Five people, three of them in Cyprus, have been arrested as part of an investigation by the European Public Prosecutor’s Office (EPPO) into suspected cross-border VAT fraud involving the sale of smartphones. The case concerns estimated tax losses in Sweden and Germany.
Arrests and searches in four countries
The arrests took place this week in Cyprus, Germany and Italy, at the request of the European Public Prosecutor’s Office in Munich. Searches and seizures were also carried out in Cyprus, Greece and Italy.
A total of 12 searches were carried out at the homes and business premises of suspects and companies under investigation.
How the alleged scheme operated
According to the EPPO, the criminal organisation under investigation allegedly used a complex carousel VAT fraud scheme. It is alleged to have exploited EU rules for cross-border transactions between member states, which are exempt from VAT under certain conditions.
The smartphones were sold through shell companies based in Germany, Albania and Sweden.
The arrested individuals allegedly set up and controlled the fraud network.
Estimated tax losses
The estimated tax loss amounts to €80 million in Sweden and €34 million in Germany.
Assets frozen and seized
Assets worth up to €80,000 were frozen, while bank accounts, cars and properties in Cyprus, Greece and Italy were seized.
Authorities involved
The operation involved, among others, the competent tax and police authorities of Cyprus and the Unit for Combating Money Laundering (MOKAS), together with their counterparts in Germany, Greece and Italy.
Part of the wider Midas investigation
The investigation forms part of the EPPO’s wider “Midas” investigative framework into cross-border VAT fraud cases.
