The Russian billionaire denied knowledge of the arrangement, saying he was not personally responsible or liable for the alleged tax evasion.
Russian oligarch Roman Abramovich saved millions of euros through a scheme which falsely classified five of his superyachts as commercial vessels, an investigation has found.
The strategy devised by his network allowed the billionaire to avoid paying VAT in European countries where his boats received services like refuelling.
Private vessels are subject to the sales tax, which is typically levied at around 20% by EU members.
However, five of Abramovich’s superyachts — including The Eclipse, which was, at one stage, the world’s largest — got around the requirement between 2005 and 2012 by claiming that they were being chartered out to customers.
A joint investigation by the BBC, the Guardian and the Bureau of Investigative Journalism revealed that this did not actually happen.
The boats were leased and managed by Blue Ocean Yacht Management, a Cyprus-based company controlled by Abramovich. This firm then rented them out to “customers”.
Leaked files from Cyprus show that all the clients were British Virgin Islands-registered companies owned by Abramovich himself.
In a statement, the Russian billionaire’s lawyers said he had always sought and acted in accordance with expert tax and legal advice.
They added that their client was unaware of the scheme and denied personal responsibility.
The arrangement was laid out explicitly in an email sent in 2005 by Blue Ocean director Jonathan Holloway, who recently told the BBC that he could not be expected to remember the “individual circumstances of every vessel I have ever managed”.
In the memo, Holloway wrote: “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.
“Our structure must as clearly as possible separate the different parties so that an investigator checking on our operation would see it as a legitimate structure. But 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.”
European authorities had taken action against Blue Ocean in the past, but they did not seem fully aware of the yacht scheme.
In 2015, prosecutors in the Italian port of Trieste tried to recoup €500,000 from Blue Ocean in allegedly unpaid refuelling duties.
The case was dropped after Abramovich’s associates claimed its yachts were being used for commercial purposes.
In 2012, authorities in Cyprus disputed the firm’s claim to VAT exemption, arguing that it owed more than €14m in unpaid tax between December 2005 and August 2010.
Lawyers for the company contested this, but the Cypriot supreme court dismissed their appeal last March. Four months later, Blue Ocean was dissolved.
