The newest British royal baby may have to pay US taxes for the rest of their life

Bad luck, cuz.
Bad luck, cuz.
Image: Reuters
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Right on the heels the past weekend’s royal wedding, the UK’s royal family announced another life milestone this morning: Prince Harry and Meghan Markle are expecting their first child.

The Duke and Duchess of Sussex’s child, due in spring of next year, will be seventh in line to the throne, and most likely a Lord or a Lady rather than a Prince or Princess (unless great grandma intervenes). Another thing their child will almost certainly be is a dual British-American citizen.

California-born Markle is said to be in the several-years long process of applying for UK citizenship, and Kensington Palace told the BBC last year she will be treated like any other spousal immigrant in the process. When she is granted it, she is entirely within her rights to keep her US citizenship—the two countries allow dual citizenship—though she could theoretically undergo the arduous and expensive process of giving up her American citizenship if she chose to.

Either way, by the time she gives birth in roughly six months, she will almost certainly still be an American—and one who’s spent a requisite five years of her life prior to a baby’s birth living in the US. Thus, her little Lord or Lady be will be entitled to citizenship of both Britain and America.

That might be bad news for the royal baby: America’s global taxation regime is infamously onerous to overseas citizens. That’s because it’s one of the only countries in the world (along with Eritrea) that taxes based on citizenship, not residency. This means that even if you rarely set foot in the US, you’re still on the hook when it comes to reporting your global income to American tax authorities. It’s true that certain treaties soften the blow of paying tax in two countries, but not entirely (especially for the wealthy, which presumably includes members of the royal family).

British MP and former London mayor Boris Johnson famously rescinded his American citizenship in 2016, ending years of “absolutely outrageous” tax bills he did not want to pay. Johnson happened to be born in the US when his British parents were working there, but he had not lived in America since he was five years old. He is one of thousands of people every year to renounce their US citizenship, thanks in part to draconian tax rules.

There’s sure to be plenty of baby prep for the happy royals in the next few months, but let’s hope they don’t overlook the need to line up a good expat accountant for the future.