Italian police have dismantled an illegal alcohol operation with branches in as many as 17 European countries, smuggling around 180 million liters of Vodka and Whiskey among other spirits.
Italian prosecutors have issued protective orders against 20 people alleged to be involved in the criminal association, which is thought to have avoided around 80 million euros in excise duty since 2016.
The fraudsters were involved in a ‘carousel’ scam involving real and fake alcoholic drink companies which took advantage of loopholes in tax regulation at EU level, such as the exemption from paying VAT or excise tax for transactions within the European Union, to evade taxes on the trade of alcohol.
To carry out the fraud the criminals would set up companies in several EU countries each importing the alcohol from the other until at the end of the chain the final company would make a claim to be reimbursed for VAT, which in reality never been paid by the first company.
By repeating this operation repeatedly over a few months the VAT could be ‘reclaimed’ several times.
As part of the investigation more than 50 searches, coordinated by the European judicial body, Eurojust, were carried in 12 European countries targeting delivery companies, intermediaries and shipping companies.
In one of the raids, which took place in July 2017, police in the Netherlands discovered an MDMA laboratory in what was supposed to be a vodka storage depot. In another, in Germany, the local police found 30,000 liters of expired alcohol.
A 63-year-old British citizen, suspected of being the ringleader, was arrested on Tuesday on foot of a European arrest warrant, as was a 46-year-old Italian citizen also suspected of occupying a senior position within the criminal organisation.
According to the European Commission some 50 billion euros is lost to the EU as a result of this kind of cross border VAT fraud, with the proceeds often flowing into other criminal enterprises or used to fund international terrorism.
