The European Public Prosecutor's Office (EPPO) announced on Monday that, following a request from its Venice office, an investigating judge at the Court of Milan issued house arrest orders for two individuals alleged to have run a network of companies as part of a VAT carousel fraud scheme, with estimated damages exceeding €33 million.
The investigation
According to the announcement, an investigation by Venice's Guardia di Finanza financial police identified a Chinese couple, operating out of Milan, as the main suspects. The two are alleged to have exercised de facto control, since 2019, over numerous companies involved in the VAT fraud scheme, with the aim of concealing the illegal import of goods into Italy and their resale on the domestic market without payment of the VAT owed.
How the alleged scheme operated
The companies involved were formally managed by front persons with no criminal record or assets who, according to the investigation, had no substantive role in management and may have been unaware of the offences allegedly being committed through the businesses in which they were registered as directors.
Analysis of the activity of so-called "missing traders" involved in the scheme showed sales worth millions of euros without the fulfilment of tax obligations, resulting in unpaid VAT exceeding €33.4 million. According to EPPO, the scheme operated as a criminal organisation allegedly directed by the couple.
Asset seizure only partially executed
The Milan investigating judge ordered the seizure of assets equal in value to the alleged damages. However, the order was only partially executed due to a lack of sufficient funds or assets held by the suspects in Italy. Searches were also carried out at their residences.
Source: EPPO
