Facebook Co-Founder Renounced US Citizenship to Dodge Taxes

May 15th, 2012 at 7:20 pm

Eduardo Saverin, a co-founder of Facebook, has renounced his US citizen last year reportedly to avoid paying the hefty tax he will have to pay once the social networking site opens its initial public offering this week. Saverin, 30 and currently living in Singapore, holds a 2% stake in the company, which would put his net worth at around $2 billion after the IPO.

Saverin’s “unfriending” of United States ahead of Facebook’s big day in trading could save him at least $39 million, 1% of his worth, according to estimates. His spokesman, however, claimed that Saverin’s citizenship shift has to do with his plans on living in the island-state for “an indefinite period of time” and it coincides with his plans on investing in Brazilian and global companies with strong interests in Asian markets.

Despite the tax dodging, Saverin would still have to pay a lot in exit tax for renouncing his citizenship, but Singapore has a low-tax jurisdiction and no capital gains tax.

The story is quite an irony for Saverin, who left his native Brazil and lived in Miami at age 13 to escape the threat of kidnappers. He graduated magna cum laude from Harvard with a degree in economics. It was here where he met CEO Mark Zuckerberg in his junior year. The two did not agree on the direction of the company they founded, leading to Saverin suing Zuckerberg for an undisclosed amount. The case was settled out of court, with Saverin receiving a 5% stake in Facebook, some of which he has since sold off.

Source: The Guardian