europe

European police roll up massive VAT fraud gang

The criminal organisation was composed mainly of Italian, Portuguese and Spanish nationals and was allegedly managed from Spain by a father and son

AFP
16:57 May 4, 2018

THE HAGUE: European police arrested 58 people in a continent-wide crackdown on a VAT fraud gang robbing European taxpayers of hundreds-of-millions of euros, the continent’s policing agencies said Friday.

A two-day operation coordinated by Europol and Europe’s prosecuting authority Eurojust, saw police last month swooping down on suspects in Belgium, Germany, Portugal and Spain.

Spanish police alone arrested 52 suspects between 18 and 20 April at the base of the criminal group’s operations, Europol and Eurojust said in statements issued from their headquarters in The Hague.

“The criminal organisation was composed mainly of Italian, Portuguese and Spanish nationals and was allegedly managed from Spain by a father and son - Spanish nationals with Indian roots,” Europol said.

The gang which had been operating across Europe for the last nine years is suspected of VAT fraud and money laundering amounting to a staggering total of more than 390 million euros ($466 million).

Carrying out or simulating imports and buying of electronic goods both real and fake and then selling it online, the suspects used a network of more than 100 companies - the majority so-called “shell companies” across Europe and the United States.

They even owned a production centre to create false invoices for imported electronic goods and luxury cars below the invoice price.

“Investigations revealed that the group issued false invoices to the value of over 250 million euros in three years,” Europol said.

The gang also used their large network of shell companies to launder money before funnelling the cash into Bulgarian and Hungarian bank accounts.

“In particular, the organisation moved more than 140 million euros in two years from Hungarian shell companies,” Europol added.

“The group then used different methods to integrate its profits, such as investments in real estate and real businesses, or the purchase of luxury vehicles,” the agency added.

The final destination of the proceeds of the crimes were in Italy, Spain and the United States.

The gang’s masterminds are suspected of so-called missing trader fraud which has cost the EU economy 60 million euros in damage so far, Europol said.

It works on the principle of importing goods VAT-free and then selling them locally charging VAT, with the importer dodging the sales tax it should be paying to the government.

The goods are also resold and exported, with the criminals then reclaiming VAT to which they are not entitled, at the taxpayers’ expense.