According to a recent investigation, Jensen Huang, the CEO of Nvidia, has been accused of using complex tax avoidance strategies to minimize his tax liability.
Nvidia's headquarters is located in Santa Clara, California, but the company has been using a loophole to shift profits to the Cayman Islands, a tax haven with no corporate income tax.
This practice is not unique to Nvidia, as many multinational corporations use similar strategies to reduce their tax burden.
The investigation found that Nvidia has been using a technique called "double Irish" to avoid paying taxes in the US and other countries.
Jensen Huang's Tax Strategy
Jensen Huang, the CEO of Nvidia, has employed a clever tax strategy to minimize his tax liability. He set up an irrevocable trust, known as an "I Dig It" trust, which allowed him to move 584,000 Nvidia shares worth $7 million into it.
This trust circumvents estate tax, gift tax, and even capital gains tax, saving him a significant amount of money. The tax bill for those $7 million of shares, now worth over $3 billion, would be no more than a few hundred thousand dollars.
Huang and his wife Lori also used a technique called GRATs, which stands for Grantor Retained Annuity Trusts. They put just over three million Nvidia shares worth about $100 million into their four GRATs.
These shares are now worth over $15 billion, and the family is poised to avoid about $6 billion in estate taxes.
Avoiding High Taxes
Jensen Huang and his wife Lori set up an irrevocable trust, moving 584,000 Nvidia shares worth $7 million into it. This was an intentionally defective grantor trust, nicknamed “I Dig It,” which helps circumvent estate tax, gift tax, and capital gains tax.
This setup saved the Huangs a massive tax bill, potentially over $1 billion, for those $7 million shares now worth over $3 billion. The tax bill is now just a few hundred thousand dollars.
The Huangs also created four Grantor Retained Annuity Trusts (GRATs), putting just over three million Nvidia shares worth about $100 million into them. These shares are now worth over $15 billion.
Without this setup, the Huangs would have owed estate taxes on this massive gain, potentially saving them around $6 billion.
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