Following an investigation by the European Public Prosecutor’s Office (EPPO) in Frankfurt am Main (Germany), two suspects were convicted last week (15 February 2023) by the Frankfurt Regional Court (Landgericht Frankfurt) of VAT fraud. One of the two accused was sentenced to 5 years and 9 months of imprisonment, and the other was sentenced to two years on probation.
The first offender was part of an organisation that achieved fraudulent VAT repayments of more than €33 million, by trading in Voice over Internet Protocol (VoIP) services. He was acting as the manager of companies, which were purely fictitious. The companies’ sole purpose was to issue invoices enabling the recipient of the invoices – another fictitious company – to claim input tax from the tax authorities, without justification.
Moreover, the first offender also acted as the de facto managing director of another company involved in the trade of electronic goods. As with the VoIP transactions, the trade did not take place as the invoices had shown. The company of the defendant only drew up invoices, forwarded payments and acted as the contact point in Germany for the presumed main organisers of all the supply chains of the electronic goods, operating from the UK. Between April 2018 and March 2021, the de facto managing director neither declared nor paid taxes on the listed transactions from his electronic goods company.
The second offender acted from December 2018 to August 2020 as the formal director of the company involved in the fraudulent trade of electronic goods. Even if the first offender controlled what happened to this company, in his role of managing director, and was the contact person for the main organisers from the UK, the second defendant knew of the fraudulent activities and did not ensure proper taxation of the transactions referred to in the invoices.
Several tax investigation offices from Germany were involved in this EPPO investigation, namely the Frankfurt Tax Investigation Office (Steuerfahndung Frankfurt am Main), the Leipzig Tax Investigation Office (Steuerfahndung Leipzig) and the Braunschweig Tax Investigation Office (Steuerfahndung Braunschweig).