Italian Authorities Bust VAT Fraud Ring

Published: 15 May 2024

Tax Fraud ScrabbleMillions lost in a VAT fraud scheme in Italy, linked to the sale of electronic goods. (Photo: Patrick Cannon, Flickr, License)

By Zdravko Ljubas

Italian authorities have put 11 suspects under house arrest as part of a crackdown on a VAT fraud ring that has deprived the budget of the European Union as well as national budgets of more than 25 million euros (US$27.17 million).

This action follows an investigation into a VAT fraud scheme linked to the sale of electronic goods, as the European Public Prosecutor’s Office (EPPO) stated on Wednesday.

EPPO highlighted evidence indicating the involvement of a group of entrepreneurs and accountants accused of devising various fraudulent tactics, including issuing fake invoices for non-existent goods and fictitious transactions through foreign-based companies acting as “missing traders” – shell companies established solely to evade VAT payment.

This enabled them to flood the market with electronic goods at bargain prices, undercutting honest businesses.

The investigation, according to EPPO, also uncovered evidence of self-money laundering, a method where the individuals involved in the primary offense also engage in laundering the criminal proceeds themselves.

EPPO also voiced suspicion that a portion of the allegedly fraudulent proceeds was initially funneled through an intermediary company before being transferred to the suspects’ offshore bank accounts.