The European Commission has been looking for several weeks at possible tax evasion loopholes when hiring or buying yachts and aircraft, made possible by misapplications of the EU rules on VAT, the institution confirmed on Wednesday 8 November.
This confirmation comes in the wake of revelations by the International Consortium of Investigative Journalists (ICIJ), in its Paradise Papers series, that the world Formula One champion, Lewis Hamilton, managed to avoid paying more than €5 million in VAT on the purchase of a private jet, thanks to a scheme designed for him by the law firm Appleby, which is at the centre of the scandal (see EUROPE 11899 and 11898). This scheme based on registering the jet on the Isle of Man, where the ICIJ has traced 48 jets, with an average value of $33.9 million.
The Commissioner started to ask the member states questions, having read about similar cases in the Malta Files, revealed in spring of this year by a different international consortium of journalists.
“In the case of the Isle of Man, we have recently written to the United Kingdom to ask for more information”, a Commission source explained. The European VAT rules provide for commercial aircraft to be exempt from VAT, but not for private usage.
The information the Commission has received so far shows that these rules are not applied on the Isle of Man. If this is confirmed in its contacts, it will not hesitate to seek recourse to “legal means”, in other words open infringement proceedings.
The Commission is also taking a closer look at similar practices, but applicable to pleasure boats in Malta, Cyprus and Greece. (Original version in French by Élodie Lamer)