European VAT fraud operation leads to 30 searches in Portugal

An international operation by the European Prosecutor’s Office led to 30 searches of homes and other locations in Portugal this Wednesday as part of an investigation into VAT fraud on the sale of used cars.

A source connected to the investigation told Lusa that among the 450 searches carried out as part of “Operation Huracan” in seven countries – Germany, Belgium, Italy, Hungary, Spain, the Netherlands and Portugal – there were seven searches in homes and 23 searches outside the home. searches in Portuguese territory (mainly in the north and in the center, for example, in Vila Nova de Gaia, Braga, Trofa, Viseu, Lisbon, Terrougem and Odivelas) as part of an initiative that was supported at the national level by the Tax Measures Group from the PNR .

So far, five people have been detained by more than 2,000 tax, customs and police officials in those countries, but none of the arrests have taken place in Portugal, the same source said. About 60 suspects were also identified, and property and luxury cars were confiscated.

An investigation into a VAT fraud scheme involving an international trade of over 10,000 vehicles began in 2021 following a complaint from the Italian tax authorities to the German Federal Tax Service. The operation, launched this Wednesday, was led by the Cologne (Germany) European Union Prosecutor’s Office (EPPO).

According to a press release published in the meantime, “the total fraudulent turnover of the organized crime group behind this scheme is estimated at 225 million euros, and the damage in terms of VAT caused by the suspects is at least 38 million euros.”

According to EPPO, the scheme involved German-headquartered companies buying cars from a German sales “website”, paying VAT on which they filed a declaration and received the VAT back from the German state.

Subsequently, this company sold cars to fictitious dealers outside of Germany, namely in Italy and Hungary. Back then, the price of the vehicle was slightly higher than the net price shown on the original invoice from the online sales “site”, but more attractive since the fictitious operators did not have to pay VAT due to intra-community VAT rules (which exempt transactions between member states).

The operators then sold the vehicles at a very attractive price to the end buyer or another company. The final buyer paid the VAT, and instead of paying it to the German state, the shell traders kept the money as profit and disappeared.