Germany: Eight people indicted in connection with €80 million VAT fraud involving luxury cars (EPPO)

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.

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.

Earlier in this investigation, on 12 May 2022, German tax law enforcement authorities from various federal states, supported by the Berlin State Criminal Investigation Department, conducted searches in several locations throughout Germany and arrested two of the suspects, at the request of the EPPO. Based on the analysis of seized communication data, the suspected ringleader was identified and later arrested in Austria, in execution of a European Arrest Warrant issued by the EPPO.

In the course of financial investigations conducted in Croatia, Czechia, France, Germany and Poland, bank accounts were frozen, and real estate, cars and luxury articles were seized, all worth an estimated €5.2 million. The judicial measures also targeted two individuals and three companies as party to the confiscation proceedings. While they are not accused of participating in the offences, they are believed to have received illicit profits as a result of their execution, to the amount of €7.75 million. 

The success of this investigation was also due to good cooperation with the Public Prosecutor’s Office of Berlin, which is investigating other crimes of the accused criminal organisation that do not fall under the EPPO’s competence.

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. (source: eppo.europa.eu / photo:freepik.com)

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George Kazoleas, Lawyer

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