Cross-Country Carousel Fraud Stopped
Italian authorities seized last week nearly €84 million (US$94,816,680) as part of an investigation into the so-called ‘carousel fraud,’ a cross-country VAT avoidance scheme that costs the EU some €50 billion ($56.4 billion) per year, according to the European Parliament.
The fraud consisted of selling computer and technology products in the region of Campania in southern Italy, near Naples.
The fraudsters had six fake companies in total between Italy, Slovenia and Estonia who created fake invoices for non-existent purchases of computer and technology products in the southern Italian region of Campania. The scheme was worth up to €500 million ($564,506,000).
Authorities are currently investigating 49 suspects for their involvement in this kind of VAT fraud.
Investigators in Slovenia were able to track two of the companies by listening to phone conversations and European Investigation orders.
Carousel fraud is the most damaging cross-country fraud in the EU. It happens when fraudsters import goods VAT-free from other EU countries, and sell them to domestic buyers while charging them VAT. The fraudsters then disappear, leaving the government unable to collect the tax money.