Harry faces ‘monumental tax bill that’ll open can of worms for Royal Family’ if he breaches 183-day mark in US

'That's not just his Netflix deal, but any monies he might have received in gifts from Prince Charles and any trust funds, savings accounts or other assets he has in the UK. That means the Royal books will be open to scrutiny,' an expert said


                            Harry faces ‘monumental tax bill that’ll open can of worms for Royal Family’ if he breaches 183-day mark in US
(Getty Images)

Prince Harry currently stands the risk of inviting a "monumental tax bill" in the US. The latest reports by The Sun have claimed that the Duke of Sussex, who moved to the US in what is referred to as Megxit, has been living in Los Angeles with his wife Meghan Markle and son Archie since May. He will soon be legally obliged to pay taxes. 

Once he has lived in the US for 183 days, he will need to pay taxes. Recently emerged reports have suggested that the massive bill will be inevitable unless "he takes a break from his $14 million (£11 million) Californian mansion next month". Other publications estimate their Montecito mansion to be around $25 million (£20million). The report is based on US experts' claims. 

May 7 onwards reports started circulating that Harry and Meghan had moved to the states and that they were living at a Beverly Hills mansion owned by TV producer Tyler Perry. This means that the family has been in the US for at least 151 days, which is weeks away from the 183-day mark. 

"You can safely assume that someone at the Internal Revenue Service [IRS] is looking very closely at him," an LA tax lawyer David Holtz was reported saying. "This is a big deal," he added. 

According to a report in the Daily Mail, Harry now faces paying both US federal and Californian state taxes under the Internal Revenue Service's 'substantial presence test'. This dictates that any foreigner who spends 183 days in the country during a three-year period is required to pay US taxes on worldwide earnings. 

Another tax expert reportedly told the publications that "Harry's bill could be monumental and could open up a can of worms for the Royal Family because the IRS will want to know all his sources of income."

Prince Harry, Duke of Sussex, Meghan, Duchess of Sussex and their baby son Archie Mountbatten-Windsor meet Archbishop Desmond Tutu at the Desmond & Leah Tutu Legacy Foundation during their royal tour of South Africa on September 25, 2019 in Cape Town, South Africa. (Getty Images)

"That's not just his Netflix deal, but any monies he might have received in gifts from Prince Charles and any trust funds, savings accounts or other assets he has in the UK. That means the Royal books will be open to scrutiny. The US taxman is far more zealous than his UK counterpart," the expert added.

Another accountant reportedly said that Harry will have to declare to the IRS "every penny" he has received. "Meghan is a US taxpayer and her situation hasn't changed, but Harry will have to tell the IRS about every penny he has received. That includes paying gift tax on any monetary gifts he received from Prince Charles and he will have to show any other source of income including trust funds set up after the death of Princess Diana."

"If Harry's been in the US for 183 days straight then he's done. But it is safe to assume they have had lawyers and tax experts grinding away on this issue for months," Holtz said. 

A report in The Sun suggests that should Harry wish to avoid the so-called "monumental bill" and not lay his sources of income bare, "It means Harry would have to leave the US until 2023". 

Earlier this year, Meghan and Harry signed a multi-year deal with the streaming giant Netflix. In addition to the multi-year Netflix deal - which is expected to be worth around $148 million (£115 million) - Harry also bagged $1 million for a speech at an event for JP Morgan in February. While some reports put the deal's value at £115 million, a Daily Mail report said on Sunday said that it is worth between $3-5 million a year.

This is big money that will be heavily taxed by US laws. Reports say that if Harry's visa is a diplomatic visa, he is exempt from taxes. But if it was a 0-1 visa for people with 'extraordinary abilities', then he will be liable for the same taxes in the US as everyone else.

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