The European Public Prosecutor’s Office (EPPO) in Berlin (Germany) has filed an indictment against eight suspects in connection with a VAT fraud scheme involving the trade of luxury cars and medical face masks, with an estimated damage of €80 million.
Four of the defendants are charged with orchestrating the VAT fraud as members of an organised criminal group; among them is the suspected ringleader. Another defendant is charged with aiding and abetting. Two others are accused of money laundering activities. A notary, believed to have assisted the organised criminal group during a period of a number of years, is charged with forgery and false notarisation.
Labyrinth of companies
The investigation uncovered a complex network through which luxury cars and medical face masks were traded, using shell companies in several countries – including Czechia, Germany and Poland. The defendants are believed to have used people in economic difficulty from Poland and Latvia as straw men. It is also alleged that the main suspects acted as factual managing directors of several companies by forging signatures, assisted by the notary and a tax advisor. A Polish currency exchange company that was controlled by the main defendants is believed to have served as a front to launder and share profits.
According to the accusation, the VAT fraud scheme, which had a turnover of hundreds of millions of euro, was based on the sale of high-priced vehicles through missing trader companies that did not meet their tax obligations. Furthermore, parallel chains of fictitious invoices and carousel transactions were used to fraudulently claim repayments of VAT from national tax authorities. The criminal scheme took advantage of EU rules on cross-border transactions between its Member States, as these are exempt from VAT.