Blogs

Facebook Co founder Gives Up U.S. Citizenship before Company Goes Public

Eduardo Saverin, the billionaire co founder of Facebook Inc., has renounced his U.S. citizenship. The move, which is almost certainly compelled by the company's upcoming initial public offering (IPO), places Saverin among a growing number of Americans who give up their passports each year, says Bloomberg.

In Saverin's case, giving up his citizenship is a sensible solution to a substantial tax liability.

Because he already resides in Singapore and operates most of his current enterprises out of that country, Saverin will not want for a national home.
Furthermore, Facebook's upcoming IPO, which values the social network at as much as $96 billion, will yield Saverin an enormous sum for his 4 percent stake in the company.
By taking this action, Saverin will be able to substantially reduce his tax burden.

This is not to say that Saverin will avoid taxes entirely on his assets: Americans giving up their citizenship must pay an exit tax that essentially treats capital gains as if they are sold right then. However, by paying this tax before the IPO, Saverin will grant his financial advisers greater flexibility in valuing his assets and assessing his total tax burden.

In following this course of action, Saverin has become only the latest entrant into a pool of Americans all bent on reducing their tax outlays. A record 1,780 gave up their U.S. passports last year compared with 235 in 2008, according to government records.
A partial explanation for this increase is that income tax rates for top U.S. earners will rise to 39.6 percent from 35 percent next year.
Furthermore, rates on capital gains and dividends also are scheduled to rise.

This strategy of renunciation, though seemingly extreme, has also been compelled by action on the part of the federal government. The Foreign Account Tax Compliance Act, known as FACTA, seeks to track gains made by Americans' assets abroad so that they can be taxed. Facing such limitations on traditional forms of tax evasion, these Americans elect instead to give up their citizenship entirely.

Source: Danielle Kucera, Sanat Vallikappen and Christine Harper, "Facebook Co-Founder Saverin Gives Up U.S. Citizenship before IPO," Bloomberg, May 11, 2012.

For text: http://www.bloomberg.com/news/2012-05-11/facebook-co-founder-saverin-gives-up-u-s-citizenship-before-ipo.html

Email me when people comment –

You need to be a member of Patriot Action Network to add comments!

Join Patriot Action Network

Today's News

Latest Network Activity

Marlene commented on Sera Wilson's blog post CIVIL UNREST IN AMERICA: #Ferguson How Far Does the Rabbit Hole Really Go?
"0bozo and holder, the Cheech and Chong of the current corrupt admiistration holding a conference in a trashed out 1980 VW bug with the windows rolled up and smoking rope.  Their idea of a high day."
49 seconds ago
Marlene commented on Sera Wilson's blog post CIVIL UNREST IN AMERICA: #Ferguson How Far Does the Rabbit Hole Really Go?
"Totally agree.  National Guard is NOT one of our branches of military.  It is wrong to use them as such.

My personal opinion is that way too much attention is being paid to the Ferguson matter.  They are thriving on it.  Turn off the attention and…"
4 minutes ago
Eric Odom replied to MOTUS's discussion Thanksgiving 2014
"Thanks for sharing this, MOTUS. I'll put this in today's PAN email. 
Happy Thanksgiving!"
11 minutes ago
Rudy, Donnie, Emily Shelton and 3 more joined Patriot Action Network Official Help Group
32 minutes ago
Linda Kilbride and Anthony Fairless are now friends
1 hour ago
Kevin M. Fry, Ironhorse, Renea Kovski and 7 more joined Patriot Action Network
2 hours ago
Teddy Jack Eddy commented on Sera Wilson's blog post CIVIL UNREST IN AMERICA: #Ferguson How Far Does the Rabbit Hole Really Go?
"1st of all... I'm against militarizing police forces or American streets in principle and find it alarming so many are readily advocating it. Much more alarming than the riots, which I don't defend at all.
The article reads that the Missouri governo…"
2 hours ago
MOTUS posted a discussion
For each new morning with its light, For rest and shelter of the night, For health and food, for love and friends, For everything Thy goodness sends. - Ralph Waldo EmersonIf you are like me, you have many reasons to be grateful and give thanks this…
3 hours ago
More…