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23 June, 2024
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Cyprus helps uncover VAT carousel fraud

Online computer seller with companies in Cyprus linked to transnational mafia-style tax evasion


Cypriot authorities swung into action after an investigation of fraudulent activity in Portugal was expanded through the European Public Prosecutor’s Office, with several companies on the island reportedly linked to a scheme that cost Lisbon tens of millions in tax revenue.

According to European media, a Missing Trader Intra-Community fraud known as a VAT carousel fraud was being investigated in Portugal, where authorities in Lisbon called on EPPO for assistance after reaching a dead end.

Cypriot tax commissioner Sotiris Markides told state radio on Thursday that authorities on the island were alerted by EPPO in connection with Portuguese nationals who had formed a complex chain of companies, mainly selling computer equipment online, where VAT was being lost.

“They were transferring many goods between countries and VAT that was owed [in Portugal] ended up somehow getting lost in the process,” Markides said.

'They were transferring many goods between countries and VAT that was owed [in Portugal] ended up somehow getting lost in the process' Markides said

Markides said Cyprus was not significantly involved in the specific case but confirmed that “fewer than ten companies” registered on the island were known to have been involved.

“These were Portuguese criminals, not Cypriots, and we need to be clear on this to avoid false impressions,” Markides said.

Law enforcement and the state prosecutor’s office in the Republic of Cyprus had joined 13 other EU member states that carried out simultaneous investigative measures and searches.

The case began in April 2021 the Portuguese Tax Authority in Coimbra was looking into a company selling mobile phones, tablets, earphones and other electronic devices, on suspicion of VAT fraud.

But Portuguese authorities were puzzled over a number of companies that seemed to be on the up and up but still wanted to investigate further.

After EPPO started operations in June 2021, Portuguese authorities reported their case and sought assistance, including the use of the central EPPO Case Management System to access national and European databases.

European Chief Prosecutor Laura Kövesi said it took her office fewer than 18 months from the initial crime report to “uncover a whole web of organized crime groups responsible for a staggering €2.2 billion loss to EU taxpayers.”

“Without the EPPO, this kind of operation would have taken years to prepare – or more likely, would never have taken place,” Kövesi said, adding “I believe this is Europe’s biggest VAT fraud discovered so far."

Cyprus  |  Portugal  |  fraud  |  VAT  |  EPPO  |  Markides  |  Kövesi  |  financial crime  |  VAT carousel fraud

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