Operation Admiral 2.0: EPPO Exposes EUR 2.9 Billion EU VAT Fraud Case

In 2022, the Investigation Admiral unveiled what is considered the most significant VAT fraud case in the EU's history. The damages were initially estimated at EUR 2.2 billion but rose to over EUR 2.9 billion. Two years later, the European Public Prosecutor’s Office (EPPO) in Riga, Latvia, and Vilnius, Lithuania, carried out a new action under the codename Investigation Admiral 2.0.

Facts of the Case

The Investigation Admiral, which ended with the biggest VAT fraud in the EU, revealed that the criminal organizations behind this fraud operated in 22 EU countries and ten non-EU countries, including the UK, the USA, and China. The operation was initiated after the Portuguese Tax Authority in Coimbra noticed suspicious activities during the tax audit of a company that traded with electronic devices, such as mobile phones and tablets.

The Portuguese Tax Authority reported this case to EPPO in 2021, which resulted in determining connections between the suspected Portuguese company and close to 9000 other legal entities and more than 600 individuals located across the EU.

This elaborate scheme took advantage of the EU VAT system, and the criminal syndicate members were also involved in other illegal activities, including offshore money transfers and money laundering.

Two years later, under the lead of EPPO offices in Riga and Vilnius, the coordinated action took place in 16 EU countries. Investigation Admiral 2.0 determined that another criminal syndicate used the same elaborate VAT fraud scheme for trading electronic products.

The fraudulents established around 400 companies in 15 EU countries and acted as legitimate suppliers of electronic products. However, although the end customers paid VAT on their online purchases, sellers never met their VAT responsibilities. In addition, some of the companies in the system would request a VAT refund from the national authority, resulting in EUR 297 million in damages.

Conclusion

What started as a tax audit in one company in Portugal led to an astonishingly large VAT fraud. The number of companies and individuals involved and the number of EU and non-EU countries where they operated shows how difficult it was to discover this kind of network and coordinate the investigation on such a large scale.

This undoubtedly was the most challenging task for all involved parties, as more than 200 Customs and Tax Police, State Police, Corruption Prevention and Combating Bureau investigators, and criminal intelligence officers were involved only in Latvia.

Source: EPPO - Investigation Admiral 2.0, EPPO - Operation Admiral