Last week (7 November), the European Public Prosecutor’s Office (EPPO) in Munich carried out more than 200 searches in several locations in Germany and the Netherlands, during an operation against an alleged customs and VAT fraud ring understood to have caused damage of over €200 million in evaded tax and customs duties.
During this action day, over 300 tax and customs investigators raided more than 200 locations and seized over €450 000 in cash, two luxury cars and more than 80 smartphones, 30 hard disks and several servers. Four suspects, understood to have led the customs and VAT fraud scheme, were arrested and are currently in detention.
This investigation, code-named ‘Masquerade Ball’, centres on a suspected organised crime group involving Chinese nationals, alleged to have put in place a complex system to undervalue and evade customs duties and VAT due on the importation of goods.
Tightly choreographed scheme
According to the investigation, this group imported a high number of goods such as textiles, shoes and small electronic items from China to EU countries. By using fake invoices, the value of the goods was declared as far less than their actual value, which led to a lower payment of customs duties. In addition, it is understood that they evaded the payment of VAT by abusing an exemption linked to an EU importation mechanism known as ‘Customs Procedure 42’ – applied if goods imported from outside the EU into a Member State are subsequently transported, for final delivery, to another EU Member State – by pretending to ship the goods from one EU country to another.
