The Courier & Advertiser (Fife Edition)
Celtic shareholder’s firm used tax haven
Billionaire Dermot Desmond denies former company avoided tax
Billionaire Dermot Desmond’s exclusive private jet company used an offshore tax haven to avoid taxes, according to documents in the Paradise Papers.
The Irish businessman, who is the biggest single shareholder in Celtic FC, owned the Swiss-based Execujet for eight years until he sold it in 2015.
The leaked papers reveal Execujet asked a law firm to open an Isle of Man company in 2012 to avoid Swiss taxes.
Mr Desmond strongly denies his former company avoided tax.
He said it was “tax and regulatory compliant in all jurisdictions it operated in”.
BBC Scotland’s investigations team is the only Scottish partner involved in the global media project examining more than 13 million documents mostly leaked from the offshore law firm Appleby.
Emails from the leak, dubbed the Paradise Papers, suggest Execujet may have avoided up to $1.3m (£1m) in Swiss taxes over three years.
The offshore structure implemented by Appleby is legal but tax expert Philip 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.
Execujet is an exclusive aviation company that manages 160 business jets and employs about 1,000 people in seven regions around the globe. Its headquarters are in Switzerland. Internal Appleby documents explained that Execujet had to pay a 5% stamp duty levy on its insurance premium because Switzerland was listed as its main office for insurance purposes.
The documents called this a “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.”
The Isle of Man is a self-governing British Crown dependency that lies in the Irish Sea between Cumbria and Northern Ireland. It considers itself to be a low-tax financial centre rather than a tax haven.
There is no aviation insurance tax in the Isle of Man, meaning that by switching its primary insured office from Switzerland to the island Execujet was able to avoid the 5% charge on a $3.8m (£2.91m) insurance policy, resulting in savings of up to $190,000 (£145,000) a year.
To do the switch, Appleby staff created a shell, or “brass plate”, company in the Isle of Man calling it Execujet (IOM), and installed another shell company, General Controllers, staffed with Appleby executives, as the sole director.