VAT fraud worth €48 million uncovered in Europe

The European Public Prosecutor's Office (EPPO), based in Luxembourg and operating since 2021, has conducted one of the largest financial crime operations in its history. On 24 October, it became known that a large-scale investigation had resulted in the dismantling of an international VAT fraud scheme that caused a loss of almost €50 million.

The operation, codenamed "Mela", covered seven countries with more than 100 searches, including in Germany, Spain, the Netherlands, Austria, Belgium, Luxembourg and Romania. More than 300 police and anti-corruption officers were involved in the operation. This resulted in seven arrests, most of which took place in Germany, Spain and the Netherlands.

The essence of the fraud was the abuse of the taxation scheme on second-hand electronics. Criminals sold new electronic devices, such as smartphones, disguised as "resold" in order to pay VAT only on the trade mark-up, rather than on the full value. This not only allowed goods to be sold at dumping prices, but also allowed huge sums to be diverted from taxation.

There have also been asset freezing operations in 14 countries, including Ireland, Lithuania, the Czech Republic, Italy and the UK. Thus, EPPO demonstrates that it is able not only to investigate the most complex schemes, but also to effectively coordinate transnational actions of law enforcement and judicial authorities.