Facebook made Billionaire co-founder, Eduardo Saverin, has dropped his U.S. Citizenship. The reason seems to be taxes. He will be making a lot of money when Facebook goes public later this month and the only way to reap the fruits of his effort is say goodbye to being American.
If you have been following the news, Eduardo Saverin isn’t the first to give the boot to U.S. Citizenship. Many Americans are choosing to go the other way because of the massive taxes they have to pay in the United States. If half of their hard-work is stolen by the Government you really can’t sleep at night.
Eduardo Saverin is on an Internal Revenue Service list of Americans choosing to renounce their U.S. citizenship as of April 30, Bloomberg reports. Saverin, who was born in Brazil but now lives in Singapore, decided to give up his citizenship “around September” his spokesman told Bloomberg. Singapore doesn’t tax capital gains — or income earned from other certain types of investments.
When the company goes public later this month, Facebook shares are expected to debut somewhere between $28 and $35 a piece, which would put the social network’s value at nearly $100 billion.
Saverin’s move isn’t the first to raise questions about how taxes related to Facebook’s market debut will be handled. The company structured its IPO in such a way that will allow it to sidestep state and federal income taxes on its 2011 earnings, according to a February report from the Citizens for Tax Justice.
If Saverin did indeed give up his U.S. passport in order to avoid taxes on the money he’ll bring in from the Facebook IPO, he’d be far from the first super-rich American to do so. The number of wealthy Americans dropping their citizenship has grown sevenfold in the four years since a whistleblower at UBS prompted a crackdown on tax evasion, according to a separate Bloomberg report.
John Dorrance III, the heir to the Campell’s Soup fortune, ditched his U.S. citizenship and moved to Ireland before selling his stake in the family business, according to Forbes. Dropping citizenship to avoid taxes isn’t a phenomenon limited to the U.S. either. Lily Safra, the Brazilian widow of banker Edmond Safra, left her native country for Monaco.
Still, even after efforts from international organizations to crack down on global tax evasion, the practice is still rampant, according to a recent study from two European economists. Bank accounts in tax havens held about $2.7 trillion last year, the same amount as in 2007, even after a slew of international treaties aimed at preventing the practice.
In fact, instead of scaring the super-rich from stashing their cash in accounts where they can avoid paying taxes, the international treaties actually prompted the world’s wealthy to move their money to other tax havens in many cases, the study found.