Three people have been arrested in Cyprus as part of a European Public Prosecutor’s Office (EPPO) investigation into an alleged pound 114 million cross-border VAT fraud involving smartphone sales and estimated tax losses in Sweden and Germany. Five suspects were arrested this week in Cyprus, Germany and Italy, at the request of the EPPO’s Munich office. Searches and seizures were also carried out in Cyprus, Greece and Italy.
According to the EPPO, the criminal organisation under investigation is suspected of operating a complex VAT carousel fraud scheme that exploited EU rules governing cross-border transactions between Member States, which are exempt from VAT under certain conditions. Smartphones were sold through companies and ‘missing traders’ based in Germany, Albania and Sweden.
The estimated tax loss amounts to pound 80 million in Sweden and pound 34 million in Germany. The arrested suspects are believed to have established and controlled the alleged fraud scheme. A total of 12 searches were carried out at the premises of suspects and companies under investigation. Assets worth up to pound 80,000 were frozen, while bank accounts, cars and real estate were seized in Cyprus, Greece and Italy.
Cyprus’ authorities involved in the operation included the Tax Department, the Cyprus Police, its Cybercrime Division and Digital Forensic Lab, and the Financial Intelligence Unit (MOKAS). Authorities from Germany, Greece and Italy also supported the investigation.
The case forms part of the EPPO’s wider ‘Midas’ investigation cluster targeting cross-border VAT fraud. All persons concerned are presumed innocent until proven guilty before the competent German courts.