Spain Uncovers EUR 184M VAT Fraud: Tax Agency & Europol Investigation

The Spanish Tax Agency, the Civil Guard, and Europol jointly uncovered a EUR 184 million VAT fraud, leading to the arrests and seizure of millions of euros in cryptocurrency. As the Tax Agency stated, the criminal organization committed VAT fraud in the hydrocarbon sector in fiscal years 2021 to 2023 through a well-organized network of companies. Apart from fraudulent activities, members of criminal organizations are also charged with money laundering.

Investigation and the Structure of VAT Fraudulent Activities

The Spanish Tax Agency announced that 19 search and seizure operations were conducted in the joint operation, resulting in 11 arrests and eight people being investigated further. Furthermore, EUR 7 million in cryptocurrency was seized, and an additional request was made to block a cryptocurrency account worth around EUR 19 million.

The investigation and arrests took place in the provinces of Madrid, Guadalajara, Barcelona, ​​Zaragoza, Castellón, Alicante, and Ciudad Real, which further testifies to the organization of this criminal group and the magnitude of the fraud.

The criminal organization used an extensive network of businesses that operated in a coordinated way to conduct large-scale VAT fraud. The companies in the network transferred invoices and purchased fuel while pretending to have legitimate business activities. 

Other companies in the network were established to accumulate fraud quotas. The purpose of the quota-gathering companies was not to pay VAT to the Spanish Treasury, thus avoiding the payment and ensuring personal financial benefits to the leaders of the criminal organization.

In addition, companies were not registered in the names of the criminal organization's leaders but were formally run by others.

Conclusion

Although cross-border, triangular, or customs transactions are the most common VAT fraud, the results of the investigation by the Spanish tax governing bodies and Europol show that fraudsters are becoming increasingly innovative and familiar with regulations for other taxable sectors.

Nevertheless, the operation's success demonstrates how government bodies and international organizations fight against these schemes. Additionally, this kind of fraud should become less common with the new digital reporting systems in place.

Source: Tax Agency