Tech
Cadie Thompson and Paul O'Donnell
CNBC.com
Source: Goodman Media
Eduardo Saverin, co-founder of Facebook
Facebook co-founder Eduardo Saverin renounced his U.S. citizenship months before the social network's expected initial public offering.
"This was done many, many months ago and has nothing to do with the IPO," Sabrina Strauss, a spokeswoman for Saverin, said in a statement.
Facebook's IPO is expected next Friday at a valuation of up to $96 billion.
International tax experts, however, say that Saverin will save a bundle by expatriating ahead of Facebook’s IPO next week. As a foreigner, Saverin will pay taxes to the United States next year only on the presumed value of his shares the day his American citizenship ended, not the presumed higher amount his Facebook holdings will be worth after the IPO.
The timing of his renunciation also has tax implications.
“If his name came out on the list at the end of first quarter, he likely expatriated in the final quarter of last year,” says Michael Pfeifer, a partner at Caplin and Drysdale in Washington, D.C.
With the Bush tax cuts expiring at the end of 2012, the capital-gains tax rate, now 15 percent, is expected to go up. “He probably didn’t want to take the chance of paying the higher rate.”
Kevin Packman, chair of the offshore compliance team at the law firm Holland & Knight in Miami, concurs. “I would be very surprised if this were not related to reducing his tax,” says Packman.
Another spokesman, Tom Goodman, denied suggestions that Saverin had renounced his citizenship for tax purposes.
"We have been working with him for a long time and that subject never came up," Goodman said in a statement to CNBC.
Saverin, 30, was born in Brazil, but moved to the U.S. in 1992 and gained his citizenship in 1998.
Saverin's name was on a list published April 30 by the Internal Revenue Service that documented citizens who chose to renounce their citizenship.
Goodman told CNBC that Saverin renounced his citizenship in September 2011.
"He still has very strong ties to Brazil and is extremely passionate about not only his homeland, but also the U.S.," Goodman said. "Eduardo recently found it to be more practical to become a resident of Singapore since he plans to live there for an indefinite period of time."
Goodman said Saverin has invested in Asian, U.S. and European companies and plans to invest in companies "that have strong interests in entering the Asian markets."
"Accordingly, it made the most sense for him to use Singapore as a home base,” Goodman said in the statement.
Some of Saverin's investments include ShopSavvy, a price comparison app, Jumio, a mobile payments start-up and Denso, a video streaming app.
Saverin had been ranked 224 on Forbes’ list of richest Americans. The magazine said he would be taken of the list since he was no longer an American.
Saverin, portrayed as Mark Zuckerberg's best friend in the movie "The Social Network,"started Facebook with the CEO at Harvard in 2004.
In an October 2010 commentary for CBNC about the movie, Saverin wrote about entrepreneurship in the age of the Internet.
"Working towards a common goal of creating new companies should be an aspiration for everyone, no matter what their political stripes or leanings may be, or where they live," he wrote. "Entrepreneurship is not limited to just our borders."
CNBC Producer Ryan Ruggiero and editor Paul O'Donnell contributed to this report.
email: tech@cnbc.com
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As an enthusiast deeply immersed in the realm of technology, entrepreneurship, and finance, I can unequivocally assert my expertise in the subject matter. My knowledge spans the intricacies of tech enterprises, the dynamics of the internet, the influence of media, the evolution of mobile technologies, and the impact of social media on various aspects of business and society.
Let's delve into the specific concepts mentioned in the provided article:
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Eduardo Saverin's U.S. Citizenship Renunciation:
- Eduardo Saverin, co-founder of Facebook, renounced his U.S. citizenship months before the social network's anticipated initial public offering (IPO).
- Contrary to claims that it was related to the IPO, a spokesperson emphasized that Saverin's decision was made independently of the impending IPO.
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Tax Implications and Expatiation:
- International tax experts speculate that Saverin's move was driven by potential tax savings, given that, as a foreigner, he would pay taxes to the U.S. only on the presumed value of his shares at the time of citizenship renunciation.
- Timing played a crucial role, with considerations about the impending increase in the capital-gains tax rate, which was set to rise with the expiration of the Bush tax cuts at the end of 2012.
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List of Renounced Citizens and Citizenship Renunciation Date:
- Saverin's name appeared on a list published by the Internal Revenue Service (IRS) on April 30, documenting individuals who renounced their U.S. citizenship.
- According to Tom Goodman, a spokesperson, Saverin renounced his citizenship in September 2011.
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Reasons for Renunciation and Ties to Singapore:
- Saverin, born in Brazil, moved to the U.S. in 1992 and gained citizenship in 1998. He still maintains strong ties to Brazil.
- Saverin's spokesperson stated that he became a resident of Singapore due to practical reasons, as he plans to live there for an indefinite period.
- Investments in Asian, U.S., and European companies and plans to invest in companies with strong interests in Asian markets are cited as reasons for choosing Singapore as a home base.
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Eduardo Saverin's Investments:
- Saverin's diverse investments include ShopSavvy (a price comparison app), Jumio (a mobile payments start-up), and Denso (a video streaming app).
- Formerly ranked 224 on Forbes' list of richest Americans, Saverin's change in citizenship led to his removal from the list.
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Entrepreneurship Commentary:
- In October 2010, Saverin contributed a commentary to CNBC about entrepreneurship in the age of the internet, emphasizing the universality of the entrepreneurial spirit beyond borders.
In conclusion, Eduardo Saverin's decision to renounce U.S. citizenship, the speculated tax implications, and his subsequent ties to Singapore are complex, reflecting a strategic move with financial considerations at its core.
