Now residing in Singapore, Eduardo Saverin is giving up his U.S. citizenship. It seems he will have quite the tax saving due to this move.
Bloomberg is reporting that Brazilian-born Saverin (30) renounced his U.S. citizenship in September last year.
This move is apparently not out of the ordinary these days. RT reported some time ago that in 2011 alone, at least 1,788 Americans renounced their U.S. citizenship, which is more than the totals for 2007, 2008 and 2009 together.
Why are people giving up their U.S. citizenship? Its actually quite simple.
In a report published in 2011, the IRS explained, “The complexity of international tax law, combined with the administrative burden placed on these taxpayers, creates an environment where taxpayers who are trying their best to comply simply cannot. For some, this means paying more US tax than is legally required, while others may be subject to steep civil and criminal penalties. For some US taxpayers abroad, the tax requirements are so confusing and the compliance burden so great that they give up their US citizenship.”
Yes, U.S. citizens living abroad still have to pay tax to Uncle Sam and it gets complicated.
Saverin is living in Singapore and he is unsure when he will return to the U.S. With the sale of shares in Facebook, Saverin can anticipate up to $3,4 billion passing into his banking account. By renouncing his citizenship, Saverin stands to save a lot of that money from being taken by the IRS.
A spokesman for Saverin told Bloomberg, “Eduardo recently found it more practical to become a resident of Singapore since he plans to live there for an indefinite period of time.”
Earlier this month the Wall Street Journal ran an article about Saverin and his move to Singapore, but the issue of his citizenship didn't come up.
According to WSJ, Saverin did not respond to multiple interview requests.
Reuven S. Avi-Yonah of the University of Michigan's international tax program told Bloomberg that Saverin's renouncing his U.S. citizenship is "a very smart idea" from a tax standpoint.
While Saverin parted ways with the company in 2004, his stake in Facebook remains at around 4%, which in the current IPO situation is valuable.