Raids in Netherlands part of massive EU VAT fraud case involving 10,000 cars

Police and tax investigators in seven countries, including the Netherlands, raided over 450 addresses in an extensive investigation into VAT fraud involving the international trade of some 10,000 cars. Five key suspects were arrested on Wednesday, the European Public Prosecutor’s Office (EPPO) announced.

According to EPPO, the suspects achieved a turnover of around 225 million euros and caused at least 38 million euros in VAT damage with their scheme. Using a German-based company, they bought cars from a German car dealer, paying VAT. They then submitted a VAT claim to get the VAT back from the German State.

After that, they sold the cars to traders outside Germany, namely Italy and Hungary, for slightly more than the purchase price, but excluding VAT due to the intra-community VAT rules. The trader then sold the cars at a very attractive price to a final customer or another company. The final customer paid VAT to the trader, but instead of transferring that to the German State, they kept the money and disappeared.

According to EPPO, the suspects also regularly issued false invoices to make it look like they had correctly purchased the vehicles and paid VAT. That enabled the buyers to register the vehicles in another country. “The scheme allowed unfair competition, as the cars were being sold at a lower market price,” EPPO said.

The investigation into this organized crime group has spanned two years, during which time around 60 people were arrested for participating in the group or supporting the main suspects. The main suspects were arrested on Wednesday during the 450 raids in Belgium, Germany, Hungary, Italy, the Netherlands, Portugal, and Spain.

They are suspected of VAT fraud, tax evasion, organized crime, money laundering, and forgery. “Measures to recover the damages have been taken, and more details will be communicated once known,” EPPO said.