The Royal Family may want Prince Harry to remain on a diplomatic visa indefinitely so they do not have to reveal aspects of his finances to the US government.
If the Duke of Sussex were to become a US citizen or permanent resident with a green card, it could be a financial “dagger in the heart” for the royals, a tax expert told Dailymail.com.
This would mean the duke would have to declare all his worldwide income to the US Internal Revenue Service, including details of any British bank accounts or trusts.
In addition, documents relating to any joint financial transactions involving the rest of the Royal Family would have to be made public.
It comes amid growing speculation over the Duke’s immigration status in the United States.
Immigration experts have suggested to Dailymail.com that he could be on an extremely rare A-1 Head of State visa.
The Duke and Duchess of Sussex dance on a recent tour of Colombia, four years after moving to the United States.
The Royal Family may have to reveal financial details if the Duke is a US tax resident, experts say
Meanwhile, a court case brought under the Freedom of Information Act, seeking to establish what visa the royal holds, appears to have stalled.
The case was brought by a Washington DC-based think tank, the Heritage Foundation, against the Department of Homeland Security.
In April, the judge in the case requested records from the Department of Homeland Security, but there has been no public hearing since then.
This also comes as the Duke is reportedly set to receive a multi-million pound payout in the UK on his 40th birthday later this month, from a trust set up by his great-grandmother, the late Queen Mother.
If you have a diplomatic visa, then you will have to pay taxes, including that windfall, according to the UK system.
He would only be subject to US income tax on his US earnings, such as his Netflix deal, which would have to be reported on an IRS Form 1099-NR.
“The Royal Family want it to stay in A-1,” international tax expert Clayton Cartwright told Dailymail.com. “I think they have common ground in that they want it to stay in A-1. If they’ve consulted tax advisers, it will stay in A-1.
“The A-1 is your golden ticket. If you have an A-1, you can stay here (in the United States) forever. The United States wouldn’t care.”
He added: “The United States has a foreign policy interest in not requiring U.S. tax residency for diplomats. It is good diplomatic practice.”
‘It keeps private from Britain not only the foreign assets owned by Prince Harry, but also other assets of the Royal Family in which he figures.’
The duke may have a diplomatic visa but his immigration status is not publicly known.
The Duke and Duchess of Sussex at a gala in New York City
The Duke is eligible to apply for a green card through his marriage to US citizen Meghan Markle.
It would make him a permanent resident in the US for tax purposes, and his worldwide income would be taxed in the US rather than the UK.
“In that situation, she would have to disclose to the IRS the interests in the (Queen Mother’s) trust. She has to disclose the trust document,” Cartwright said. “The Royal Family probably doesn’t want that to happen.
‘They are certainly saying that he should be freed from the green card, that is a fiscal dagger in the heart of the Royal Family.
“All of this entanglement that probably exists between the Royal Family and their finances would be subject to disclosure. If you said you weren’t going to disclose it because it was about the Royal Family, there would be a huge backlash.”
Under the US Foreign Bank and Financial Accounts Reporting (FBAR) law, if the Duke becomes a US tax resident, he would also have to disclose all bank accounts in the UK.
“Over the last four and a half years they have probably started to unravel some of their financial relationships, such as the Duchy of Cornwall,” Cartwright added. “But it would take the royal family quite a while to unravel it all. They could divest it into trusts.”
The Duke and Duchess of Sussex kiss during the Sentebale Polo Awards Ceremony at the Royal County of Berkshire Polo Club on July 26, 2018 in Windsor, England.
If he has a diplomatic visa, any windfall Harry receives from the Queen Mother’s trust on his birthday would be subject to tax in the UK.
The United States “wouldn’t care” and “wouldn’t have anything to do with that fight.”
If you have a green card, this would count as worldwide income and you would have to pay tax in the US.
Under a double tax treaty, you would not pay taxes in either country.
In February, the duke said he had “considered” applying for US citizenship.
Asked on ABC’s Good Morning America what was holding him back, he said: “I have no idea. It’s a thought that has crossed my mind, but it’s not a priority for me right now.”
Two months later, the Duke indicated that he “habitually resided” in the United States.
The ranking was made in a business document filed with the UK’s Companies House for Travalyst Ltd, a 75 per cent-owned UK company that advises travel brands on sustainable tourism.
In March, Donald Trump suggested he could deport the Duke, telling GB News: “We’ll have to see if they know anything about drugs, and if he lied, they’ll have to take appropriate action.”
Donald Trump suggested he could deport the duke if he is re-elected to the White House
Another possibility is that Duke has an O-1 visa, a temporary nonimmigrant visa for foreigners with extraordinary abilities.
If so, you would likely meet the “substantial presence” test, meaning the amount of time you spend in the U.S. would make you a resident there for tax purposes.
In the Freedom of Information case taking place in Washington DC, the Heritage Foundation wants to see whether, given his admissions of drug use in his autobiography ‘Spare’, the Duke has received preferential treatment from the Biden administration.
When applying for a non-diplomatic U.S. visa, foreign nationals are asked on a form: “Are you or have you ever been a drug abuser or addict?”
They are also asked if they have ever “violated any laws related to controlled substances.”
If you answer “yes,” you may still receive an exemption.
Sources close to the Duke have previously indicated that he answered truthfully about any visa requests.
However, it has not been confirmed what type of visa he applied for.
Melissa Chavin, a London-based US immigration lawyer, previously told Dailymail.com that the duke may have had an A-1 head of state visa, which is used by heads of state and members of the royal family as he is fifth in line to the throne.
“It’s something very special,” he said. “And the security check is not the same. It’s a lower security check. It’s a special visa for members of the royal families.”
These individuals are only being investigated for espionage, terrorism and “activities contrary to the foreign policy of the United States,” rather than for drug use.
The A-1 “Head of State” visa is distinguished from the A-1 visa, which is for high-ranking diplomats.
A-1 visa holders, such as an ambassador, are supposed to come to the U.S. to work as high-level diplomats.
But an A-1 Head of State visa holder is free to come to the U.S. without working as a head of state or member of the royal family.
At a hearing in Washington DC in February, John Bardo, a lawyer for the Department of Homeland Security, told the court: “He (the Duke) could have a category A diplomatic visa. It is possible. We hold that it is possible.”
Cartwright, the international tax expert, said there would be financial disadvantages for the Duke if he had a diplomatic visa.
The duke would be sacrificing tax breaks he could have had as an American citizen.
He said: ‘Prince Harry will not be able to file joint returns with his spouse and take advantage of the “married filing jointly” tax rate brackets.’