What was the value of the VAT fraud uncovered by the EPPO?

The VAT fraud investigated by the EPPO amounted to EUR 25 million and involved a complex network of missing traders exploiting EU cross-border VAT rules.

Which countries outside the EU were involved in the EPPO investigation?

The investigation extended beyond the EU to include the Dominican Republic, Peru, and Uruguay. Bank accounts in the first two were frozen, and Uruguay provided critical intelligence support.

What triggered the EPPO's action against the fraud network?

The EPPO office in Madrid initiated the investigation with 13 searches in 2023, arresting 24 individuals and uncovering fraudulent cross-border VAT schemes.

What role did international cooperation play in this case?

International cooperation was vital, involving programs like EL PACCTO 2.0, the Ibero-American Association of Public Prosecutors, and bilateral agreements with six Latin American countries.

What items and assets were seized during the EPPO operation?

Authorities seized documents, electronic devices, IT equipment, luxury items, vehicles, EUR 135,000 in cash, and froze bank accounts and real estate across several countries.

Why is this case significant despite not being the largest fraud uncovered?

The case is notable for demonstrating the effectiveness of EU and non-EU cooperation in combating transnational VAT fraud, highlighting the global nature of financial crime.

EPPO Cracks EUR 25M VAT Fraud With Latin America Ties

EPPO investigations and actions typically take place in European countries. They are, in most cases, connected to goods imported from China or other countries known for manufacturing low-value goods and electronic devices like mobile phones, tablets, or headphones.

However, the latest result in the EPPO investigation conducted by the EPPO office in Madrid led to the seizure of bank accounts in the Dominican Republic and Peru. Additionally, the official authorities from Uruguay also contributed to the investigation by providing vital information to EPPO.

Fact of the Investigation

The first results of the investigation into the EUR 25 million VAT fraud were announced in 2023, when the EPPO's office in Madrid conducted 13 searches, resulting in the arrest of 24 people. The investigation revealed that the VAT fraud was orchestrated by a criminal group operating in both the EU and Latin America. The EPPO announced that the fraudsters exploited EU rules on cross-border transactions, which are exempt from VAT, by using a chain of missing traders that would disappear without fulfilling their tax obligations.

As a result of the action, a large number of documents, electronic devices, IT equipment, high-value items, and vehicles, along with EUR 135,000 in cash, were seized. Additionally, bank accounts in Spain, Belgium, Lithuania, and Romania were frozen. Furthermore, real estate properties in Spain were also seized.

Two years later, EPPO announced that, based on the Mutual Legal Assistance requests issued to three countries, six bank accounts in the Dominican Republic and four in Peru were frozen. The success of the investigation and actions is directly linked to the EL PACCTO 2.0, the cooperation program between the EU and Latin America and the Caribbean (EU-LAC) in the fields of justice and security on combating transnational organized crime.

Additionally, the working arrangements with the Ibero-American Association of Public Prosecutors (AIAMP) and bilateral agreements between the EPPO and six Latin American countries, Argentina, Brazil, Costa Rica, Panama, Paraguay, and Peru, contributed to the success of this investigation.

Conclusion

Even though this VAT fraud case is not one of the most valuable in financial terms, the investigation and result accomplished showcase the importance of cooperation between not only EU countries, but also between EU authorities and other non-EU governments, such as those from Latin America.

Since the VAT frauds may include participants from all over the world, and fraud does not recognize borders, joint actions and international cooperation are essential to prevent fraudsters from exploiting EU and global trade agreements and arrangements.

Source: EPPO