Prince Harry Faces A Monumental Federal And CA State Tax Bill

Prince Harry could face a ‘monumental’ tax bill unless he takes a break from his £11 million Californian mansion next month, according to experts.

The Prince moved to Los Angeles with his wife Meghan and their baby son Archie in early May after leaving a rented mansion in Vancouver, Canada, in March.

The couple were first reported to be staying at a sprawling Beverly Hills mansion owned by TV producer Tyler Perry on May 7 – meaning that, as of today, Harry has been in the US for at least 151 days. If he reaches 183 days he is legally liable to pay taxes there.

Top LA tax lawyer David Holtz last night said: ‘You can safely assume that someone at the Internal Revenue Service [IRS] is looking very closely at him. This is a big deal.’

Harry, 36, faces paying both US federal and Californian state taxes under the ‘substantial presence test’ that requires any foreigner who spends 183 days in the country during a three-year period to pay US taxes on worldwide earnings.

Another tax expert said: ‘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.

‘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.’

As well as earning a reported $1 million for a speech at an event for JP Morgan in February, Harry and Meghan have signed a multi-year deal with streaming giant Netflix.

Some reports put the deal’s value at £115 million, although The Mail on Sunday understands it is worth between $3-5 million a year.

The Duke and Duchess of Sussex, who are estimated to have a joint fortune of £20 million, live in a mansion in Montecito, California, bought through a company registered to the address of Meghan’s business manager Andrew Meyer.

Mr Holtz said: ‘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.’

A key factor is the type of visa on which Harry entered the US. If it is a diplomatic visa, he is exempt, 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.

Another accountant said: ‘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.’

Meanwhile, Harry last night sent a message of support for those taking part in today’s London marathon where elite athletes will compete on the course while 45,000 others runners compete ‘virtually’ on a course of their choice. ‘While we won’t be together personally we are together in spirit,’ he said. ‘And the amazing tenacity of runners from around the world is a reminder of our strength and sense of community during these difficult times.’


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