The royal family may want Prince Harry to remain on a diplomatic visa indefinitely so they don’t have to reveal financial details to the US government.
If the Duke of Sussex were to become a US citizen, or a permanent resident with a green card, it could be a financial “stab in the heart” for the royals, a tax expert told Dailymail.com.
That would mean the Duke would have to declare his entire worldwide income to the US tax authorities, including details of any British bank accounts or trusts.
Documents relating to the joint finances of the rest of the royal family should also be made public.
It comes amid mounting speculation over the Duke’s immigration status in the US
Immigration experts have told Dailymail.com that he may have an extremely rare A-1 head of state visa.
The Duke and Duchess of Sussex dance during a recent tour of Colombia, four years after moving to the US
Royal family would have to release financial information if duke is a US tax resident, experts say
Meanwhile, a lawsuit filed under the Freedom of Information Act seeking to determine what visa the royal holds appears to be at a standstill.
The case was brought by a Washington DC think tank, the Heritage Foundation, against the Department of Homeland Security,
In April, the judge in the case requested documents from the Department of Homeland Security, but no public hearing has been held since then.
It also comes as the Duke is reportedly set to receive a multimillion-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 he has a diplomatic visa, then under the British system he will have to pay tax on that windfall as well.
He would only have to pay US income tax on his US income, such as his deal with Netflix, which he would have to report on IRS form 1099-NR.
“The royal family wants him to remain on the A-1,” international tax expert Clayton Cartwright told Dailymail.com. “I think they have a common ground in wanting him to remain on an A-1. If he has consulted tax advisors, he will remain on an A-1.
“The A-1 is his golden ticket. If he’s on an A-1, he can stay here (in the US) forever. The US wouldn’t care.”
He added: ‘The US has a foreign policy interest in not activating US tax residency for diplomats. It is good diplomatic practice.
“It not only keeps Prince Harry’s overseas assets private to Britain, but also other royal family assets on which he is listed.”
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 because of his marriage to US citizen Meghan Markle.
It would make him a permanent US resident for tax purposes, and his worldwide income would then be taxed in the US rather than the UK.
“In that situation, he would have to disclose the interest in the (Queen Mother’s) trust (to the IRS). He would have to make the trust document public,” Cartwright said. “The royal family probably wouldn’t want that.
‘They will no doubt say we should spare him a green card, which is a tax dagger in the heart of the royal family.
“All of the entanglements that are likely to exist between the royal family and its finances should be made public. If you said you wouldn’t make it public because it’s the royal family, that would be a huge setback.”
Under the US Foreign Bank and Financial Accounts Report (FBAR) law, if the Duke becomes a US tax resident, he must also disclose any UK bank accounts.
“Over the last four and a half years they’ve probably started to unravel him, some of the financial relationships, like the Duchy of Cornwall,” Cartwright added. “But it would take the Royal Family quite a long time to unravel it all. He could be taken out of trusts.”
The Duke and Duchess of Sussex kiss at the trophy presentation at the Sentebale Polo held in Windsor, England on July 26, 2018.
If he has a diplomatic visa, any bonus Harry receives from the Queen Mother’s trust fund on his birthday would be taxed in the UK.
The US would ‘not care’ and ‘have no interest in that fight.’
If he has a Green Card, that would be considered worldwide income and he would have to pay the taxes in the US.
Under a tax treaty to avoid double taxation, he would not have to pay taxes in either country.
In February, the duke said he had “considered” applying to become a US citizen.
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 high priority for me right now.”
Two months later, the Duke indicated that he is “ordinarily resident” in the US
The classification was made in a corporate filing with UK Companies House for Britain-based Travalyst Ltd, of which he owns 75 percent. The firm advises travel brands on sustainable tourism.
In March, Donald Trump suggested he could expel the Duke, telling GB News: ‘We need to find out if they know anything about the drugs. If he lied, they need to take appropriate action.’
Donald Trump suggested he could deport the Duke if he were re-elected to the White House
Another possibility is that the Duke has an O-1 visa, a temporary nonimmigrant visa for aliens with extraordinary abilities.
If so, he likely meets the “substantial presence test,” meaning that the amount of time he spends in the U.S. makes him a resident there for tax purposes.
In the ongoing Freedom of Information Act case in Washington, DC, the Heritage Foundation wants to investigate whether the duke received preferential treatment from the Biden administration given his admissions about drug use in his autobiography, “Spare.”
When applying for a non-diplomatic visa to the US, foreigners are asked the following question on a form: “Are you or have you ever been a drug user or addict?”
They are also asked if they have ever violated any law regarding narcotics.
If they answer yes, they can still get an exemption.
Sources close to the Duke have previously indicated that he has told the truth on all visa applications.
However, it has not been confirmed what type of visa he has applied for.
London-based US immigration lawyer Melissa Chavin previously told Dailymail.com that the duke may have held 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 just very special,” she said. “And the security check is not the same. It’s a lower security check. It’s a visa specifically for members of the royal family.”
Such individuals are screened only for espionage, terrorism and “activities contrary to U.S. foreign policy,” not for drug use.
The A-1 visa for heads of state is distinct from the A-1 visa, which is intended for senior diplomats.
Holders of an A-1 visa, such as ambassadors, are expected to come to the US to work as senior diplomats.
However, an A-1 head of state visa holder is allowed to travel to the US without having to work 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. That is possible. We would argue that it is possible.’
Cartwright, the international tax expert, said there would be financial disadvantages for the duke if he were to have a diplomatic visa.
The Duke would sacrifice tax benefits he could receive as an American citizen.
He said: ‘Prince Harry cannot file a joint return with his wife and benefit from the tax rates for ‘married couples filing jointly’.’