A Facebook Founder Renounces His U.S. Citizenship

Eduardo Saverin, co-founder of Facebook, at an event in New York last year.

By QUENTIN HARDY

Eduardo Saverin, one of the founders of Facebook, officially defriended the United States in September, giving up his American citizenship for the more tax-friendly residency status of Singapore.

Mr. Saverin, who was born in Brazil and has lived in Singapore since 2010, plans to remain in the Asian island nation indefinitely. Singapore has a maximum personal income tax rate of 20 percent and no taxes on capital gains. He gained American citizenship in 1998.

A spokesman for Mr. Saverin insisted his client did not renounce his citizenship for financial reasons. “I have worked with him for over a year, and that never came up,” said Thomas Goodman, the spokesman. “Obviously, it was a big decision, but he’s making all these investments in Europe, Asia and the U.S. It just seemed a lot simpler.”

He declined to say exactly what simplifications the impending billionaire would enjoy, other than the financial ones. The revelation of the renunciation, published by the State Department at the end of April and reported by Bloomberg News earlier on Friday, comes just days before Facebook is expected to go public.

The decision was in fact made several months ago, however, Mr. Goodman said. “Everyone is trying to tie this to the I.P.O. and taxes,” he said. “It was never about that.”

Mr. Saverin’s loss of citizenship in September 2011 makes it likely that the process was initiated sometime around last May, according to a person familiar with the situation. People leaving American citizenship under such circumstances typically pay an “exit tax,” which is a final bill based on all assets.

As Mr. Saverin’s holdings were primarily shares in a prepublic start-up company, the valuation of those assets was very likely the product of a significant negotiation. In a financing round in January 2011, Facebook was valued at about $50 billion, a little more than half what it is expected to be worth after next week’s initial public offering of stock.

Mr. Saverin, 30, co-founded Facebook while at Harvard with Mark Zuckerberg, Dustin Moskovitz and Chris Hughes, all of whom remain United States citizens. At one time Mr. Saverin owned about 34 percent of the company, but his shares were severely diluted during several financing rounds, leading to a lawsuit that was settled out of court with undisclosed terms. He now owns less than 5 percent of Facebook, but he is expected to be worth over $3.5 billion after the stock offering. He has reportedly sold over $250 million of Facebook stock ahead of the offering.

Among Mr. Saverin’s other investments are Anideo, a Singapore maker of a mobile video application; Jumio, an American company that processes payments based on image recognition; and Shopsavvy, an American maker of software used for comparison shopping.

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This post has been revised to reflect the following correction:

Correction: May 11, 2012

An earlier version of this post included a photo published in error. It showed Andrew Garfield, the actor who played Eduardo Saverin in the movie "The Social Network," not Mr. Saverin himself.

NYT