Tax Fraud Investigation Unit: VAT Fraud Totalling 195 Million Euros Uncovered
Priority operation in 17 European countries, 14 people arrested
At the beginning of April, the European Public Prosecutor's Office (EPPO) in Munich and Cologne took action against a suspected criminal organisation that is alleged to have committed massive VAT fraud totalling 195 million euros by selling smartphones, small electronic appliances and protective masks. In a Europe-wide coordinated priority operation, 130 searches were carried out and 14 people were arrested. The Austrian Tax Fraud Investigation Unit also took part in the operation.
‘The fight against cross-border duty fraud and tax evasion only works through well-coordinated international cooperation. Thanks to the meticulous preparation and determined action of all the units involved, it was possible to uncover a massive case of fraud and put an end to the criminal activities. I would like to thank all the colleagues involved’, said Minister of Finance Magnus Brunner.
Successes in Austria
In Austria, the Tax Fraud Investigation Unit carried out search and seizure orders at a total of seven addresses with around 55 officers. Two Austrian citizens are listed as suspects.
Another European arrest warrant was issued for a German citizen who is listed as a suspect in these proceedings in Germany but was on a skiing holiday in Austria. He is now in custody pending extradition.
During the seven house searches in Austria, a total of almost 200,000 euros in cash, numerous valuables, 166 iPhones in their original packaging worth around 200,000 euros and 45 other smartphones were seized. Extensive evidence such as paper documents and data carriers were also seized.
680 task forces across Europe
Around 680 investigators were deployed across Europe at the same time to secure evidence and make arrests in a total of 130 searches. The background is a suspected VAT missing-trader fraud by a German conduit company. This is a complex criminal system that exploits EU regulations for cross-border transactions between member states, as these are exempt from VAT.
The accused company is believed to have carried out various forms of VAT fraud related to the trade of small electronic goods, including smartphones, since 2017. It is believed that the suspects used fraudulent chains of traders who disappeared without fulfilling their tax obligations.
Business with coronavirus masks
From 2020, the same people entered the market for protective masks and sought to profit illegally from the coronavirus pandemic. The European Public Prosecutor's Office assumes that the suspected criminal organisation behind the identified VAT fraud created a series of letterbox companies, straw men, fictitious identities and secret communication channels to conceal their criminal activities. Once all the evidence has been analysed, the focus of the operation will serve as the basis for an indictment.
Next Monday 6 May, Minister of Finance Magnus Brunner and the Tax Fraud Investigation Unit will present its performance report for 2023, including spectacular, successfully concluded cases.