European prosecutors have launched an investigation into an international criminal network suspected of carrying out a massive cross-border VAT fraud scheme involving the import and sale of luxury cars, causing estimated losses of €100 million.
The European Public Prosecutor’s Office (EPPO) confirmed that seven properties in Croatia were seized as part of the investigation.
The operation, codenamed “Javelin,” was coordinated by EPPO offices in Frankfurt and Graz. On Wednesday, authorities carried out searches in Austria, Croatia, the Czech Republic, Germany and Poland, with the support of more than 900 police officers and tax officials.
Thirteen people were arrested, while more than 50 suspects are under investigation.
According to the EPPO, assets worth approximately €26 million were seized during the operation. In Berlin, two properties were confiscated, including one containing a hostel. Seven additional properties were seized in Croatia.
Authorities also froze bank accounts and confiscated dozens of vehicles, including luxury cars, as well as cash, cryptocurrency assets, a handgun with ammunition and several expensive watches.
How the €100 Million VAT Fraud Scheme Worked
Based on the evidence collected so far, prosecutors suspect that five alleged ringleaders and two tax advisers organized so-called carousel VAT fraud operations beginning at least in 2016.
The scheme allegedly exploited European Union rules that allow cross-border transactions between EU member states to be exempt from value-added tax (VAT).
According to investigators, companies operating in several EU countries, including Austria and the Czech Republic, reported cross-border sales of luxury vehicles to various companies in Berlin.
These German businesses allegedly acted as so-called “missing traders.”
Under EU rules, companies purchasing vehicles through qualifying cross-border transactions could acquire them at net prices without paying VAT at the point of purchase.
However, when reselling the vehicles within Germany, the companies were required to charge VAT to their customers and transfer the collected tax to the German authorities.
Investigators suspect that the companies involved in the alleged criminal network failed to meet those tax obligations, allowing the organizers to generate substantial illegal profits while causing significant losses to public finances.
The investigation is ongoing, and the suspects are presumed innocent until proven guilty in court.
