February 2, 2023

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Criminal proceedings: Luxembourg caught in “biggest European VAT fraud”

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Criminal actsLuxembourg caught in “biggest European VAT scam”

LUXEMBOURG/WORLD – Searches took place in several countries on Tuesday in an investigation into VAT fraud in the sale of electronic devices. It all started with a dubious company in Portugal.

An investigation into cross-border VAT fraud on the sale of electronic equipment led to prosecutions in 14 EU countries on Tuesday, costing them 2.2 billion euros. European in charge of investigation. More than 600 people are believed to be involved in what the European Public Prosecutor’s Office (EPPO), Laura Kövesi, called “the largest European VAT fraud ever detected”.

Apart from Denmark, 27 EU countries have been affected by these “criminal activities”. The investigation, which began eighteen months ago, has spread outside the EU to Albania, China, Mauritius, Serbia, Singapore, Switzerland, Turkey, the United Arab Emirates, the United Kingdom and the United States. The operation, named “Admiral”, stems from an investigation by Portuguese tax authorities in Coimbra (centre) in April 2021 against a company selling mobile phones, tablets, headphones and other electronic devices suspected of VAT fraud.

A dubious company in Portugal

The case was reported to the European Public Prosecutor’s Office when it took office in Luxembourg in June 2021. Investigators, supported by Europol, gradually established links between the suspect company in Portugal and nearly 9,000 other companies in different countries. The chain includes companies that act as suppliers of electronic equipment and other companies that sell these devices online, while claiming VAT refunds from national authorities, and these revenues disappear offshore.

So-called “carousel” VAT fraud costs the EU 50 billion euros a year, according to Europol estimates. It covers a number of companies established in at least two EU member states. This includes the deduction or refund of VAT related to intra-Community supply of goods when this VAT is not refunded to the relevant tax administration.

Searches were conducted in Belgium, Cyprus, France, Germany, Greece, Hungary, Italy, Lithuania, Luxembourg, Netherlands, Portugal, Romania, Slovakia and Spain. Search operations were carried out on October 12 and 13 in the Czech Republic, Hungary, Italy, the Netherlands, Slovakia and Sweden.

“A clear demonstration of the benefits of a transnational prosecutor’s office”

The move is “a clear demonstration of the benefits of a transnational prosecutor’s office”, Ms Kövesi underlined. The EPPO, which brings together 22 of the 27 EU member states, is competent for fraud affecting the Union’s budget.

In 2008-2009, a massive VAT fraud in the CO2 market cost the French tax authorities 1.6 billion euros, according to the Court of Auditors, and around 5 billion euros at the European level, according to Europol.

(AFP)

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