Cyprus-based scheme helped Russian billionaire Roman Abramovich avoid tax on fleet of luxury yachts through fake rental business

Russian billionaire Roman Abramovich used the Cyprus-based company Blue Ocean Yacht Management to avoid paying taxes, according to an investigation by the BBC and The Bureau of Investigative Journalism (TBIJ). The scheme, which operated between 2005 and 2012, is reported to have saved Abramovich tens of millions of euros.

The investigation analyzed over 400,000 leaked files and 72,000 emails leaked from MeritServus, a Cypriot corporate services provider. The findings revealed that Blue Ocean leased out superyachts that were, in reality, used by Abramovich himself. These yachts, worth hundreds of millions of dollars, were rented to other companies registered in the British Virgin Islands. While these companies were formally independent, they were all controlled by Abramovich and his close associates.

Among the billionaire’s yachts was Eclipse — a 162.5-meter vessel featuring two helipads and a pool that could be converted into a dance floor. As per the BBC, the vessel was once the largest private yacht in the world and was worth an estimated $700 million. According to the documents, in December 2012, Eclipse was leased to a company linked to Abramovich for $2 million. However, the investigators were able to show that the “supposedly commercial structure, where one company hires boats to another, was actually an in-house deal.”

The documents also revealed that some agreements were backdated, and the recorded movements of the yachts, supposedly under lease, did not match their actual locations. For example, in 2012, Eclipse was listed as being in Gibraltar but was actually cruising in the Caribbean.

Jonathan Holloway, a former director of Blue Ocean, said that he could not be “expected to remember the individual circumstances of every vessel I have ever managed,” as he “managed literally hundreds of vessels from many different locations around the world.”

Despite the claim, Holloway authored a revealing memo in 2005 — titled “Operating Structure” — for the management of the billionaire’s yachts, warning that the scheme could be exposed if investigators found links between the companies. “We all have to recognise that a determined investigator could eventually discover this is an in-house structure with the possible consequences that would entail,” the memo read. Holloway also suggested transferring Blue Ocean’s management to another organization formally unconnected to Abramovich in order to avoid suspicion.

According to the documents, tax consultants from Deloitte in Cyprus informed Holloway that VAT would be required if the vessels were classified as pleasure yachts, whereas commercial classification would exempt them from the tax.

Superyacht law expert Benjamin Maltby told the BBC that many of Abramovich’s luxury yacht charters were structured using contracts originally designed for commercial cargo ships transporting goods like grain or steel.

Cypriot tax officials investigated Blue Ocean for failing to pay up to €17 million in VAT. In a case first brought in 2013, Cypriot authorities successfully claimed that Blue Ocean owed the lower amount of €14 million in taxes on its rental agreements. The Court of Appeal upheld the ruling in 2018.

It is unclear whether this amount was ever paid. Blue Ocean was liquidated in mid-2024.

Lawyers representing Abramovich told the BBC that he denied “any allegation that he had any knowledge” of the matter, or that he was “personally responsible” or accountable for “any alleged deception of any government authority” to evade taxes.