Italy - Customs Fraud Case Concerning Import of E-Bikes

The European Public Prosecutor’s Office (EPPO) offices in Italy have been very active in previous weeks, publishing several cases of discovered frauds related to customs and VAT. Although other cases involved carousel fraud related to luxury cars and fraud involving cleaning products and beverages, the one published on July 12, 2024, related to imports of electric bicycles (e-bikes) from China, was the most valuable case.

Facts of the Case

At the request of the EPPO in Milan, Italy, the Italian Financial Police (Guardia di Finanza) executed a freezing order against a company suspected of a severe customs fraud involving the importation of e-bikes from China, causing an estimated damage of over EUR 9.8 million.

The EPPO's investigation was initiated following a report from the department of the Financial Police in Monza, which indicated that an Italian company had been committing customs violations since 2019.

It is alleged that the company imported complete e-bikes from China into the EU but in unassembled form, that is, in parts and separate shipments, to circumvent the additional customs duties imposed by the EU's new anti-dumping regulation introduced in 2019. The company avoided paying anti-dumping, customs duties, and VAT, amounting to over EUR 9.8 million between 2019 and 2022.

On October 20, 2023, the Milan EPPO office requested the suspected company freeze for EUR 5,039,260.08. This represents the unpaid customs duties and VAT since July 30, 2020, when company liability for such offenses was established under Italian law. On July 8, 2024, the judge for preliminary investigations at the Court of Milan granted the request and issued a freezing order, which is currently being enforced.

Conclusion

This and similar frauds have significant consequences for state budgets. Conversely, they show how far individuals and companies are willing to go to increase profit margins. As international trade increases, such cases become more frequent and more challenging to spot. 

However, the actions of the EPPO and Italian authorities demonstrate that attempts to circumvent customs and VAT rules can lead to substantial legal consequences and financial penalties. 

Source: EPPO - Italy: EPPO arrests two and freezes €7.6 million in VAT fraud investigation, EPPO - Italy: EPPO uncovers €8.8 million VAT fraud, EPPO - Italy: EPPO seizes assets in investigation into €9.8 million customs fraud involving e-bikes