At the request of the European Public Prosecutor’s Office (EPPO) in Madrid, eight presumed members of a criminal network, including three suspected ringleaders, were detained this week for their alleged involvement in a €68 million VAT fraud scheme linked to imported alcohol from several EU Member States.
Searches were carried out in 19 locations in Barcelona, Cádiz, Coruña, Ibiza, Madrid and Valencia, targeting companies’ premises, houses of suspects, a room in a luxury hotel where one of the main suspects was staying, and a tax warehouse. Law enforcement agents seized one yacht, five cars (including three Porsches), 34 luxury watches and €333 085 in cash. Over €700 000 was frozen in bank accounts, and a seizure order was issued for 21 real estate properties.
At issue is an intra-community VAT fraud – a complex criminal scheme that takes advantage of EU rules on cross-border transactions between its Member States, as these are exempt from value added tax (VAT). They are also suspected of money laundering. The fraud under investigation involves the importation of large quantities of alcohol from tax warehouses in several EU Member States to a Spanish tax warehouse – a facility where certain excise goods can be stored without immediate payment of taxes.
The VAT becomes payable only when the products leave the warehouse for commercial distribution or consumption. Once there, fraudulent intermediaries (‘missing traders’) based in Spain controlled by the organisation acquire the alcohol and become liable for VAT, but they vanish without fulfilling their tax obligations. The alcohol is then sold to a chain of fraudulent companies, using false invoices, in order to hide the whole deceptive circuit. Finally, the alcohol is distributed in Spain, using distributors controlled by the criminal network. The VAT derived from these fictitious operations is never paid.
It is estimated that the scheme allowed for an illicit profit of approximately €68 million between 2018 and 2024, causing an equivalent damage to the Spanish state and the EU budget. The investigative measures counted on the support of Spain’s Central Operational Unit of the Guardia Civil (Unidad Central Operativa - UCO), as well as Spain’s Tax Agency (Agencia Estatal de la Administración Tributaria).
All persons involved are presumed innocent until proven guilty by the competent Spanish courts of law. The EPPO is the independent public prosecution office of the European Union. It is responsible for investigating, prosecuting and bringing to judgment crimes against the financial interests of the EU.