Facebook co-founder renounces US citizenship
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E-mail Xinhua, May 12, 2012
Facebook co-founder Eduardo Saverin has renounced his U.S. citizenship ahead of the social networking company's initial public offering (IPO), a move that may reduce his capital-gains tax bill, U.S. media reported on Friday.
"Eduardo recently found it more practical to become a resident of Singapore, since he plans to live there for an indefinite period of time," Saverin's spokesman Tom Goodman reportedly told Bloomberg by email.
Saverin, 30, helped Mark Zuckerberg to start Facebook at Harvard in 2004, and holds an estimated four percent of Facebook stake. At the high end of the Facebook IPO valuation, the stake would be worth around 3.84 billion U.S. dollars, according to Bloomberg.
Renouncing the U.S. citizenship in advance of an IPO is "a very smart idea" from a tax standpoint, Reuven Avi-Yonah, director of the international tax program at the University of Michigan's law school, told Bloomberg.
But Saverin won't dodge all U.S. taxes. Americans who give up their citizenship still owe an exit tax on the capital gains from their stock holdings, said Avi-Yonah.
According to existing policies, Singapore does not have a capital gains tax and collects tax on income earned in the nation as well as from certain foreign sources.
Saverin was born in Brazil in 1982 and became a U.S. citizen in 1998. He has lived in Singapore since 2010. Saverin once sued Zuckerberg over his ownership in Facebook and settled for an undisclosed amount.
In the 2010 award-winning movie The Social Network, Saverin was portrayed as Zuckerberg's friend providing the company's early financing.
Facebook plans to raise as much as 11.8 billion dollars through an IPO expected to be held later this month, the biggest in history for an Internet company.
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