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The European Public Prosecutor's Office (EPPO) announced on Tuesday that, by conducting simultaneous investigations, they had uncovered a highly complex VAT fraud scheme based on the sale of popular electronic goods. They pointed out that the resulting material damage was more than two billion and 200 million euros.
The action was called "Admiral", as part of which more than 200 searches were carried out, and in which law enforcement agencies of 14 member states of the European Union participated. It was carried out in Belgium, Cyprus, France, Germany, Greece, Hungary, Italy, Lithuania, Luxembourg, the Netherlands, Portugal, Romania, Slovakia and Spain, while searches on October 12 and 13 in connection with this operation were already carried out in the Czech Republic, Hungary, Italy, the Netherlands, Slovakia and Sweden.
The EPPO stated that all collected data is being analyzed and that the investigation into organized criminal groups from this scheme continues. Measures have also been taken to compensate for the damage.
EPPO exposed a sophisticated criminal industry with the "Admiral" action.
"All the data collected is being analysed, and the investigation into the organised crime groups behind this scheme is continuing," the EPPO said in a statement.
"The estimated damages investigated under Operation Admiral currently amount to €2.2 billion. Measures to recover the damages have been taken," it added. "These activities would not be possible without the involvement of several highly skilled organised crime groups, each of which has specific roles in the overall scheme.
Working transnationally, almost with an industrial logic, they have been avoiding detection for years," the prosecutor's office said. She also stated that it took EPPO less than 18 months from the initial crime report to uncovering the entire network of organized criminal groups that caused the above-mentioned damage of two billion and 200 million euros.
"Operation Admiral is a clear demonstration of the advantages of a transnational prosecution office," said European Chief Prosecutor Laura Kövesi. "When it comes to VAT fraud, from a national perspective, the damages can be assessed as relatively small or non-existent, or even remain undetected.
You need a helicopter view, to see the whole picture," she added. It was also clarified that this whole story started in April 2021 in Portugal when the tax authorities in the city of Coimbra investigated a company that sells mobile phones, headphones, tablets and other electronic devices, all because of suspected VAT fraud.
When the EPPO officially started investigating these suspicious circumstances in June, the Portuguese authorities themselves reported the case. At first it seemed that the invoicing and tax returns were in order, but Portugal's European Delegated Prosecutors decided to investigate everything in detail.
Thus, connections were subsequently established between the suspect company in Portugal and close to 9,000 other legal entities and more than 600 natural persons located in different countries. The essence of this fraud is based on the fact that companies acting as "pure suppliers" of electronic devices sold the same products across the border to other companies, without requiring them to pay tax.
On the other hand, those companies that would take over the products would sell them online while the customers would pay tax on their shipments. That money was supposed to be paid into the state coffers, but instead it was directed to offshore accounts, and after that those certain companies would shut down, so the tax collectors would not be able to collect taxes from the state.
European prosecutors, European delegated prosecutors, EPPO analysts for financial fraud and representatives of Europol and national law enforcement authorities participated in the entire action. The latest Europol estimates of this type of fraud bring about 50 billion euros in tax losses to the member states of the European Union.