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(Luxembourg, 27 February 2024) – At the request of the European Public Prosecutor’s Office (EPPO) in Milan (Italy), five individuals were arrested on 23 February, on suspicion of orchestrating a €220 million VAT fraud involving alcohol exports to several Member States. A freezing order was also executed at the EPPO’s request by the Italian Financial Police (Guardia di Finanza) of Milan, targeting bank accounts, real estate and luxury cars.
The judge for preliminary investigations of the Court of Milan ordered the pre-trial detention of three of the suspects, understood to be the ringleaders of the scheme – all Italian citizens living in Dubai and Monaco. In addition, the two other suspects will remain under house arrest. A sixth suspect – an Italian entrepreneur in the alcoholic beverages sector, convicted of corruption in the past, and also suspected of bribing a police officer in this investigation – has been prohibited from leaving his place of residence. Earlier in this investigation, the police officer was convicted of receiving a bribe of €50 000, with the purpose of softening or excluding the responsibilities of one of the suspects in this investigation, and those of some of his family members.
Criminal organisation involving 12 countries
The investigation uncovered a highly skilled white collar criminal organisation suspected of using false invoices to evade the payment of taxes for exporting large quantities of alcoholic beverages, using an intra-community VAT ‘carousel’ fraud – a complex criminal scheme that takes advantage of EU rules on cross-border transactions between its Member States, as these are exempt from value added tax (VAT).
The scheme under investigation involved the simulated trade of the same goods between commercial operators based in Italy and elsewhere in Europe, using a widespread network of companies located in Belgium, Bulgaria, Czechia, France, Hungary, the Netherlands, Portugal, Romania, Slovakia, Spain and the United Kingdom. It is understood that the chain included missing traders located in Italy and in those countries, as well as buffer companies. In reality, based on the evidence, the majority of the exports were actually destined for the Italian market. According to the investigation, at least 43 companies were involved in the fraud, as well as 17 individuals, including sales agents, consultants and accounting and logistics managers.
Based on the evidence, the scheme generated, between 2015 and 2021, a turnover of over €850 million, resulting in tax evasion and illicit profits of €220 million.
The offences under investigation include cross-border criminal association, VAT fraud, forgery of commercial operations and money laundering. The operational model of the EPPO as a single office makes it possible to detect cross-border criminal networks, but also to obtain evidence much faster and in a far more comprehensive manner than under the usual judicial cooperation modalities.
All persons concerned are presumed to be innocent until proven guilty in the competent Italian courts of law.
The EPPO is the independent public prosecution office of the European Union. It is responsible for investigating, prosecuting and bringing to judgment crimes against the financial interests of the EU.