Friday, 23 Oct 2020

Prince Harry faces ‘monumental’ tax bill unless he takes break from £11million LA mansion

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Earlier this year, Prince Harry and Meghan Markle shocked the world by announcing they are stepping down as senior members of the Royal Family. The couple now live in Los Angeles with their son, Archie.

It was first believed the couple were staying at a huge Beverly Hills mansion owned by TV producer Tyler Perry.

But experts have warned as Harry has been living in the US since May, if he reaches 183 days he is legally liable to pay taxes there.

Top LA tax lawyer David Holtz 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 now faces paying both US federal and Californian state taxes under “substantial presence test”.

Mr Holtz added: “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.”

This 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.”

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Another accountant said Harry will have to the IRS about “every penny” he has received.

They 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.”

Earlier this year, Meghan and Harry signed a multi-year deal with the streaming giant Netflix.

Although the exact amount of the deal has not been revealed, some reports say it is worth between $3-5million a year.

The Duke and Duchess of Sussex released a statement regarding their Netflix deal, which read: “Through our work with diverse communities and their environments to shining a light on people and causes around the world, our focus will be on creating content that informs but also gives hope.”

The couple are expected to follow in the footsteps of their friends, Barack and Michelle Obama, who have already secured an Academy Award through their first Netflix production which was about globalisation, called American Factory.

The staggering Netflix deal has already allowed the couple to pay back the £2.4million which was spent on renovating Frogmore Cottage – paid for from taxpayers’ money.

It is understood the pair had been relying on Harry’s father Prince Charles for funds after the pair quit their senior royal roles but reports say they are no longer receiving money from the Prince of Wales.

The Netflix deal will see the couple producing a range of programmes for the streaming service.

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