Greece Uncovers EUR 150 Million Cross-border VAT Fraud Scheme

A criminal organization has been successfully dismantled, and its members apprehended in a decisive police action conducted by the Economic Police Directorate in Greece. These arrests culminate a meticulous months-long investigation under the Hellenic Office of European Authorized Prosecutors, demonstrating the effectiveness of law enforcement in combating such criminal activities.

Apart from 21 members, including three criminal organization leaders, who were arrested, police seized 46 mobile phones, seven portable PCs and tablets, and the sum of EUR 139,696, among other things, in this action.

Facts Of the Case

The investigation, which spanned for months, uncovered the intricate procedures employed by the criminal organization members to deceive the non-return of VAT. The group members were organized into two subgroups, which acted in coordination, placing themselves across Attica regions while taking preventive measures not to disclose their businesses. 

They achieved this by constantly establishing new legal entities, using virtual networks for communication, and transferring money physically instead of bank transfers and payments, underscoring the gravity of their criminal activities.

The VAT evasion scheme functioned so that the group established so-called ‘front’ companies that did not have actual business operations in Greece, Cyprus, and Slovakia. The investigation showed that since 2019, at least 430 companies have been established and used for fraudulent VAT-related activities. By doing so, this criminal group ran a complex scheme known as carousel fraud or chain fraud for VAT.

These companies submitted false and inaccurate VAT returns and issued and received false invoices to create fictitious VAT refund claims. 

In addition to this scheme, the group used the same method to create a chain of separate e-commerce companies involved in cross-border VAT fraudulent activities.

Conclusion

This elaborate scheme, which included illegal operations in several countries and transactions up to EUR 150 million, saw the group member gain a personal benefit of EUR 26 million. To break this criminal group, the investigation included the work of 12 specialist digital data researchers from the Digital Evidence Examination Department, recordings of 179,450 telephone conversations, and 780 other materials, such as video materials.

In addition to different Police departments and the Prosecutor's Office, the Greek Independent Authority for Public Revenue, or AADE, played a critical role in this investigation. This shows how much effort countries and their official authorities must make to prevent or stop VAT fraud.

Source: TaxHeaven