Carousel fraud, EU prosecutor investigates 260 million in unpaid VAT to Italy

Brussels – There is a VAT evasion scheme on fuels at the heart of the investigation that the European Public Prosecutor’s Office (EPPO) is conducting in Italy, at the request of the Bologna and Naples offices. Today (14 November), the Neapolitan financial police carried out a series of preventive seizures, the latest act in an investigation that has lasted more than a year and a half. 

In total, the criminal activities of the network uncovered by the EPPO left a hole in Italy’s coffers of approximately €260 million, corresponding to the value-added tax not paid on a turnover of more than €1 billion, generated through the illegal sale of fuels on the Italian market. 

The technique used is one of the well-known “carousel frauds“, schemes based on fictitious companies and “ghost traders” who buy goods without VAT from intra-EU resellers (in this case based in Croatia and Slovenia) and then sell them at price increased by a VAT never paid to the Treasury, without fulfilling their tax obligations to the Italian tax authorities and distorting competition in the single European market. 

The measure, announced by the twelve-star prosecutor’s office, concerns a company linked to the head of the criminal network, a Campania businessman sentenced at first instance on 15 October to eight years’ imprisonment and a fine of €8,600, with the confiscation of assets of up to €73 million and a ban on entrepreneurial activity. 

The entire group—59 suspects and 13 companies in the crosshairs—had previously been dismantled in March 2024, when precautionary measures were issued for eight people. Last April, the financial police had seized assets worth 20 million, including over 150 properties (including a tourist resort). 

Investigations revealed that the shell company (officially registered in the name of the entrepreneur’s wife) had a tax warehouse in Magenta, near Milan, used to facilitate so-called VAT fraud schemes. In addition, the organisation is suspected to have recycled more than 35 million in other illicit proceeds, using bank accounts of companies based in two other countries, Romania and Hungary.