European Public Prosecutor’s Office Announces Arrests Over €13M VAT Fraud

In a significant development in the fight against financial crime, the European Public Prosecutor’s Office (EPPO) in Brussels announced the arrest of seven suspects in the Netherlands for orchestrating a €13 million VAT fraud involving Belgian and Dutch companies.

Scheme and False Claims

The elaborate fraud, code-named “Kingdom,” involved a Belgian subsidiary of a Dutch company allegedly submitting false claims for VAT refunds to the Belgian Treasury. The resulting payments, totaling €13.7 million, were transferred to accounts controlled by the suspects.

One of the banks involved in the transactions became suspicious and returned €3.7 million to the Belgian authorities.

Larger Fraudulent Network

According to EPPO investigation, the Belgian subsidiary was a part of a larger fraudulent network, known as “missing traders,” exploiting EU rules on cross-border transactions for profit, with no actual goods being traded, only fake invoices and fraudulent VAT declarations submitted. The suspects, all living in the Netherlands, had previous record of similar fraudulent activities within the country.

Attempts to Replicate and Ill-Gotten Gains

The suspects’ first successful VAT refund claim in Belgium sparked an attempt to replicate the scheme with another Dutch company, resulting in a claim of over €4 million. However, this claim was not paid out due to heightened scrutiny. A substantial portion of the ill-gotten gains, estimated in millions, was reportedly transferred to the United Arab Emirates. The rest was used to purchase luxury cars, expensive goods, and for gambling in casinos.

Seizure of Assets and Luxury Goods

Simultaneous searches were carried out at the premises of companies in the Netherlands linked to the suspects, as well as in their residences. The operations involved over 97 law enforcement officers from Dutch Fiscal Information and Investigation Service (FIOD), Dutch Public Prosecutor’s Office for Serious Fraud, Environmental Crime and Asset Confiscation, and Belgian Federal Police’s Central Unit for Economic Crime.

During the searches, luxury goods worth over €200,000, €7,000 in cash, and a vehicle were seized. In a previous investigation into money laundering involving some of the suspects, the FIOD and the Dutch Public Prosecutor’s Office had seized assets, including Porsches, a Lamborghini, and four bank accounts worth €671,000 in total. These assets, acquired using the illicit gains obtained from the VAT fraud, were frozen to compensate the damage caused.

Presumption of Innocence and EPPO’s Role

All suspects involved in the case are presumed innocent until proven guilty in the competent Belgian courts of law. The EPPO takes responsibility for investigating, prosecuting, and bringing to judgment crimes against the financial interests of the EU. This investigation underlines its crucial role in safeguarding the EU’s financial integrity and bringing those responsible for financial crime to justice.