Financial Crime World

Title: “EPPO Arrests Three in €70 Million VAT Fraud Case Involving Car Imports in Germany and Italy”

21 February 2024

European Public Prosecutor’s Office (EPPO) Disrupts International VAT Fraud Network

(Luxembourg, 21 February 2024) – In a coordinated operation with Europol, the German Tax Investigation Offices, and Italian Financial Police, the European Public Prosecutor’s Office (EPPO) dismantled an international criminal organization suspected of orchestrating a multimillion-euro Value-Added Tax (VAT) fraud scheme involving car imports. A total of more than 80 searches were carried out, resulting in the arrest of three individuals.

Arrests and Seizures

  • Three suspects—two men and one woman—were arrested in Munich and Dortmund, Germany.
  • Over 40 high-priced vehicles, a luxury apartment, bank accounts worth €1.2 million, luxury watches, jewelry, several luxury bags, a writing robot used to forge signatures on invoices, and a weapon were seized during the raids.

Alleged Crimes

The suspects are accused of heading a criminal organization that used an intricate intra-community VAT scheme. This scheme exploited EU rules on cross-border transactions between Member States to fraudulently evade VAT obligations.

Evading German VAT

The investigation indicated that the suspects acquired vehicles from various German car dealers and then employed a network of shell companies and counterfeit invoices to create false sales to other European Union Member States. As a result, they avoided paying German VAT on some €70 million worth of imported cars.

Vehicles Diverted to “Missing Traders”

A preliminary report suggested that some of the vehicles might have been sold to “missing traders” in Italy, approximately 200 such companies that failed to meet their tax obligations in their respective countries as per the investigation.

Cooperation between Agencies

The investigation benefited from the collaboration among several organizations, including:

  • Europol
  • German Tax Investigation Offices in Munich and Hagen
  • Police of Hagen
  • Italian Financial Police in Prato, Tuscany

Impact on Criminal Justice System

European Public Prosecutor’s Office

The European Public Prosecutor’s Office is an independent public prosecution office of the European Union, responsible for investigating, prosecuting, and bringing to judgment crimes against the financial interests of the EU.

The EPPO has the power to prosecute criminal offenses related to:

  • VAT and other forms of consumption tax fraud
  • Customs fraud
  • Fraud related to the Union’s financial interests
  • Organized crime causing significant damage to the financial interests of the European Union