THE grandest name associated with the “Paradise Papers”, leaked documents that shine light on offshore transactions (see article), is that of Queen Elizabeth. The papers reveal that the Duchy of Lancaster, her private estate, invested millions in a Cayman Islands fund. Many of her subjects are nonplussed. Jeremy Corbyn, the leader of the Labour Party, implied that she should apologise, though there is no suggestion of wrongdoing. Yet despite her offshore dealings, the queen actually pays more tax than legally required, not less.

As head of state, she enjoys lots of weird exemptions. Civil and criminal proceedings cannot be taken against the sovereign under British law. Passports are issued in her name, so it is unnecessary for her to possess one.

These oddities extend to tax, which is collected by an office called Her Majesty’s Revenue & Customs. The sovereign is not legally liable for income, capital-gains or inheritance tax. The arrangement has a certain logic to it. The queen is supposed to be impartial with respect to government policy, and might be less so if politicians’ decisions on tax determined her take-home pay. (This argument is somewhat undermined by the energetic lobbying of the government by Prince Charles, her heir and fellow offshore investor.) Other monarchs enjoy similar exemptions: the Dutch king does not pay tax on income from his kingdom.

Yet there is a difference between what the law requires and what happens in reality. In 1992 a row broke out over demands that taxpayers should contribute to the repair of Windsor Castle, which had been damaged in a fire. The queen subsequently agreed to pay tax on two of her three streams of funding.

First, she pays taxes on her private income, such as investment income. The details are private, as they are for anyone. Second, she pays taxes on some income and capital gains from the Privy Purse, which is part-funded by the Duchy of Lancaster, the estate at the centre of the Paradise Papers leaks. Last financial year the net income of the Duchy was £19.2m ($25.2m), so in theory the queen could have been liable for over £8m in income tax. Her third stream of income, the sovereign grant, is disregarded for income-tax purposes because it is used for spending related to her official work.

The queen also pays council tax, voluntarily. Buckingham Palace is registered as a “Band H” property for this purpose, and thus attracts an annual bill of £1,376 from the local council.