OLAF Uncovers €200M EU Customs and VAT Fraud

The European Anti-Fraud Office (OLAF) announced that it had uncovered a major customs and VAT fraud operation involving imports, including textiles, footwear, electric bicycles, and other consumer goods, entering the EU market. The investigation into this massive tax fraud ultimately led to criminal enforcement measures by the European Public Prosecutor's Office (EPPO) in Poland.

The Course of the Investigation and Further Actions

The case was opened after the Polish Customs authorities detected suspicious trading activity and shared information with OLAF. That prompted OLAF to launch the investigation by analyzing trade patterns, tracing the movement of goods across borders, identifying risky shipments, and coordinating inspections and enforcement efforts among multiple EU countries.

The investigation centered on the misuse of two legitimate EU customs mechanisms: the transit procedure and Customs Procedure 42. Both these mechanisms are designed to facilitate trade within the EU by delaying the payment of customs duties and VAT under specific conditions.

In practice, under the transit procedure, goods imported into the EU can move through several EU countries without customs duties or VAT being paid immediately, provided those taxes are eventually settled in the country where the goods are finally delivered. Similarly, Customs Procedure 42 allows importers to avoid paying VAT at the EU entry point if the goods are being transported onward to another EU country, where the VAT should later be declared and paid.

The investigation showed that these systems were abused by fraudsters who used false declarations, misleading documentation, and complex supply chains to make it appear that goods were being legally transported or taxed elsewhere in the EU. However, the required customs duties and VAT were allegedly never paid. By exploiting these procedures, the criminal network was able to import large quantities of goods while avoiding significant tax liabilities.

As the investigation progressed, OLAF conducted five on-site inspections in Belgium and Poland and coordinated joint control operations involving authorities from Belgium, Slovenia, Germany, Hungary, and Poland. Simultaneously, OLAF collected evidence from businesses connected to the supply chain, including logistics providers and e-commerce operators. Based on all the data collected, OLAF estimates that the scheme caused approximately EUR 118 million in unpaid customs duties and approximately EUR 79 million in evaded VAT.

Conclusion

The nearly EUR 200 million in losses caused by the criminal network represent a substantial financial impact on both national governments and the overall EU budget. The case highlights the scale and sophistication of modern customs and tax fraud networks operating across the EU, strengthening the case for granting OLAF and EPPO centralized access to targeted searches of VAT information held in EU countries.

Source: European Anti-Fraud Office (OLAF), European Public Prosecutor’s Office (EPPO), VATabout