Five people have been arrested this week – three in Cyprus – during an investigation by the European public prosecutor’s office into cross-border VAT fraud amounting to €114 million.
The arrests were made in Cyprus, Germany and Italy, at the request of the European public prosecutor’s office in Munich.
The fraud had to do with the sale of smartphones and tax losses recorded in Sweden and Germany.
According to the European public prosecutor’s office, the criminal organisation under investigation allegedly used a complex VAT fraud scheme, exploiting EU rules on cross-border transactions between member states, which are exempt from VAT under certain conditions.
The smartphones were sold through shell companies based in Germany, Albania and Sweden. The estimated tax loss amounts to €80 million in Sweden and €34 million in Germany. The arrested individuals are alleged to have set up and controlled the fraud network.
A total of 12 searches were carried out in the homes and business premises of suspects and companies under investigation. Assets worth up to €80,000 were also frozen, while bank accounts, vehicles and property in Cyprus, Greece and Italy were seized.
The investigation is part of the wider ‘Midas’ investigation framework of the European Public Prosecutor’s Office into cross-border VAT fraud cases.