Denise Rich renounces her US citizenship to save millions of dollars in taxes

Denise Rich, the wealthy socialite and former wife of billionaire trader Marc Rich, has renounced her U.S. citizenship to avoid U.S. tax bill.

Denise Rich, 68, a Grammy-nominated songwriter, top Democratic donor and glamorous figure in European royalty circles, renounced her American passport in November, according to her lawyer.

Her maiden name, Denise Eisenberg, appeared in the Federal Register on April 30 in a quarterly list of Americans who renounced their U.S. citizenship and permanent residents who handed in their green cards.

By dumping her U.S. passport, Denise Rich, who was born in Worcester, Massachusetts, likely will save tens of millions of dollars or more in U.S. taxes over the long haul, tax lawyers say.

She also has Austrian citizenship through her deceased father, said Michael Heidt, a lawyer in Hollywood, Florida, who represented her in a recent lawsuit. She plans to live in London.

Denise Rich, who wrote songs recorded by Aretha Franklin, Mary J. Blige and Jessica Simpson, is the latest bold-faced name to join a wave of wealthy people renouncing their American citizenship.

Facebook co-founder Eduardo Saverin gave up his U.S. passport to become a citizen of Singapore, an offshore tax haven, before the company’s initial public offering in May.

Nearly 1,800 citizens and permanent residents, a record since data was first compiled in 1998, expatriated last year, according to government figures.

Denise Rich, the wealthy socialite and former wife of billionaire trader Marc Rich, has renounced her U.S. citizenship to avoid U.S. tax bill

Michael Heidt said Denise Rich had dumped her U.S. passport “so that she can be closer to her family and to Peter Cervinka, her long-time partner”.

Denise Rich’s two daughters live in London; Peter Cervinka, a wealthy property developer, is an Austrian national.

Denise Rich plans to make London her main residence and does not intend to acquire other passports, Michael Heidt said.

Her ex-husband, commodities trader Marc Rich, fled the United States in 1983 when indicted on charges of tax evasion, fraud, racketeering and illegal trading of oil with Iran. They divorced in 1996.

Marc Rich received a presidential pardon in 2001 on President Bill Clinton’s last day in office.

Federal prosecutors and Congress investigated the pardon, and in 2002 a House of Representatives committee concluded Denise Rich had swayed the action through donations to the Clinton library and campaign.

Dubbed “Lady Gatsby” by Yachting magazine, Denise Rich owns multiple properties, including a mansion in Aspen, Colorado.

She is a frequent habitué of Cannes, Monte Carlo and St. Tropez with celebrities and singers aboard her 157-foot yacht, Lady Joy.

Denise Rich will escape future U.S. taxes but possibly not all current ones. In 2008, Congress imposed an expatriation tax on persons with a net worth of more than $2 million who dump their U.S. citizenship or permanent residency.

Under the law, those people owe an “exit tax” on their worldwide property, computed at a fair market value the day before they leave.

But tax lawyers say the tax can be reduced or avoided by structuring asset holdings through foreign annuities.

While Austria, like the United States, generally taxes its citizens on their worldwide income, it has generous tax breaks for citizens who spend half the year abroad.

In January, Rich put her 5th Avenue penthouse in New York on the market for $65 million, according to the listing agent, The Corcoran Group.

New York property records show Denise Rich acquired a 100% stake in the apartment, described by Corcoran as “the epitome of luxury and grandeur,” for $200,000 in 2006.

Bonnie Evans, the Corcoran broker for the property, declined to discuss details.

The recent lawsuit against Denise Rich was filed on behalf of Lee Goldberg, the former protector of a Cook Islands trust of which Rich is a beneficiary, in February. The case was dismissed in April, court records show.

The Cook Islands, a South Pacific tax haven, offers Swiss-style secrecy for wealthy investors.

The lawsuit accused Denise Rich and Richard Kilstock, a British real estate entrepreneur who is married to Rich’s daughter Daniella, of “transferring, moving or secreting trust assets, in violation of the trust’s guidelines and without the knowledge or permission of Goldberg.”

Denise Rich and Richard Kilstock denied the charges and accused Lee Goldberg of altering trust documents, court filings show.

Both Lee Goldberg and his attorney, Donald Thomas, declined to discuss the case. Denise Rich recently dismissed Lee Goldberg, one of her long-time lawyers, as protector of the trust.

Michael Heidt, who also represents Richard Kilstock in the case, declined to discuss the lawsuit.