He has just been born, but he is already of great interest to the American tax authorities: Harry and Meghan’s baby will (later) be accountable in the United States, because he is of American nationality. The US tax service will have access to a lot of information on the wealth of the couple, and the royal family.
While the British are still waiting to discover the face of “Baby Sussex”, born Monday, May 6, his parents, Prince Harry and Meghan Markle, will have to quickly manage another problem: that of the American tax authorities. And there are several reasons why the United States Tax Service is on the prowl for the royal baby.
Because he is (also) American
This is a first: the little boy is mixed race, but above all, he has dual nationality, British and American, through his mother Meghan. By law, like any US citizen, no matter where he was born or where he lives, this baby will be accountable annually to the IRS, the US tax administration.
Any gifts given to the baby by non-Americans will need to be declared, as required by the administration. If Harry and Meghan, for example, decide to open an account at their bank for their child, it will have to be reported to the IRS. If the Queen gives the baby a gift worth more than $ 100,000, same thing.
Because her mother is now a duchess … and rich
Since her marriage to Harry, on May 19, 2018 in Windsor (United Kingdom), Meghan Markle has become Duchess of Sussex. Being born in the United States (in Los Angeles) and having retained her American nationality, she too will have to declare to the American tax authorities everything that now makes her an extremely wealthy person: the couple’s house in Windsor, the diamond offered by the prince for their engagement, or the ring offered by the Queen for their marriage.
On the other hand, the very expensive gifts, received during the “baby-shower” of Meghan, organized in New York, may not have to be declared to the tax authorities, having been offered by her friends. But the US tax authorities will still have a lot of information on the wealth of Harry and Meghan, beyond the privacy of their child.
Because American law has been extended
Since the adoption of the Foreign Account Tax Compliance Act (FATCA) in 2010, citizens with U.S. nationality must declare their income in the United States, even if they do not reside there. They can therefore also pay taxes. The British royal family can not therefore refuse to comply with all these rules, risking fines from the American tax authorities.
The only solution to avoid all this: for Meghan to renounce American nationality. But the “Baby Sussex” is subject to these rules until he is 18, before he can decide, if he wants to, to renounce American nationality too.