Facebook co-founder Eduardo Saverin (photo) is expected to save hundreds of millions of dollars or more on his tax liabilities after becoming one of the more high-profile individuals to renounce U.S. citizenship in recent years. The Brazilian-born multi-billionaire now lives in Singapore, where the government does not impose capital-gains taxes or take a cut of income earned abroad.
With social-networking giant Facebook ready to launch an initial public offering (IPO) of its stock, analysts have estimated that the company could be worth as much as $100 billion. That means Saverin, who owns about four or five percent of the company, might be sitting on billions of dollars’ worth of assets — a figure that almost certainly would get the Internal Revenue Service (IRS) and the big-spending U.S. government frothing at the mouth.
Of course, even by renouncing his citizenship, Saverin and his wealth did not completely escape Washington, D.C.’s clutches. The U.S. government imposes what is known as an “exit tax” on wealthy individuals before it allows them to permanently sever their ties to the “Homeland.” In the case of stocks, according to experts cited in news reports, the IRS treats and taxes them as if they had already been sold before granting anyone permission to permanently ditch Uncle Sam.
While it remains unclear exactly how much wealth the IRS seized from Saverin, tax experts say he made a smart financial move by giving up his citizenship before Facebook’s IPO. “Once it’s public you can’t fool around with the value,” Reuven Avi-Yonah, director of the international tax program at the University of Michigan’s law school, told Bloomberg. In the future, the benefits could be even greater as Saverin invests his wealth and it continues to grow.
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