Britain’s Prince Harry marrying American TV actress Meghan Markle opens a can of FATCA worms for the royals.
The Paradise Papers have revealed the royals have some controversial secret offshore investments.
The romance has probably made them a little more jittery as they have realised that as a US citizen, Markle must file the details of any foreign financial accounts she controls – and that would include any joint accounts she might have with Prince Harry.
Even without FATCA, Markle must file details of her assets if the couple is worth more than $150,000 at any point in the year.
This is highly likely given she is a successful actress and Harry receives more than £1 million a year.
Princess Di’s fortune
Not only would she have to give the information on her tax filing to the IRS, but any foreign financial institutions, which would include the couple’s bank in London, would also have to file a report should the accounts top a balance of $50,000 while she remains a US resident, but also if as an expat the balances should go over $200,000.
Should Prince Harry move to the States when they marry, he would have to tell the IRS about his mother Princess Diana’s fortune, which was reportedly worth more than £21 million and pays him and his brother William a £3.5 million a year allowance to share.
Royal children would throw another spanner in the works.
“Parents cannot elect to have a child lose his or her US citizenship, so the children will be US citizens and therefore, US taxpayers unless they decide to give it up when they reach the age of majority,” said Kristin Konschnik, lawyer with London-based Butler Snow Law.
Foreign Secretary Boris Johnson fell into this trap when after selling his London home he received a hefty tax demand from the IRS even though he has lived in the UK since he was five-years-old.
He avoided the bill by giving up his US passport.
“This sharing of financial information with the US government would probably be undesirable for the royal family, which has long preferred that its finances remain opaque,” said David McClure, the author of the book “Royal Legacy: How the royal family have made, spent and passed on their wealth.
He added that he believed the royal family have no idea how much they are worth.