At the request of the European Public Prosecutor’s Office (EPPO) in Madrid 14 searches were carried out in an investigation into a suspected transnational criminal organisation believed to have orchestrated a €17 million VAT fraud involving the sale of luxury cars.
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Due to the suspected criminal network’s extensive reach throughout Spain, searches were conducted in the provinces of Madrid, Badajoz, León, Navarra, Biscay and Granada by Spain’s National Police (Policía Nacional), in conjunction with the Civil Guard (Guardia Civil) and Spain’s Tax Agency (Agencia Tributaria).
During the searches, law enforcement agents arrested 49 suspects, blocked 84 luxury cars and gathered extensive documentation.
In addition, four luxury cars, worth more than €500 000, were seized, as well as over €200 000 in cash and numerous bank accounts with a combined worth of more than €500 000.
A possible VAT fraud with estimated losses to the EU and national budgets of more than €17 million is under investigation, with the cooperation of Spain’s Tax Agency.
According to the evidence, the suspects set up a criminal organisation in Spain for the purchase and sale of second hand luxury vehicles between companies in Germany and Portugal.
This criminal network employed two complex schemes in order to evade the payment of VAT. One scheme involved fraudulently applying Spain’s Special Regime for Used Goods through Portuguese companies to create opacity in the commercial chain.
The other involved using fictitious companies to commit intra-community VAT fraud – a complex criminal scheme that takes advantage of EU rules on cross-border transactions between Member States, as these are exempt from value-added tax (VAT).
The vehicles were sold to car dealerships throughout the Spanish territory. According to the investigation, some of the vehicles may have been destined for use as luxury sports cars by other criminal organisations linked to drug trafficking, either through a rental system – in which the vehicles were registered under a company with a front man – or in order to transport narcotic substances.
The investigation of the bank accounts of more than 200 companies made it possible to trace the movement of over €600 million, with the capital originating in Spain and channeled to the accounts of different companies linked to the organisation in Portugal and Germany.
According to the investigation, launched at the beginning of 2021, three offences related to VAT fraud were committed between 2019 to 2021. The facts could also constitute money laundering. ■