According to Bloomberg News, Eduardo Saverin renounced his American citizenship in September, moving his residency to the more tax friendly country of Singapore where has been living since 2010 and where he can enjoy income tax capped at 20% and no capital gains or inheritance tax. He gained American citizenship on 1998 after to moving to the country from Brazil.
In addition, individuals are only taxed on income earned in Singapore, which means earnings from his business interests in Asia and Latin America will be greatly enhanced. Saverin’s decision to renounce his citizenship also coincides with the initial public offering of Facebook which is due to take place this week and which is expected to make him worth $3.5bn, despite now only owning less than 5% of the company’s stock.
However, Tom Goodman, a spokesperson for Saverin has insisted the decision to renounce his citizenship was not purely financial. “I have worked with him for over a year, and that never came up,” said Goodman.
“Obviously, it was a big decision, but he’s making all these investments in Europe, Asia and the US. It just seemed a lot simpler.”
The stringent, and sometimes seemingly unfair, tax system for US citizens living or working abroad has come under the spotlight more frequently in recent months because of the implementation of the Foreign Account Tax Compliance Act and the growing realisation by countries and companies around the world of the implications it has on having financial dealings with US citizens.
As a result, a growing number of American citizens are opting to renounce their citizenship. According to The New York Times, some 1,780 people gave up their US nationality last year, eight times the 2008 level and the “largest number in more than a decade”.
However, this pressure has also brought results, according to the Internal Revenue Services, which said the number of Americans filing the Report of Foreign Bank and Financial Accounts (FBAR) has more than doubled since 2009, increasing from 276,386 to 618,134 in 2011. Failure to file FBAR could of course be costly, with punishments ranging from a $500,000 fine to up to 10 years in prison.