Italy: House arrests, seizures and searches in €33 million VAT fraud investigation involving the import of clothing from China into the EU

(Luxembourg, 10 August 2026) – At the request of the European Public Prosecutor’s Office (EPPO) in Venice (Italy), the judge for preliminary investigations at the Court of Milan issued a house arrest order against two individuals suspected of having managed and used several companies to commit a VAT carousel fraud with an estimated damage of over €33 million, involving the import of clothing from China into the EU.  

The investigation, conducted by the Venice Financial Police (Guardia di Finanza), identified a Chinese couple, whose operational base was in Milan, as main suspects. Since 2019, they allegedly exercised de facto control over numerous companies involved in a VAT carousel fraud scheme designed to conceal the unlawful introduction of goods into Italy and their subsequent resale on the domestic market without payment of the VAT due on the sales transactions.

The companies involved were formally managed by front persons with no police records and no assets. According to the investigation, they played no effective role in managing the companies and may have been unaware of the offences committed through the businesses for which they were registered as directors. 

An analysis of the activities of the companies participating in the VAT carousel fraud scheme revealed that most of the missing trader companies involved had generated sales worth millions of euros while failing to comply with their tax reporting obligations, resulting in a VAT evasion exceeding €33.4 million.

According to the evidence, the scheme was operated as a criminal organisation under the direction of the couple.

The judge for preliminary investigations in Milan ordered the seizure of assets of the value of the damage. However, due to the lack of funds or assets attributable to the suspects in Italy, the order could only be enforced to a limited extent. Searches were also carried out at the suspects’ homes.

All persons concerned are presumed innocent until proved guilty by a final judgment of the competent Italian courts.

The European Public Prosecutor’s Office (EPPO) is the independent public prosecution office of the European Union. It is responsible for investigating, prosecuting and bringing to judgment offences affecting the financial interests of the EU.