EU VAT Fraud Bust: EPPO Arrests Seven in Italy

Seven people suspected of involvement in a large-scale VAT fraud scheme have been arrested in Verona and Naples. The coordinated action was conducted by the European Public Prosecutor's Office (EPPO) and the Italian financial police. These arrests are linked to a wider investigation that in November 2025 led to coordinated enforcement action by EPPO offices in Venice and Zagreb, exposing a cross-border network operating across multiple EU countries and causing an estimated loss of more than EUR 78 million in unpaid VAT.

The Results of the Investigation

According to the investigation, the group operated across Italy and Croatia through a network of companies designed to facilitate VAT fraud. The scheme worked by purchasing hygiene and household goods from Italian wholesalers without VAT, then passing them through so-called missing trader companies in the Naples area. These entities would then resell these goods without paying due VAT, enabling the network to illegally extract value from the tax system while keeping the trade chain appearing legitimate on paper.

Additionally, the investigators determined that the network’s foreign shell companies, along with other businesses used at various points in the fraudulent supply chain, were in reality controlled from Italy by the criminal organisation.

To hide trails of illegal activities, the suspects are believed to have repeatedly swapped out the companies involved and registered them in the names of front men who had no real assets or genuine involvement. This created an artificial supply chain that relied on multiple cross-border transactions, allowing the group to disguise the fraud while evading more than EUR 33 million in VAT in Italy alone.

Among those arrested, two of the main organisers were placed in pre-trial custody, four other suspects were ordered to remain under house arrest, and two additional individuals were subjected to lighter preventive restrictions, such as mandatory reporting to authorities and a ban on conducting business activities. The arrest warrants were carried out only for seven suspects, as one had left the country.

Conclusion

Investigation Nebula shows how widespread VAT fraud can be, and that successful action in one country does not automatically mean that the scheme is completely dismantled. With the latest actions, EPPO, with the help of national authorities in Croatia and Italy, disrupted an EU-wide criminal scheme that used complex trade flows in everyday goods to evade VAT on a massive scale. Nonetheless, whether this is the end of this investigation remains to be seen, as further prosecutions and asset recovery proceedings may still follow.

Source: EPPO