The European Public Prosecutor’s Office, with the cooperation of authorities from 14 Member States of the European Union, has coordinated joint actions, including numerous searches in companies and homes, in relation to a complex scheme of VAT fraud related to the sale of electronic products.
This action has taken place simultaneously in Belgium, Cyprus, Germany, France, Greece, Hungary, Italy, Lithuania, Luxembourg, the Netherlands, Slovakia, Spain, Portugal and Romania. In Spain, the actions have been carried out by different specialized units of the Civil Guard in the provinces of Malaga Y Barcelona.
The estimate of the fraud investigated in the framework of the operation, which has been called Admiral, amounts to approximately €2.2 billion.
Start of investigation
In April 2021 the Portuguese Tax Authorities of Coimbra launched the investigation on suspicion of VAT fraud by a company selling mobile phones, tablets, headphones and other electronic devices. Following the entry into operation of the European Public Prosecutor’s Office in June 2021, and based on the new legislative framework, it takes over the Portuguese investigation.
Through international cooperation, the European Prosecutors, the European Delegated Prosecutors, the financial fraud analysts of the European Public Prosecutor’s Office and Europol, as well as the national authorities involved, gradually established connections between the company initially investigated in Portugal with close to other 9,000 legal entities and more than 600 natural persons in different countries.
Eighteen months after receiving the initial report, the EPPO has identified the largest VAT carousel fraud so far investigated in the EU.
The criminal activities investigated extend to the 22 Member States that recognize the jurisdiction of the European Public Prosecutor’s Office, as well as Hungary, Ireland, Poland and Sweden, and third countries such as Albania, China, Mauritius, Serbia, Singapore, Switzerland, Turkey, the Emirates United Arabs and the United States.
Organized crime involvement
Beyond the magnitude of the VAT fraud investigated, what stands out in this investigation is the extraordinary complexity of the network of companies involved, roughly made up of companies that act as suppliers of electronic devices and others that claim VAT refunds from national tax authorities once the devices have been sold to individuals through electronic commerce platforms, to later channel the benefits of these sales abroad before dissolving (trout companies or missing traders).
These activities would not be possible without the participation of several highly qualified organized crime groups, each of which performs specific functions in the network, which would have allowed them to avoid detection for years.
The fight of the European Public Prosecutor’s Office against fraud
According to data from Europol, the VAT carousel fraud or intra-community fraud of missing operators (MTIC, for its acronym in English), is the crime that provides the most benefits to organized crime in the EU, at a cost of around 50,000 million euros per year for Member States. Being this type of fraud a cross-border criminal phenomenon by definition, once it reaches a level of complexity comparable to that investigated in the ADMIRAL operation it is almost impossible to detect.
The action of the European Public Prosecutor’s Office has made it possible to investigate this organization globally throughout Europe, making use of national and European tools and databases and with the support of the analytical and investigative capacity of the Central Office of said Public Prosecutor’s Office, as well as as well as Europol and the different national authorities involved.
In Spain, the European Public Prosecutor’s Office had the support of members of the Civil Guard units, carrying out a total of four entries and searches in a company in Barcelona and in two addresses and a law firm in MarbellaTwo high-end vehicles and various commercial documentation have been seized. In addition to Europol, the Civil Guard has participated in Operation ADMIRAL together with various specialized police forces in Europe.