Cross-border operation in Germany and Netherlands uncovers major VAT fraud scheme
The European Public Prosecutor’s Office (EPPO) conducted an operation in the Netherlands and Germany on November 7, targeting an alleged customs and VAT fraud ring involving Chinese nationals. This group is suspected of evading taxes and customs duties amounting to over 200 million euros, the EPPO reported on Wednesday.
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. For the operation last week, EPPO was notably assisted by the Dutch financial crimes inspectorate FIOD.
During the operation, over 300 tax and customs investigators searched more than 200 locations, seizing over 450,000 euros in cash, two luxury cars, over 80 smartphones, 30 hard disks, and several servers. Four suspects, believed to be the leaders of the scheme, were arrested and are currently in custody.
The suspected organized crime group involving Chinese nationals allegedly imported large quantities of textiles, shoes, and electronics from China to the EU, using fake invoices to understate the value of these goods, thereby reducing the customs duties payable.
The group is also suspected of evading VAT payments by exploiting a loophole in the EU importation mechanism that exempts VAT if goods imported from outside the EU are transported from one EU member state to another for final delivery. They allegedly did this by falsely claiming to ship the goods between EU countries.
“It is understood that, in order to carry out this type of scheme, the criminal group had to create a vast network of middlemen, mostly based in Germany, Belgium, and the Netherlands,” EPPO reported. These middlemen oversaw customs clearance and logistics within the EU and acted as intermediary sellers, EPPO explained.
