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Date published: 2012/05/16
The BBC says:
Facebook's co-founder Eduardo Saverin has renounced his US citizenship ahead of the company going public on Friday.
Brazilian-born Mr Saverin, 30, will avoid paying around $600m (£373m) in tax when he picks up his share of the site's stock offering.
He made the move to renounce his citizenship in September 2011.
However, his decision was only made public last week when the US Internal Revenue Service published a list of Americans giving up their citizenship.
Mr Saverin has lived in Singapore since 2009.
Mr Saverin holds 4% of the site's stock, the ownership of which is set to put his personal wealth at around $4bn (£2.5bn).
If he were to remain a US citizen, he would be liable for capital gains tax.
The BBC, along with most of the world's media, completely got the reporting for this story wrong. When you give up US citizenship the IRS levies a tax on your wealth at exit (above a threshold, which Saverin is way above). This will have included the Facebook shares. The only difference renouncing in September 2011 will make is that the valuation of these shares will have been lower relative to what it will be at flotation (by how much is up for Saverin's accountants and the IRS to argue over), so the capital gains will have been lower.
The real story here, which the BBC, along with most of the world's media, ignored, is that the US government, alone in the world, thinks that it has the right to tax US citizens no matter where they live. And the regulation of US citizens who live abroad is getting worse and worse, including, from 2013, the right to demand that foreign banks spy on US citizens. This is why more and more people are ditching their US citizenship. (The fact that the Republican Party has become a sect of lunatics has not helped.)
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