International Law Enforcement Action Day Against VAT Fraud Scheme!

Law Enforcement action day against VAT fraud scheme
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On an international law enforcement action day, a multinational team of more than 2,000 investigators from seven countries has conducted a successful operation with five arrests, over 450 searches, and the seizure of real estate and vehicles in Belgium, Germany, Hungary, Italy, the Netherlands, Portugal, and Spain. The operation, codenamed Huracán, focused on uncovering a significant value-added tax (VAT) fraud scheme involving the international trade of more than 10,000 cars.

The action day was led by the European Public Prosecutor’s Office (EPPO) in Cologne, with support from Europol. The organized crime group behind the scheme is estimated to have generated a fraudulent turnover of approximately €225 million, with VAT losses exceeding EUR 38 million. The investigation and action were carried out with the assistance of the Operational Network @ON, funded by the EU Project ISF4@ON.

The investigation was initiated after a tax authority in Italy reported suspicious activities to the EPPO in January 2021. The authorities had noticed that companies registered in Italy and Hungary were acquiring many cars from Germany and selling them to individuals and companies in other EU countries without paying the required VAT to the Italian state.

Within a few months, the European Delegated Prosecutors of the EPPO and investigators from the EPPO’s Central Office managed to identify the network of missing traders and the organized crime group responsible for the fraud.

It is estimated that over 10,000 cars were sold using this scheme. In total, approximately 60 individuals are suspected of participating in the organized crime group or providing support to the main suspects. Between 2017 and June 2023, the criminals managed to generate fraudulent turnover exceeding EUR 225 million and caused VAT losses of over EUR 38 million.

In addition to VAT fraud and tax evasion, the investigation revealed potential links to organized crime, money laundering, and document forgery. The scheme resulted in VAT fraud and created unfair competition, as the cars were sold below market prices.

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