Paul L. Caron
Dean



Tuesday, January 21, 2020

Megxit Tax Planning For Prince Harry And Meghan Markle

Town & Country, Meghan Markle and Prince Harry's New Roles Could Impact Meghan's Immigration Status—and Their Taxes:

Now that Meghan and Harry intend to retreat from their royal roles, attain "financial independence," and live part-time in North America, Meghan and Archie's tax and citizenship plans are a little up in the air. ...

Meghan is still a US citizen, and therefore required to pay US taxes on her worldwide income. Prince Harry could technically elect to be treated as a US taxpayer and file jointly with Meghan, but "he would never do that," explains Dianne Mehany, a lawyer specializing in international tax planning." ...

When Meghan and Harry announced their engagement back in 2017, Harry's communications team confirmed to the BBC that Meghan "intends to become a UK citizen and will go through the process of that." Said process, as per the UK government's website, would require Meghan to have lived in the country for three years before becoming eligible for naturalization.

Once gaining UK citizenship, Meghan could elect to relinquish her US citizenship, and save herself the trouble and expense of filing US tax returns. "The only problem there is, she would have to pay the exit tax," Mehany notes, referencing the expatriation tax that those forfeiting US citizenship are subject to. ...

"The real tricky thing," Mehany notes, "is to make sure they don't spend too much time in the United States, so that Harry becomes a resident of the United States, at which point his entire worldwide wealth would become subject to US taxation, which I know they want to avoid."

Dan Mitchell (Cato Institute), Taxes Will Be a Royal Pain for Meghan and Harry:

As reported by the U.K.-based Telegraph, they’re minimizing their exposure to the rapacious California tax system:

The Duchess of Sussex has moved her business to a US state used by the super-rich to protect their interests from scrutiny. The Duchess’s company Frim Fram Inc was moved out of California in December and incorporated in Delaware, which tax experts suggest could be done to avoid being hit with tax liabilities in California. ... [T]he move was made on New Year’s Eve … ”You would want to do it on New Year’s Eve simply because if you go one minute into the next year you would owe some taxes to California for the year of 2020,” said Alan Stachura, from financial services firm Wolters Kluwer. … Mr Stachura, who helps companies incorporate in Delaware, added that the state offers “a tax benefit for items like trademarks and royalties.” ... Experts say there are several benefits in moving a corporation to Delaware, including the state’s flexible business laws and its low personal income tax rates. … A source said that as the Duchess is no longer resident in California it was appropriate for the registration to be moved.

https://taxprof.typepad.com/taxprof_blog/2020/01/megxit-tax-planning-for-prince-harry-and-meghan-markle.html

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Comments

I stopped caring about what happens to and with the British Royal Family as of April 1775.

Posted by: ruralcounsel | Jan 23, 2020 3:22:19 AM