Germany: Searches and arrests in probe into suspected €15.7 million VAT fraud involving mobile phone sales

(Luxembourg, 17 September 2026) – The European Public Prosecutor’s Office (EPPO) in Frankfurt am Main (Germany) conducted searches, arrests and asset freezes yesterday in an investigation into suspected large-scale VAT fraud involving the online sale of mobile phones.

The investigative measures took place in Austria, Bulgaria, Cyprus and Germany. Four suspects were arrested, including three in Bulgaria and one in Germany. Searches were carried out at business premises and private residences linked to the suspects and the companies allegedly involved in the scheme.

The investigative court in Frankfurt am Main issued asset freezing orders worth approximately €20.5 million against two suspects and two companies. In parallel, the competent German authorities in Braunschweig and Berlin are taking measures to recover assets from the companies that sold the mobile phones and from their managers. Bank accounts, mobile phones and luxury watches were seized and €3.3 million were already recovered by one of the suspected companies.

At issue is a suspected VAT margin fraud scheme involving new mobile phones sold to consumers in Germany. The VAT margin scheme is a special tax arrangement under which VAT is paid only on the seller’s profit margin rather than on the full sales price. It is intended to prevent double taxation when second-hand goods are resold. Applying this scheme to new goods that do not qualify for it can result in significant losses to public revenues.

According to the investigation, the suspects set up a cross-border trading structure involving companies in Bulgaria, Cyprus and Germany in order to enable the unlawful application of the VAT margin scheme to new mobile phones sold online in Germany.

The evidence gathered indicates that mobile phones were passed through a chain of companies controlled by the suspects before being sold by German online retailers to end customers. By creating the appearance that the phones qualified for the VAT margin scheme, VAT was calculated only on the sellers’ profit margin instead of on the full value of the phones.. This allowed the phones to be  sold at prices below those of competitors complying with tax rules, which generated substantial illicit profits that were distributed through the network of companies involved in the scheme. 

The investigation further established that the two main suspects, a Bulgarian couple, organised and controlled the companies used in the fraud and  applied the unlawful VAT rules across the entire supply chain.

It is estimated that the fraudulent scheme caused VAT losses exceeding €15.7 million. The final amount of the damage remains subject to ongoing investigations.

The searches, arrests and asset freezes were carried out with the support of

• Europol 
• Austria: Anti-Fraud Office (ABB)
• Bulgaria:
  • National Investigation Service (Национална следствена служба)
  • State Agency “National Security” (Държавна агенция „Национална сигурност“)
  • General Directorate “Combating Organised Crime” – Ministry of Interior (Генерална дирекция „Борба с организираната престъпност“ – Министерство на вътрешните работи)
  • National Revenue Agency (Национална агенция по приходите)
• Cyprus:
  • Tax department (Τμήμα Φορολογίας)
  • Crime Prevention Department of the Police Headquarters (Τμήμα Καταπολέμησης Εγκλήματος Aρχηγείου Αστυνομίας)
    • The Office for executing European investigation orders & letters of request (Γραφείο Εκτέλεσης Ευρωπαϊκών Εντολών έρευνας και Αιτημάτων Δικαστικής Συνδρομής) 
    • The Cybercrime subdivision - Digital Forensic Lab (Ηλεκτρονικό έγκλημα- Δικανικό Εργαστήριο Ηλεκτρονικών Δεδομένων) 
• Germany:
  • Tax investigation offices in Berlin, Braunschweig, Frankfurt/Oder, Koblenz (Steuerfahndung Koblenz, Steuerfahndungsstellen Berlin und Frankfurt/Oder, Finanzamt für Fahndung und Strafsachen Braunschweig), supported by IT investigators from Mainz, Neustadt and Trier 
  • Central Criminal Investigation Department Braunschweig (Zentrale Kriminalinspektion Braunschweig)

All persons concerned are presumed innocent until proven guilty in the competent German 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.