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Michael Pfeifer Quoted in CNBC article, Facebook Co-Founder Saverin Renounces Citizenship
Caplin & Drysdale

Michael Pfeifer Quoted in CNBC article, Facebook Co-Founder Saverin Renounces Citizenship

Date: 5/11/2012

Excerpt taken from the article.

Facebook co-founder Eduardo Saverin renounced his U.S. citizenship months before the social network's expected initial public offering.
 
"This was done many, many months ago and has nothing to do with the IPO," Sabrina Strauss, a spokeswoman for Saverin, said in a statement.

Facebook's IPO is expected next Friday at a valuation of up to $96 billion.

International tax experts, however, say that Saverin will save a bundle by expatriating ahead of Facebook's IPO next week. As a foreigner, Saverin will pay taxes to the United States next year only on the presumed value of his shares the day his American citizenship ended, not the presumed higher amount his Facebook holdings will be worth after the IPO.

The timing of his renunciation also has tax implications.
"If his name came out on the list at the end of first quarter, he likely expatriated in the final quarter of last year," says Michael Pfeifer, a partner at Caplin and Drysdale in Washington, D.C.

With the Bush tax cuts expiring at the end of 2012, the capital-gains tax rate, now 15 percent, is expected to go up. "He probably didn't want to take the chance of paying the higher rate."

Kevin Packman, chair of the offshore compliance team at the law firm Holland & Knight in Miami, concurs. "I would be very surprised if this were not related to reducing his tax," says Packman.

Another spokesman, Tom Goodman, denied suggestions that Saverin had renounced his citizenship for tax purposes.

To read the full article about Eduardo Saverin renouncing his U.S. citizenship months before the social network's expected initial public offering, please click here.

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