Carousel Fraud: EUR 42.8 million in VAT evasion uncovered in Italy

Brussels – The European Public Prosecutor’s Office (EPPO) and the Prato Finance Police have identified tax evasion amounting to EUR 42.8 million in unpaid VAT, facilitated through carousel fraud in the luxury goods sector. The office has uncovered a network of shell companies with illicit turnover in Italy, resulting in large-scale searches and seizures. The suspicion is that of ‘carousel fraud,’ schemes based on shell companies that purchase goods VAT-free from intra-EU sellers and then resell them at a marked-up price, without ever paying the VAT to the tax authorities.

The alleged illegal activity reportedly continued for years. According to the investigators, between 2019 and 2024, the suspects allegedly imported more than 1,700 vehicles from Germany to Italy without paying VAT by systematically issuing and using false invoices through shell companies registered under strawmen. By doing so, they are believed to have avoided VAT payments amounting to over 42.8 million, enabling them to sell vehicles at abnormally competitive prices. The scam, according to the European Public Prosecutor’s Office, came to light following a report from a consumer who had difficulties registering a German car purchased from an Italian dealership. 

The report was the starting point for the investigation, which led to the seizure of 40 luxury cars worth around three million euro, 53 bank accounts with balances of around 1.29 million euro, capital shares in eight companies worth 71,800 euro, real estate worth around one million euro, nine luxury watches, as well as gold jewelry, a diamond ring, luxury glasses, and 4,200 euro in cash.