CYPRUS: Cyprus-based tax evasion scheme uncovered through superyacht leasing

A major tax evasion scheme involving Russian billionaire Roman Abramovich’s superyachts has been exposed, revealing how he exploited Cyprus’ offshore business environment to evade EU taxes.

An investigation by the BBC and the Bureau of Investigative Journalism uncovered leaked documents showing that between 2005 and 2012, Abramovich’s companies created a fake yacht-leasing business in Cyprus to avoid taxes on his $1.2 billion fleet, which included the Eclipse, once the world’s longest yacht.

The scheme centred around leasing the yachts to “independent customers” who were actually companies controlled by Abramovich through offshore trusts in the British Virgin Islands.

Despite being registered as commercial vessels, the yachts were used exclusively by Abramovich, his family, and associates.

The operation was managed by Blue Ocean Yacht Management, a Cyprus-based company that appeared legitimate on paper but was secretly designed to skirt tax laws. Leaked emails revealed that Abramovich’s team made efforts to present the operation as “independent” to avoid scrutiny.

Cypriot authorities eventually caught on and fined Abramovich’s company €14 million for unpaid VAT in 2012, a ruling upheld by the courts in 2024. It remains unclear whether the fine has been paid.

The leaked documents also exposed that Abramovich himself, referred to as “RA,” was the most frequent user of the yachts, with fabricated charter agreements used to justify financial transactions.

Cypriot professionals, including accountant Demetris Ioannides—sanctioned by the UK in 2023—and the law firm Chrysses Demetriades were implicated in assisting the scheme.

Abramovich has denied personal involvement, though evidence points to a coordinated effort by his team to evade millions in taxes.

Experts argue the case highlights the risks posed by offshore jurisdictions like Cyprus, which allow for hidden ownership and tax avoidance through legal loopholes.