Facebook co-founder Eduardo Saverin has given up his U.S. citizenship, a move that will reduce his taxes when Facebook goes public in the coming weeks.
Saverin, who was born in Brazil and moved to the U.S. in 1992 and has been a U.S. citizen since 1998, has decided to become a resident of Singapore. He is said to own around 5 percent of the company, which has a valuation of between $77 billion and $96 billion according to paperwork filed ahead of its initial public offering.
In a statement, Saverin’s spokesman Tom Goodman said that the switch was done, in part, for business reasons.
“Eduardo recently found it to be more practical to become a resident of Singapore since he plans to live there for an indefinite period of time,” said Saverin’s spokesman Tom Goodman. “He has invested in Asian, U.S. and European companies. He also plans to invest in Brazilian and global companies that have strong interests in entering the Asian markets. Accordingly, it made the most sense for him to use Singapore as a home base.”
Business reasons aside, it will certainly benefit Saverin to be a non-U.S. citizen once the company he helped to found hits the public market.
“It definitely is going to reduce his tax burdens,” said Edward Kleinbard, a professor at the University of Southern California’s Gould School of Law who specializes in tax law.
Saverin won’t be able to duck all of his taxes, Kleinbard said, but he will be able to avoid paying some charges he would have picked up if he had stayed a U.S. citizen.
He said that Saverin will have to pay taxes on the value of the company before he switched his citizenship, while company was still private. Saverin could argue that the value was lower before it was publicly traded.
Kleinbard said that there aren’t that many expatriations — likely fewer than 2,00o per year — but most are cases where immigrants (or those with dual-citizenship) return to their home in another country. There are also cases where U.S. citizens who have married foreign nationals will expatriate to live in their spouses’ home countries.
“There a only a handful of cases with very high net-worth individuals,” he said. “Those are very exceptional cases.”