Do you recall hearing about the Paradise Papers / Panama Papers? They exposed tax loopholes, offshore accounts, and other nefarious ways the extremely rich get around paying taxes... take Lewis Hamilton for an example

The Paradise Papers are documents relating to offshore investments that were leaked, then shared with the International Consortium of Investigative Journalists, a network of more than 380 journalists. Some of the details were made public on 5 November 2017, second only to the Panama Papers of 2016 as the biggest data leak in history, and stories are still being released.

The documents originate from legal firm Appleby, ( an offshore law firm which advises clients on "legitimate and lawful ways to conduct their business") the corporate services providers Estera and Asiaciti Trust, and business registries in 19 tax jurisdictions.

The documents contain the names of more than 120,000 people and companies. Among those whose financial affairs are mentioned are, separately, AIG, Prince Charles and Queen Elizabeth II, President of Colombia Juan Manuel Santos, and U.S. Secretary of Commerce Wilbur Ross.

And, Lewis Hamilton.

Why am I singling out Hamilton? Well, it's likely that all of you know who he is, and why his name is instantly recognizable, and that in the car enthusiast world, he is likely the worlds richest sports icon. After all, if I wrote this article about Penny Pritzker's, you'd have no idea who she is... I've never heard of her before...  but since I bring her up, she had pledged to divest from more than 200 firms when she was confirmed as President Barack Obama's commerce secretary in 2013, but she transferred her assets to a company owned by her children's trusts, which shared the same address as her office. See?

So, that's why Hamilton, and also because there is a clear and easy to read article in the Guardian to draw information from about Hamilton, about how he avoided paying European taxes on his private jet using an Isle of Man scheme, where he has a company on the island, which bought a private jet for him, and he leases the jet from that company, that he owns.

Simple, right? If you are rich enough, you get a lawyer to draw up papers that are legal, and that will create a business for you, even without an office or a door. It's simply a legal entity that will pay taxes. Though, when you are rich enough, you can select where you create that paper that makes you a company owner... and why not do that where that country isn't going to tax you very much. Then, your company buys a plane... and leases it. Why not? Companies buy and lease things all over the world, why shouldn't you, if you are rich enough, own a company that buys planes. Well, one plane... the one you want.... and lease it, once, to you?

You then aren't buying it, that leasing company is... and so you aren't going to own it, just rent it, and you don't have to pay taxes on the value of that asset, that's up to the leasing company to do. Now, you're riding anywhere, any time, in your own private jet, if you can afford it.

Appleby, the law firm at the centre of the Paradise Papers leak, helped Hamilton and dozens of other clients set up seemingly artificial leasing businesses on the Isle of Man, through which they rented their own jets from themselves.

Then the Isle of Man government gave tax refunds to the private jet owners. 231 of them, which add up to about a $1bn giveaway, and that's money the rich don't pay in taxes, it's money they receive. Yes, instead of paying a tax for purchasing a 50 million dollar airplane, they are getting a tax refund. 231 of them. A billion dollars, leaving the govt budget, making rich people richer, instead of rich people who can afford (when you have over 100 million dollars, I state that enables you to afford anything short of islands and countries purchased for private resorts, who says I'm wrong?) to pay a tax on a purchase. Sales tax, and property tax. Is that really too much to do, when you are worth over $100,000,000?

Hamilton said he had instructed a senior lawyer to check his arrangements and was told they were lawful. He said his practice was to rely on professional advice. Legitimate tax avoidance schemes are not illegal. There is no suggestion Hamilton was directly involved in creating the scheme used for his jet. He sought professional advice and followed it.

That's why so many people get a university degree in business and economics. They want to learn how to make a ridiculous amount of money, and how to keep it, and not pay taxes to a govt that didn't work for it.

Anyway, how much was the sales tax/ VAT (value added tax https://en.wikipedia.org/wiki/Value-added_tax_in_the_United_Kingdom ) on the jet? Just 3.3 million British Pounds. Can Hamilton afford to pay that after buying a 16.5 million British Pounds private jet?

Well, if you are worth 100 thousand dollars and can afford a 16 dollar blu ray, and then pay 20 dollars after sales taxes, then yes, he can. But, he's found that he doesn't need to, if he leases it on the Isle of Man.

If he had paid the 3.3 million British Pounds (£3.3m) instead of getting that as a refund, he would have funded, all by himself, 17 Sure Start childrens educational centers (similar to pre-school) for one year. Simply by paying the VAT tax on the jet plane. https://www.foundationyears.org.uk/childrens-centres/  17 pre-schools, for one year, is what £3.3m does when paid INTO the govt.

Hamilton appears to have used shell companies in the British Virgin Islands (BVI), the Isle of Man and Guernsey to avoid the entire £3.3m VAT bill triggered when he imported his £16.5m (25 million dollars) red Bombardier Challenger 605 into England from Canada in 2013. Hamilton set up another Isle of Man company to purchase a €1.7m motorhome that he uses at racetracks. No VAT appears to have been paid on that purchase either. Hamilton denies using shell companies, and says the Manx entities were part of his businesses. He drives a car, fast. So... what businesses? Exactly. Papers that create businesses that don't exist with an office, or a door.

Hamilton is worth about £130m, ($167 million dollars) and is contracted to Mercedes via a Guernsey company. What's Guernsey? A little island off the coast of France.

Hamilton has a Malta company for image rights, and has lived as a tax exile since 2007, first in Switzerland and now in Monaco.

So, how hard is it to avoid paying taxes? Not very if you're rich enough to afford lawyers, and business advisers, and investment strategists.

The business was set up for Hamilton by Appleby with advice from EY, and offered to dozens of other super-rich clients.

The advisers decide the price the jet should be leased. Appleby staff set up a Manx company and provided a director, and EY arranged the VAT registration and secured approval for the scheme from customs. This arrangement is not unlawful.

The jet was bought and owned by a BVI (British Virgin Islands) company called Stealth Aviation Ltd. and leased for €140,000 a month to a specially created Isle of Man company, Stealth (IOM) Ltd, who then charges a fee to lease the plane to a private jet operator in England. This fee allows the Isle of Man company to turn a profit and therefore claim to be “in business”.

The private jet operator is a genuine business that services and charters private jets. After all, it's not going to fuel itself. It gets paid to look after Hamilton’s plane, provide pilots and crew, and do repairs and maintenance.

The private jet operator then charges Hamilton's Guernsey-based company BRV Ltd, which charges a fee to Hamilton to manage the accounting of paying the private jet operator.

The lease payments were flowing out of bank accounts belonging to Hamilton at one end and into bank accounts belonging to him at the other end. The profits made by the Isle of Man company belonged ultimately to its owner and only customer: Hamilton.

The data suggests the sole purpose of the leasing business was to allow Hamilton to rent his plane from himself. Invoices show the jet was not leased to anyone else, and there appears to have been no effort to market it to other customers.

https://www.theguardian.com/news/series/paradise-papers
https://en.wikipedia.org/wiki/Paradise_Papers
https://www.theguardian.com/news/2017/nov/06/lewis-hamilton-avoided-taxes-jet-isle-of-man-scheme-paradise-papers