Italy VAT Carousel Fraud: €500M Scheme Exposed

Acting on requests from the European Public Prosecutor's Offices (EPPO) in Naples and Venice, the Italian Financial Police in Naples and Caserta seized assets as part of an investigation into a large-scale VAT carousel fraud in the IT sector. This preventive seizure was carried out pursuant to an order issued by the Judge for Preliminary Investigations at the Court of Naples and targets five companies believed to be involved in the scheme.

Overview of the Fraud Scheme

The suspects and companies under investigation created a network of Italian and foreign shell companies with no real business operations, which were used to simulate commercial transactions and generate false VAT credits. More specifically, companies registered in the Netherlands, Germany, Romania, and Hungary were involved in the structure to obscure the flow of money.  

The goods involved, mainly electronics and printer consumables, reportedly never physically moved at all, staying in the same warehouses while fake transactions were recorded on paper. The Italian and European authorities identified invoices for non-existent transactions totaling more than EUR 500 million.

Based on these findings, the Naples Court issued a preventive seizure order covering shareholdings in five suspect companies, four business complexes, and an industrial warehouse in Somma Vesuviana, seizing assets worth over EUR 32 million. Notably, the actions carried out by the EPPO and the Financial Police are part of a broader investigation into an organized network of 64 suspects, largely based in the Naples area, specializing in intra-EU VAT fraud.

Conclusion

With the total of 64 suspected individuals implicated, over EUR 32 million in assets frozen, and an assessed EUR 500 million in damages caused by the fraud scheme, the investigation sends a clear signal that large-scale tax fraud targeting EU revenues has evolved into a sophisticated scheme exploiting the EU single market through layers of shell companies and fictitious paper trails. However, the EPPOs and the Italian Financial Police coordinated response demonstrates that the EU is increasingly capable of matching that complexity.

Source: EPPO - Investigation Carosello