Russian oligarch Roman Abramovich used a complex offshore scheme to dodge millions in tax on his fleet of luxury superyachts, leaked documents have revealed.
Files from Cyprus Confidential show how Abramovich's companies created a fiction that five of his superyachts were being hired out commercially to avoid VAT payments.
The scheme, which operated between 2005 and 2012, involved Cyprus-based Blue Ocean Yacht Management leasing vessels to companies that were secretly controlled by Abramovich himself.
Experts say the arrangements could amount to deliberate tax evasion.
Abramovich was sanctioned by the UK in 2022
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A 2005 memo written by Blue Ocean director Jonathan Holloway laid bare the scheme's intentions: "We want to avoid paying VAT on the purchase price of the yachts and where possible to avoid paying VAT on goods and services provided to the yachts."
The structure involved yachts owned by British Virgin Islands companies, which were controlled by a Cyprus-based trust benefiting Abramovich.
These vessels were then leased to Blue Ocean, which in turn chartered them to other Abramovich-controlled companies, creating an illusion of commercial activity.
The potential tax savings were enormous, with the Eclipse superyacht requiring between $1.5million and $2million to refuel - implying VAT bills of up to $400,000 each time it needed filling.
Between 2005 and 2012, Blue Ocean recorded fuel costs exceeding $15million.
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The 162-metre Eclipse was once the world's largest pleasure cruiser and insured for €390million
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The scheme covered five luxury yachts, including the 162-metre Eclipse, which was once the world's largest pleasure cruiser and insured for €390million.
The vessels hosted lavish events, including a $1million New Year's performance by the Red Hot Chili Peppers in 2011.
Documents reveal many charter agreements were backdated to facilitate tax-free fuel purchases and did not match vessels' actual locations.
"Whether it is avoidance or evasion depends on whether the business misrepresented information," said Rita de la Feria, professor of tax law at Leeds University.
Italian tax lawyer Tommaso Di Tanno told the BBC: "There has been tax evasion. This is criminal."
In one instance, a backdated charter was used to obtain duty-free fuel on the French Riviera, saving Blue Ocean $44,000.
Italian prosecutors launched proceedings against Blue Ocean in 2015 over €500,000 in allegedly unpaid duties on fuel for three yachts between 2009 and 2012.
The Russian-Israeli billionaire announced he was selling Chelsea in 2022
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The criminal charges were dropped after Abramovich's associates explained the vessels were used commercially.
Cypriot tax authorities determined Blue Ocean owed more than €14million in unpaid taxes from 2005 to 2010.
After a decade-long legal battle, Cyprus's supreme court dismissed Blue Ocean's final appeal in March 2024. The company was dissolved last year.
Lawyers for Abramovich said he had "always obtained independent expert professional tax and legal advice" and acted in accordance with that advice.
They said he expected similar advice was sought by those responsible for running the companies involved.
The sanctioned oligarch denied any knowledge of or personal responsibility for "any alleged deception of any government authority" to evade tax payments.
Abramovich, who was sanctioned by the UK in 2022, now reportedly divides his time between Istanbul, Tel Aviv and the Russian resort of Sochi.
