Russian billionaire oligarch Roman Abramovich employed an intricate offshore scheme to avoid paying millions in value-added tax (VAT) on his fleet of luxury superyachts, according to leaked documents.
The investigation by the Guardian, BBC, Bureau of Investigative Journalism, Der Spiegel and ZDF revealed how Abramovich’s companies potentially circumvented tax obligations worth tens of millions of dollars, much of which should have been paid to Cyprus.
The documents, part of the Cyprus Confidential leak, show how offshore companies were used to create a façade that five of Abramovich’s superyachts were being chartered to commercial clients.
This arrangement allowed the vessels’ operating companies to avoid VAT on numerous expenses.
His 162-metre yacht Eclipse, which in 2011 was the world’s largest, exemplified the luxury involved.
Worth €390 million in insurance value, it featured two helipads, swimming pools, a private cinema and entertainment venues.
During one New Year’s celebration at St Barts in the Caribbean, it hosted a private Red Hot Chili Peppers concert costing $1 million.
The scheme’s structure, which operated from 2005 to at least 2012, involved Blue Ocean Yacht Management, a Cyprus-based company established in 2002 to manage Abramovich’s yacht fleet.
Documents show the yachts were owned by separate British Virgin Islands companies, themselves owned by a Cyprus-based trust benefiting Abramovich.
Under this arrangement, Blue Ocean could avoid VAT on substantial operating costs. Fuel costs alone for Eclipse could reach $2 million per refill, with associated VAT of $400,000.
Between 2005 and 2012, Blue Ocean recorded fuel expenses of $15 million, saving millions in taxes, according to leaked documents obtained by OCCRP.
Abramovich’s lawyers denied any legal violations, stating their client always followed professional tax advice. They maintained he had no personal knowledge or responsibility for implementing the scheme.
However, experts examining the case told the Guardian these arrangements could amount to deliberate tax avoidance.
Internal documents reveal the scheme was known to Abramovich’s advisers, who described it as a “high-risk structure”.
The investigation found that while Abramovich’s vessels were registered as “passenger ships”, they were not rented to tourists for leisure cruises.
Instead, records show Blue Ocean’s only clients were a handful of BVI companies, all owned by Abramovich himself.
A 2005 memo by Jonathan Holloway, who joined Blue Ocean as director that March, highlighted the scheme’s risks.
He advised that the companies should have different shareholders, directors and addresses, warning that “a common link could be the first thing that makes [anyone examining the structure] dig deeper.”
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