When Prince Harry and his fiancé, American actress Meghan Markle, discussed their future plans, they mentioned that the former Suits actress will obtain British citizenship. The public was assured that she will be going through the ordinary channels, and not given preferential treatment.
Yet, the gaggle of mostly British reporters failed to ask the most interesting question: Is the normally secretive royal family required to reveal their assets now that Prince Harry is marrying an American? This is because the United States tax code requires Americans to file taxes, even if they are living in another country. What are the possible consequences?
The Washington Post reported that a Civil War-era tax rule, the Revenue Act of 1862, means that when Meghan Markle moves to England and marries Prince Harry, she will be required to file American taxes. Members of the royal family do not have to file taxes for both countries, right?
Actually, they are not exempt. The paper quoted Temple University law professor and author Peter Spiro about the tax laws regarding dual citizenship. Royal or not, Meghan Markle will certainly have to pay.
“U.S. citizens are subject to U.S. tax obligations regardless of their country of residence. A member of the royal family would be treated just like anyone else.”
The actress is worth around $7 million dollars, and she is marrying Prince Harry, who, according to Time, is worth $25 million dollars. So, any assets above $300,000 require her tax accountant to fill out IRS Form 8938. And therein lies the problem. Assets can include trusts, which include the elusive royal trusts.
Prince Harry inherited nearly $29 million from Princess Diana, and along with Prince William, they share an annuity of about $4.8 million a year.
According to David McClure, who has been investigating the “royal coffers for seven or eight years,” and author of Royal Legacy: How The Royal Family Have Made, Spent, And Passed On Their Wealth, it is unknown what sorts of royal trusts Prince Harry receives. Yet, McClure believes that it would be “undesirable” for the royal family to make this public.
He points out that there are so many twists and turns in the royal family finances, such as the newly leaked Paradise Papers that revealed that the Queen had offshore accounts, that they probably don’t even know how wealthy they really are.
“I suspect the Queen doesn’t know.”
Yet, according to tax lawyer Diane Mehany at Caplin & Drysdale, when Meghan Markle begins to file her American taxes, this would be kept private, as are all taxes. Yet, she may run into a new problem such as an audit. Then, the IRS could delve deeper into the private trusts of the royal family.
“It’s not outside the realm of possibility that a form filed by the wife of a royal would draw increased scrutiny.”
It's all fun and romance until the IRS (with its pesky rules for Americans living abroad) gets involved.https://t.co/XrDDJpmL3W
— Christine Donlan (@DonlanLaw) November 30, 2017
The need to keep their finances a secret is why Spiro predicts that the royal family will push Meghan Markle to renounce her American Citizenship.
“My guess is that she’ll be pressured by the Royal family to renounce, even if she’d rather not.”
Yet, it will take years before she obtains her British citizenship. By then, the Internal Revenue Service could know all about the various royal trusts, so it will no longer be so secret. And, perhaps Meghan and Harry will have children, who will automatically have dual citizenship.
Harry is the second son, just like Prince Andrew. And now, due to the new “streamlined royal family,” Andrew’s two blood princesses, Beatrice and Eugenie, no longer have a permanent spot in the royal family and no longer receive royal privileges. Harry and Meghan’s children may choose to go to America. Shouldn’t Meghan keep her citizenship in case of such a change?