Blümel: In 2020, Tax Fraud Investigation Unit recovered EUR 172 million in the fight against fraud Tax Fraud Investigation Unit takes stock of a successful year
Finance Minister Gernot Blümel has been taking stock of the achievements of the Tax Fraud Investigation Unit in 2020. Over the past year, 193 employees have processed and concluded a total of 527 cases. Despite difficult working conditions during this crisis year, their work succeeded in generating additional revenues for the Austrian taxpayer totalling around EUR 172 million. According to Blümel: "Even in the year of the coronavirus pandemic, our fraud investigation teams have fought a highly successful battle against tax evasion and fraud. Through this, the Tax Fraud Investigation Unit has also made a vital contribution to fair competition and fair taxation. The vast majority of business operators abide by the law and pay their due taxes. Tax evasion is not a trivial offence, since it damages not only honest business operators, but the overall reputation of the economy too. We will continue to crack down on tax evasion and remove every offender from the system, one by one."
Over the whole of 2020, 66 enforcement actions were taken by the Tax Fraud Investigation Unit, including 53 property searches in 190 deployment locations. During the course of these searches, besides other evidence, 65 000 GB of data were seized. In addition, the investigators undertook 48 tax audits, including statutory business audits and supplementary VAT audits.
The Tax Fraud Investigation Unit is a nationwide specialist unit undertaking investigations into specific fiscal offences, its remit including both national coordination tasks and international collaboration in major cross-border cases of VAT fraud. Within the Tax Fraud Investigation Unit is the Central Liaison Office (CLO), which deals with all international mutual administrative assistance involving tax matters, as well as mutual legal assistance in fiscal proceedings. In 2020, the CLO processed around 6 900 cases, thus making a substantial contribution to the fight against international tax fraud.
Just some of the outstanding successes achieved by Austria's tax investigators...
A food wholesaler based in Vienna, supplying mainly Chinese, Japanese and other Asian restaurants across Austria, was discovered to be evading tax by offering his customers the option of splitting product purchases across several invoices, with only some of the items being included in their restaurants' accounts, while the remainder were sold on the black market. During the course of investigations, searches took place at numerous restaurants across Austria, leading to the confiscation of numerous documents as well as cash in a value of around EUR 300 000. In all, tax evasion comprising VAT, income tax, corporate income tax, capital gains tax and payroll taxes was uncovered in a total sum of approximately EUR 2.6 million. The supply firm and the restaurants are now having to pay back the tax and in addition, within the framework of ongoing court proceedings, can expect to see the imposition of substantial fines.
A business operator in Upper Austria believed that temporarily fleeing to Turkey would provide a solution to his tax fraud problems. Prior to his departure, an audit of his firm had raised more questions than answers, and a premises search had revealed that the businessman had a network of around twelve companies that had been constructed purely in order to evade tax. The fraud essentially consisted of a document forgery service, whereby the businessman issued fake invoices, confirmations, shipping documentation, freight documents and other papers by which his customers could illegally buy and resell goods and, in the process, unlawfully reclaim input VAT. The evidence of all this was found on a USB stick in the businessman's trouser pocket. Overall, not only did he evade tax in a sum of around EUR 800 000. In addition, firstly he provided a hub for the illegal sales operations of the businesses that had arranged for the fictitious invoices to be issued, thereby faking non-existent transactions, and secondly, through this, he also abetted the tax evasion activities of his so-called 'business partners'. While, during the preliminary investigation, the perpetrator confessed to these offences, prior to his trial in 2017 he absconded to Turkey. Then, in 2020, the case took an unexpected turn, when he was spotted by an acquaintance in a shopping centre in Pasching, near Linz. The acquaintance notified the authorities and, following a manhunt, the man was arrested. Judgment has now been entered in the case, subject to appeal; the businessman - the first defendant - has been sentenced to a total of 40 months in jail (of which he must serve at least 24 months) and ordered to pay a fine of EUR 500 000 plus damages of EUR 634 434.59, while the second defendant – the offending business association - has received a fine of EUR 800 000.