The two former directors of the Cypriot company Blue Ocean Yacht Management Ltd, which is linked to Russian oligarch Roman Abramovich, will appear before the Limassol District Court on 26 November 2026 for the start of the hearing in the criminal case concerning €25 million in VAT arrears. The arrears arose from the management of Abramovich’s luxury yachts, with a total value of approximately €1.2 billion, through Blue Ocean Yacht. According to the Cypriot tax authorities, an attempt was made to avoid paying the VAT due through sham transactions.
The two women, who were listed as directors of Blue Ocean Yacht, were employees of another Cypriot company, Meritservus Secretaries Limited, which allegedly managed Cypriot companies operating for the benefit of Abramovich.
Responsibilities
Under Cypriot company law, companies are liable for their tax debts and other obligations, while directors are responsible for management, the keeping of accounting records, the submission of tax returns and the payment of taxes due.
On 19 March 2012, Blue Ocean Yacht received a VAT assessment of €14.2 million. It took 12 years, until 27 March 2024, for the objection to be finally determined and for the tax authorities to be able to initiate collection proceedings. By then, however, it was too late. The money had vanished, as had the company’s directors.
The VAT Law provides for prison sentences for the fraudulent evasion of VAT. Specifically, Article 46 provides as follows: “Any person who is involved in the fraudulent evasion of VAT or takes any action with a view to the fraudulent evasion of VAT, whether by himself or by any other person, is guilty of a criminal offence and is liable to a fine of up to three times the amount of VAT due, or to imprisonment of up to three years, or to both such penalties.”
It should be noted that the Tax Department’s lawyers are also seeking a third director, a British national, but efforts to locate him have so far proved unsuccessful.
Roman Abramovich is not facing charges in this case in Cyprus. Nor does the indictment include the persons who allegedly designed and organised the VAT avoidance scheme. Only the company’s former directors, who knowingly took on its directorship, are being brought to trial. Whether their role was purely formal or whether they had substantive involvement in the case will become clear during the trial. They are, however, said to maintain that they were ordinary employees carrying out the instructions of their superiors. Nevertheless, the law in force clearly sets out the responsibilities arising from the position of a company director.
The leaked documents
The documents that led to the case coming to light are believed to have been leaked from the Limassol-based Cypriot corporate services provider Meritservus Secretaries Limited, which allegedly operated on behalf of Abramovich. It was never made known how the documents came into the possession of the international journalism organisation OCCRP (Organized Crime and Corruption Reporting Project), which brought the case to light. Aspects of the case were also highlighted by the Cyprus Investigative Reporting Network (CIReN), in cooperation with OCCRP.
The VAT trick
According to OCCRP, between 1999 and 2010, Russian oligarch Roman Abramovich assembled a fleet of luxury pleasure yachts with a total value of approximately $1.2 billion. Among them was the “Eclipse” (see photo), which was once the longest yacht in the world, with two helipads.
The vessels spent part of their time in European waters, and their operating costs were particularly high. Under the European Union’s VAT regime, expenses such as fuel, crew wages, port fees and maintenance are subject to VAT. However, exemptions are provided under specific conditions for vessels used exclusively for commercial purposes.
According to OCCRP’s revelations, Abramovich’s associates allegedly used a complex leasing scheme for the yachts with the aim of avoiding the payment of VAT.
The people who set up the complex leasing scheme for Roman Abramovich’s luxury yachts, aimed at avoiding the payment of VAT in the Republic of Cyprus, made sure to cover their tracks. Only two directors of Blue Ocean Yacht, whom the Tax Department managed to locate, are being brought before the court. It is estimated that the €25 million will never be collected.
Specifically, Abramovich’s five superyachts appeared to be chartered to seemingly independent clients, who paid for cruises lasting one or two weeks. In reality, however, the supposed clients, who agreed to pay Blue Ocean up to $1.25 million for each weekly cruise, were four other companies based in the British Virgin Islands. These companies belonged to an offshore trust, with Abramovich as the beneficial owner.
A former member of the “Eclipse” crew, who asked to remain anonymous due to their continued employment in the yachting sector, said the yacht was used exclusively by Abramovich and his family. “It was in no way a charter vessel,” they told OCCRP.
The Cypriot tax authorities concluded that the vessels were not in fact used for commercial purposes that would justify exemption from VAT. As a result, in 2012 the Tax Department demanded that Blue Ocean Yacht, which was linked to the fleet, pay approximately €14 million in VAT owed. Over 14 years, this amount grew to €25 million.
Not a single euro left behind
According to a letter from Tax Commissioner Sotiris Markides to the House of Representatives, dated 23 May 2025 and seen by Politis, Blue Ocean Yacht’s lawyers spent 12 years trying to overturn the tax decision through court proceedings. However, the appeal was dismissed in March 2024, as the lawyers themselves were unable to locate their clients.
According to the companies registry, from 15 March 2022 the company remained without officers (director and secretary), and on 19 July 2024 it was struck off the register without having paid its debt to the state. The company’s restoration to the register in June 2025, by a court order obtained by the Tax Department after the issue was registered and discussed in Parliament on the initiative of then independent MP Alexandra Attalides, paved the way for the debt to be pursued.
However, searches at the Land Registry and at banks to locate Blue Ocean Yacht assets with a view to freezing them against the €25 million debt proved fruitless. The competent authorities found that the company’s bank accounts had been closed and that there was no movable property in its name.
On current evidence, it is estimated that the €25 million will never be collected. The most the Tax Department may achieve is to send the two former directors of Blue Ocean Yacht to prison.
