European Public Prosecutor's Office dismantles 114 million euro VAT fraud network

The European Public Prosecutor's Office (EPPO) in Munich has dismantled a criminal network involved in a large-scale cross-border VAT fraud scheme totaling 114 million euros. This week, authorities carried out five arrests—three in Cyprus, and one each in Germany and Italy—following an investigation into illegal smartphone sales conducted through shell companies.

The fraudulent operation exploited EU regulations regarding tax-exempt cross-border transactions. Criminals utilized shell entities based in Germany, Albania, and Sweden to facilitate the illicit sales, resulting in estimated tax losses of 80 million euros for Sweden and 34 million euros for Germany. In addition to the arrests, law enforcement executed 12 searches of residential and business premises across Cyprus, Greece, and Italy to seize assets and gather evidence.

The investigation highlights significant vulnerabilities in the European value-added tax system. The suspects, who allegedly controlled the entire network, are currently facing proceedings as authorities continue to process the evidence obtained during the raids.