A major international tax fraud in the IT sector is at the center of an investigation coordinated by the European Public Prosecutor's Office. At the request of the Naples and Venice offices of the EPPO (European Public Prosecutor's Office), the Economic and Financial Police Units of the Guardia di Finanza in Naples and Caserta executed a precautionary seizure order for a total value of over €32 million.
The measure was issued by the preliminary investigations judge of the Court of Naples and concerns five companies believed to be involved in a complex international VAT fraud scheme, based on the so-called "carousel fraud" mechanism in the trade of IT and electronic products.
The investigation started in 2023
The seizure is a development of a broader investigation launched in March 2023, which uncovered an alleged criminal network specializing in intra-Community VAT fraud related to the sale and purchase of electronic devices and printer consumables.
According to investigators, the system involved 64 suspects, operating primarily in the province of Naples, with connections to several European countries.
The mechanism of the "shell" companies
At the heart of the fraudulent scheme is a network of Italian and foreign shell companies, often lacking a real corporate structure and formally registered under front names.
These companies were allegedly used to simulate commercial transactions and generate undue tax advantages through the creation of fictitious VAT credits.
To complicate the reconstruction of the financial flows, companies based in several European Union member states, including the Netherlands, Germany, Romania, and Hungary, were also involved in the scheme.
Fake invoices for over 500 million
During the investigation, invoices for non-existent transactions worth more than 500 million euros were identified.
According to investigators, these documents were used to create fictitious VAT credits and artificially reduce the tax burden of the companies benefiting from the scheme.
Furthermore, in numerous cases, the goods allegedly sold were never actually moved, remaining on the same logistics platforms while multiple transactions between the companies involved were recorded on paper.
The seized assets
In light of the evidence gathered, the preliminary investigations judge of the Court of Naples ordered the precautionary seizure of:
of corporate stakes in five companies believed to be involved in the fraud
of four business complexes
of an industrial warehouse in Somma Vesuviana, in the Naples area
for a total value exceeding 32 million euros.
The role of the European Public Prosecutor's Office
The European Public Prosecutor's Office (EPPO) is the European Union's independent prosecutor's office responsible for investigating and prosecuting crimes affecting the EU's financial interests, including cross-border VAT fraud and the misuse of EU funds.
An informative article, but many aspects of the fraud mechanism remain unclear. The investigation seemed lengthy, and many names and roles remain vague. There's talk of shell companies and false invoices worth more than €500 million, but it's unclear how the money actually moves and how the front men were implicated.