to shop, the company store of 2012. you know that was the game plan from the beginning.

[Anna Banks]

01:53 PM on 05/13/2012

poorly done Eduardo.