TROUBLE IN PARADISE
Celtic tycoon Desmond, 67, is named in offshore tax haven claim
CELTIC’S biggest shareholder has been named in the leaked Paradise Papers on offshore tax havens.
The affairs of Irish businessman Dermot Desmond – who denies avoiding tax – were put under the spotlight after analysis of more than six million documents leaked from offshore law firm Appleby.
An investigation to be shown tonight on BBC Scotland claims the 67-year-old billionaire used a shell company in the Isle of Man to save up to £1million in Swiss taxes in three years.
Desmond owned Swiss-based private jet company ExecuJet for eight years until he sold it in 2015.
The BBC claims ExecuJet asked Appleby to open an Isle of Man company in 2012 that saved them from paying taxes in Switzerland.
The offshore structure used by Appleby is legal – but tax expert Phillip Simpson QC told the BBC it appeared to be “an aggressive avoidance arrangement”.
He added that the Isle of Man company seemed to be controlled from Switzerland, which could make it liable for taxes there.
An Appleby memo leaked to the International Consortium of Investigative Journalists said: “By having the monies paid into the Isle of Man entity, Execujet Aviation Group are not required to pay Swiss tax on the income of around 22 per cent.”
Execujet, who employ about 1000 people worldwide, were liable for a five per cent stamp duty levy on insurance premiums because Switzerland was listed as their main office for insurance purposes.
The Paradise Papers contained documents labelling this liability “negative tax consequence”.
They said: “Accordingly, ExecuJet would like to set up a company in the Isle of Man, namely ExecuJet (IOM) Limited, to be the primary insured under the above policy.”
There is no aviation insurance tax in the Isle of Man, meaning that by switching their primary insured office from Switzerland to the island, Execujet were able to avoid the five per cent charge on a £2.91million insurance policy – saving up to £145,000 a year.
Appleby installed another shell company, General Controllers – staffed with Appleby executives – as sole director of ExecuJet (IOM).
Forming the Isle of Man company also saved ExecuJet from paying tax on a £920,000 “brokerage fee” paid by insurers, the BBC claims.
According to the leaked emails, that cash was funnelled straight back to Switzerland from the Isle of Man on instructions from ExecuJet executives.
Simpson told the BBC that if individuals in Switzerland were making all the decisions about what the Isle of Man company did, it would mean the company was actually tax resident in Switzerland – leaving the structure open to challenge by Swiss tax authorities.
He added: “It would certainly be reasonable to describe this as an aggressive avoidance arrangement.”
Desmond bought ExecuJet in 2007 and sold it 2015. Data suggests the tax avoidance scheme operated from 2012 until at least 2015.
ExecuJet said: “Several years ago, ExecuJet chose the Isle of Man as it’s a centre for insurance and re-insurance companies providing an attractive fiscal environment.
“For some time now, ExecuJet IOM has not been required and is therefore no longer used.”
Desmond, one of Ireland’s richest men, is known for his passionate support of Celtic. He is the largest single shareholder, owning more than 30 per cent of the club.