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Sarajevo Times > Blog > WORLD NEWS > Crackdown on Multimillion Euro VAT Fraud involving Car Sales
WORLD NEWS

Crackdown on Multimillion Euro VAT Fraud involving Car Sales

Published: February 23, 2024
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In an operation led by the European Public Prosecutor’s Office (EPPO) and supported by Europol, 3 suspects were arrested and over 80 searches were conducted in Germany and Italy. The action day on 20 February 2024 was the culmination of an investigation into an alleged criminal organisation suspected of a multimillion euro VAT fraud involving car sales. It is understood that the scheme led to over EUR 70 million in lost VAT in Germany alone.

Three individuals, suspected of being the ringleaders of the fraud scheme, were arrested in Germany. During the searches, carried out in several locations across Germany (including Munich, Cologne and Rostock) and Italy, over 40 expensive vehicles and a luxury apartment in Munich were seized. In addition, several bank accounts, valuing over EUR 1.2 million were frozen. Law enforcement seized cash in several currencies, as well as luxury watches, jewellery and several luxury bags found in the suspects’ residences. Officers on the scene found a robot used to print signatures in invoices and discovered a weapon.

The suspects are believed to have used German companies to fraudulently export cars – both used and new – from Germany to other EU Member States. To that end, they allegedly relied on an intra-community VAT ‘carousel’ fraud. This complex criminal scheme takes advantage of EU rules on cross-border transactions between Member States, as these are exempt from value-added tax (VAT). VAT fraud, or Missing Trader Intra-Community (MTIC) fraud, is a highly profitable crime that results in billions of euros in annual tax losses for Member States.

According to the evidence, the suspects purchased vehicles on a large scale from various German car dealers, and then used a network of shell companies and forged invoices to simulate that the cars were being sold in other Member States so as to evade the payment of VAT. There are reasonable grounds to believe that the vehicles were delivered to missing trader companies, often located in Italy. According to the investigation, more than 200 of the companies that appeared on invoices as buyers of the vehicles are in fact missing traders who do not fulfil their tax obligations in their country. In some instances, it is also suspected that the vehicles were being kept in Germany.

The investigation counted on the support of Europol, Germany’s Tax Investigation Offices in Munich (Finanzamt München – Steuerfahndungsstelle) and Hagen (Finanzamt für Steuerstrafsachen und Steuerfahndung Hagen), the Police of Hagen and the Italian Financial Police (Guardia di Finanza) in Prato, Tuscany. The searches, carried out simultaneously in Germany and Italy, were conducted by hundreds of officers from the Tax Investigation Offices in Germany, the Bavarian and North Rhine-Westphalian police forces, including a special police command (SEK) and the Italian Financial Police.

Leading up to the action day, Europol provided analytical support to the partners in this investigation. Furthermore, Europol supported the action day by providing over 80 secure communication channels (VCP-Virtual Command Post), deploying four Universal Forensics Extraction Devices (UFEDs) to the action sites, and deploying a specialist with a mobile office to the operational command centre in Germany.

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