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Tag: exit tax

  • Facebook Co-Founder Responds to Allegations of a Scam

    As you may recall Facebook co-founder Eduardo Saverin has been getting a lot of grief over his decision to renounce his United States citizenship and live in Singapore. Most of the concern revolved around him escaping high income taxes that would be owed on his 4% share of Facebook, which is set to go public tomorrow.

    Earlier today senator Charles Schumer introduced a new act called the “Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy” act that would make it necessary for all individuals who renounce their citizenship to pay a 30% capital gains tax on their investments and give up their ability to ever reenter the United States. Furthermore, Schumer attacked Saverin’s plans to renounce his citizenship, calling it “a scam” and an “outrage”.

    Now Saverin is responding to the allegations and has issued a response to those who say he’s leaving the country to avoid taxation and that he is running some sort of scam. CNN has posted his full statement of affairs.

    Here are a few key segments from his statement:

    “My decision to expatriate was based solely on my interest in working and living in Singapore, where I have been since 2009. I am obligated to and will pay hundreds of millions of dollars in taxes to the United States government. I have paid and will continue to pay any taxes due on everything I earned while a U.S. citizen.”

    “…I invested my life’s savings into a start-up company that initially was run out of a college dorm room. Since then the company has expanded dramatically, has created thousands of jobs in the United States…”

    “I will continue to invest in U.S. businesses and start-ups, and believe and hope that those investments will create many new jobs in the U.S. and globally.”

    To read Eduardo’s full statement follow the links above to CNN’s coverage of this event. We will be following the story of Saverin’s renouncement and what happens to his investments. Check back here for more news as the story unfolds.

  • Senator Responds to Saverin’s Tax Scheme

    Senator Responds to Saverin’s Tax Scheme

    We’ve been following Facebook co-founder Eduardo Saverin and his exit from the United States involving him renouncing his US citizenship. According to representatives speaking on Saverin’s behalf, his decision to leave the US has nothing to do with avoiding taxes, but rather to do with freedom to live and invest where he sees fit.

    Apparently we were not the only ones following Saverin’s story, Senator Charles Schumer is calling Saverin’s plan to renounce his citizenship a “scam” and he’s taking action to make sure this isn’t a strategy others can pursue in the future. Essentially the legislation he’s crafting would impose a 30% capital gains tax on any citizen who decides to renounce and keep their US investments.

    The current exit tax is similar in the way that it assumes a fee based on actually selling the investments. I believe 30% would be a considerable increase, but not completely different than what Eduardo is required to pay now. One clear difference is that Saverin could indefinitely delay paying the exit tax as it is, until he actually does sell the stock, as the current exit tax allows.

    Introduced at a news conference this mourning, the “Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy” Act would discourage investors from renouncing citizenship in order to evade high US taxes. A main component of the act prohibits those who renounce from ever entering the United States again.

    So it looks like things are heating up for Eduardo as lawmakers begin to take notice of his exit from the United States. Currently living in Singapore, Saverin amassed his education and his wealth in the US after attending Harvard. He was born in Brazil and has had US citizenship since 1998. He is estimated to own approximately 4% of Facebook, which will be worth a hefty fortune after tomorrows much anticipated public offering.

  • Saverin May Never See the United States Again

    You might remember we’ve been reporting on Facebook co-founder Eduardo Saverin’s exit from the United States. He has renounced his United States citizenship and moved to live in Singapore. According to a representative of Saverin’s, the decision has nothing to do with escaping sizable IRS bills attributed to his 4% share in Facebook.

    When Saverin’s request goes through to officially resign US citizenship he will owe an exit tax on all his investments equivalent to a capital gains tax if he were to sell. He would owe no US taxes on the investments in the future, and Singapore no such tax. Many have criticized Eduardo’s decision as a ploy to simply evade high IRS taxation on his sizable investments.

    Today we learn that there might be a higher price to pay for renouncing US citizenship than just an exit tax. TPM reported yesterday that US immigration law frowns on citizens who renounce their citizenship for monetary gain and may make it difficult for Eduardo to obtain a visa to enter the United States again. Saverin could fall in this category according to immigration code Sec.212 [8 U.S.C.1182]:

    Former citizens who renounced citizenship to avoid taxation.-Any alien who is a former citizen of the United States who officially renounces United States citizenship and who is determined by the Attorney General to have renounced United States citizenship for the purpose of avoiding taxation by the United States is excludable

    Remember though, Saverin’s representatives are defending the fact that he has not renounced his citizenship because of taxes, but rather to enjoy living in Singapore and focusing on investments abroad. So it could be argued, if it were to come up, that he gave up citizenship for personal reasons, not to avoid taxation. Eduardo has only been a citizen of the United States since 1998. He was born in Brazil and came to America in 1995.