Eduardo Saverin Might Not Be Allowed Back in the U.S., According to Citizenship Law
Facebook co-founder Eduardo Saverin might not be allowed to return to the United States.
Billionaire Saverin, who ditched his U.S. citizenship ahead of Facebook's mega IPO, is said to own a 4 or 5 percent stake in the social network. Bloomberg reported last week that he is moving to Singapore, possibly to slash taxes he might owe the U.S. government.
According to a U.S. immigration law highlighted by Talking Points Memo (TPM), Saverin might face difficulty re-entering the country due to the timing of his expatriation. From Sec. 212. [8 U.S.C. 1182] of the law, per TPM:
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
Facebook is seeking to raise as much as $18 billion in it what is expected to be the largest Internet IPO ever. Based on a regulatory filing the social network submitted to the Securities and Exchange Commission on May 16, the stock's planned price range is currently between $34 and $38 dollars per share; the company may be valued as high as $104 billion as a result. Bloomberg reports that Saverin likely saved himself $67 million in federal income taxes on his shares; the Times pegs his savings at $100 million or more.
A separate TPM post links to a document that one would have to file with the U.S. State Department's Bureau Of Consulate Affairs in order to relinquish citizenship. An item in that document also mentions possible exclusion of a person who has renounced citizenship in order to dodge taxes:
My renunciation/relinquishment may not exempt me from United States income taxation. With regard to United States taxation consequences, I understand that I must contact the United States Internal Revenue Service. Further, I understand that if my renunciation of United States citizenship is determined by the United States Attorney General to be motivated by tax avoidance purposes, I will be found excludable from the United States under Immigration and Nationality Act, as amended.
A spokesman for Saverin has emailed multiple media outlets to say that Saverin, who was born in Brazil, did not become a resident of Singapore to avoid taxes in the U.S. "Eduardo recently found it to be more practical to become a resident of Singapore since he plans to live there for an indefinite period of time," the spokesman wrote. "He still has very strong ties to Brazil and is extremely passionate about not only his homeland, but also the U.S."
Saverin told the New York Times in an interview, “I’m not a tax expert [...] We complied with all the known laws. There was an exit tax.”
An exit tax is applied to an expatriate's capital assets, including unsold stock. Forbes estimates that, even though Saverin settled up with the government before the imminent spike in the value of Facebook's shares, he probably paid nearly $500 million to leave the country.
While still a Harvard student, Saverin served as the first CFO of Facebook. He held that position from 2004 until Mark Zuckerberg and other execs muscled him out in 2006 and diluted his 34 percent stake in the company. Saverin established his current stake in the social network as a result of a settlement with Facebook in 2009. Exact terms of the settlement were not disclosed.