Prince Harry faces tax bill reckoning in California
LONDON The Duke of Sussex faces a significant financial hit from “zealous” tax authorities in the United States, a financial expert has said, as he warned that the Duke and Duchess had not “thought through” the high cost of a Californian life.
The couple spent more than $11.5 million (8.8 million pounds) on an estate in Montecito, where they plan to live and raise their son, Archie, in relative normality.
But once the Duke has spent 183 days in the U.S. over a threeyear period, he will be considered a resident for tax purposes and liable for tax.
David McClure, author of forthcoming book The Queen’s True Worth, said: “California is a high tax state, and he’s likely to get a hit. I don’t think Harry and Meghan have totally thought through the financial consequences of their exit from the Royal family. The more their expenditure rises in California, the greater the pressure to generate their income in more down-market, commercial deals. That’s always been the worry of the palace.”
McClure said that the Duke would have to hand over much more detail about his personal finances and earnings than he would in the United Kingdom.
“The U.S. tax man is much more zealous than his U.K. counterpart. For that reason, Harry will have to watch his step on the income he generates,” he said.
The Sussexes are estimated to have a joint worth of between 16 million to 20 million pounds.
The combined outgoings of property tax, mortgage repayments, staff, security and the 18,000 pounds a month they are repaying U.K. taxpayers for the refurbishment of Frogmore House in Windsor, are vast, estimated to reach up to five million pounds annually.
Their Santa Barbara estate was purchased through a shell company listed at the Los Angeles address of the Duchess’s business manager, Andrew Meyer.
The address was used by the Duchess when she set up her Frim Fram and MM Global companies, which McClure said could suggest they are worried about the tax implications of association with the Duke.
The type of visa he has travelled on will be key in determining his tax status.
Foreign citizens who marry an American, and intend to reside in the U.S. must obtain a U.S. immigrant visa to become a lawful permanent resident.
It is possible that the Duke used diplomatic status to enter the U.S., but since he is no longer working on behalf of the Royal Family, it is thought unlikely.