BUSINESS

Facebook co-founder Eduardo Saverin sheds US citizenship to save IPO tax bill

TAGs: eduardo saverin, Facebook, initial public offering, IPO

facebook-eduardo-saverin-ipoMay 18 is the day shares in social media titan Facebook begin trading on the Nasdaq exchange, and the week-long roadshow pimping the initial public offering seems to have served its purpose. Reuters reported that the IPO is already oversubscribed, suggesting the shares may be priced above the original target range of $28 to $35. That would raise the expected haul from the 337m shares on offer from $10.6b to …? Whatever that sum turns out to be, it’s going to make quite a lot of Facebook investors and employees very, very wealthy.

Including one Eduardo Saverin (pictured at right), the Facebook co-founder whose unceremonious ouster from the company was so brilliantly preserved for eternity in The Social Network. Saverin’s name popped up in the news this week after the US Internal Revenue Service published its quarterly ‘name and shame’ list of US citizens who’d filed to renounce their citizenship. The Brazilian-born Saverin’s family moved to Miami when he was still a boy, so it’s not like he was a homegrown Yank, and for the past couple years Saverin has called Singapore home. As in, kick your shoes off and make yourself at…

The Wall Street Journal recently penned a rather colorful profile of the 30-year-old Saverin’s exploits in Singapore, which seem to revolve less around scouting potential tech startups in which to invest and more to do with “lounging with models and wealthy friends at local night clubs, racking up tens of thousands of dollars in bar tabs by ordering bottles of Cristal Champagne and Belvedere vodka.” Like you do. Saverin was even described as Singapore’s version of “a Kardashian-like figure” which we think describes his wealth, popularity with local youth and lack of a real job, rather than having grown an enormous ass that makes loud beeping noises when one steps backward.

While it’s not known precisely how big a chunk of Facebook Saverin was awarded via his post-ouster lawsuit against Zuckerberg et al, he’s believed to hold between two to four percent of the shares. In other words, if Facebook’s IPO values the company at $100b, Saverin stands to earn as much as $4b this Friday. Singapore, it should be noted, has no capital gains tax. Nice timing, you’re thinking. Saverin will indeed save a bundle by tearing up his green card, but Uncle Sam will still claim something akin to an exit tax on his capital gains. Still, making the move pre-IPO – Saverin’s spokesman claimed the actual renouncing took place “around September” – will allow Saverin’s tax attorneys to use the fact that he couldn’t easily sell the shares while Facebook was still private to further reduce his USA IOU.

NOW HOW MUCH WOULD YOU PAY?
Meanwhile, questions remain as to whether the IPO overvalues Facebook, especially given its current inability to generate revenue from mobile advertising, a significant factor in the revenue slowdown depicted in the company’s most recent quarterly earnings report. However, Facebook has other irons in the fire. The BBC reported that Facebook is testing a system in New Zealand that allows users to pay to give their Facebook posts increased visibility on the site.

The “pay to promote” fees reportedly range from 25p to £1.25 and involve adding a “yellow background” to text and pictures. A Facebook spokesperson said the test is “simply to gauge people’s interest in this method of sharing with their friends.” Is a two-tiered Facebook on the way? What happens when yellow-background posts become the new normal? Will Facebook then start offering a premium blue background? Is anyone else suddenly reminded of those gawdawful multicolored MySpace pages? Sell your shares soon, Eduardo…

Comments

views and opinions expressed are those of the author and do not necessarily reflect those of CalvinAyre.com