EPPO indicts 36 suspects and five companies for €24.3 million VAT fraud involving organised crime 

The European Public Prosecutor’s Office (EPPO) in Madrid (Spain) has indicted 36 individuals and five companies, accused of forming a criminal organisation responsible for a €24.3 million VAT fraud scheme involving the trade of mobile phones and other electronic devices. The indictments follow an investigation code-named ‘Marengo Rosso’, which stretched across eight countries.

At issue is a suspected VAT carousel fraud, a complex criminal scheme that takes advantage of EU rules on cross-border transactions between its Member States, as these are exempt from value-added tax (VAT). According to the investigation, the fraudulent scheme involved the use of shell companies in different countries, through which phones, tablets, computers and other electronic equipment were ostensibly traded, using fictitious invoices, in order to evade the payment of VAT. The chain of shell companies also allowed to claim VAT reimbursements from the national tax authorities to which the alleged perpetrators were not entitled. Finally, the goods were sold at very competitive prices through online marketplaces in several countries. The criminal profits were then laundered in different countries, including Hong Kong and Singapore, according to the evidence collected.

It is estimated that these activities have, since 2020, caused losses of more than €24 million to the EU and national budgets.

The defendants are accused of three tax offences, together with money laundering and organised crime. If found guilty, some of the accused face up to 26 years of imprisonment and the companies may be fined with €24 million and the prohibition from receiving subsidies for a period of four years.

Earlier in this investigation, law enforcement froze 95 bank accounts and seized 24 properties, as well as five luxury cars, following a request by the European Delegated Prosecutors in Madrid.

All persons involved are presumed innocent until proven guilty by the competent Spanish courts of law.

The EPPO is the independent public prosecution office of the European Union. It is responsible for investigating, prosecuting and bringing to judgment crimes against the financial interests of the EU.

Source: European Public Prosecutor’s Office

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