Dassault Aviation denies helping customers avoid tax in latest Paradise Papers allegations

Dassault Aviation is the latest business aviation company to be named in the Paradise Papers investigation into international tax avoidance by wealthy individuals and corporations.

The allegations, published by the French newspaper Le Monde on Tuesday, are that the French aeronautics group helped customers to avoid paying VAT on their Falcon business jets by registering them in the Isle of Man.

The company issued a statement yesterday, acknowledging that some Falcon purchases went through the Isle of Man but denying that it participates in tax avoidance schemes.

It also says it supports moves to harmonise the international tax rules “in order to ensure fair global trade”.

More than 13 million files related to shell companies in offshore tax jurisdictions were leaked from law firm Appleby to the German newspaper Süddeutsche Zeitung, which then enlisted the help of the International Consortium of Investigative Journalists to review the documents, nicknamed the Paradise Papers.

According to Le Monde, which helped to conduct the research, the Paradise Papers show Dassault’s “complicity” in a scheme to enable the wealthy to avoid paying 20% VAT when they bought private jets, by registering them in the tax-free jurisdiction of the Isle of Man.

According to Dassault, however, the company scrutinises its operations that lead to the delivery of jets to customers, and where those customers choose to register their aircraft and how they choose to operate them are their “exclusive prerogative”.

The company also insists that it “complies with all of its tax obligations” and pays tax in France and the US, where it manufactures its business jets. “No tax optimisation structure has been set up by the company in order to evade French taxes or French VAT,” it said. “Whether for direct sales or financing of its Falcon jets, Dassault Aviation conducts the necessary checks and formalities in compliance with the laws and regulations in force, with all such operations being regularly checked by the French tax authorities.”

It says that it incorporated seven leasing companies in the Isle of Man between 2008 and 2012, to meet customers’ “financing needs” during the financial crisis. These companies represented 2% of the Falcons delivered worldwide during the period. Dassault had never hidden this and explained these structures in a case study at the Isle of Man Aviation Conference in 2015.

“The Isle of Man was chosen for reasons related to operational flexibility and corporate management,” said a Dassault spokesperson. “The Isle of Man is, with respect to VAT, a European Community territory and is not listed among the non-cooperative tax jurisdictions.

“The need to move towards international rules for tax harmonisation is a political topic which we support in order to ensure fair global trade.”