European criminal organisation that defrauded Spanish tax agency of 70 million euros dismantled

In Spain, the operation has led to 21 arrests and 12 searches in the provinces of Malaga and Valencia. According to provisional estimates by the tax agency, the network is believed to have defrauded the Treasury of 70 million euros since 2018.

The organisation is accused of offences against the tax authorities, falsifying documents and money-laundering. It used what is known as a 'carousel fraud': a network of commercial transactions between companies designed to evade value added tax (IVA in Spain).

Investigators believe the fraud may also have extended to other European countries, although they have not specified the total amount involved.

The organisation used a network of companies to simulate commercial transactions and move IT products between different countries. The aim was to generate invoices showing tax amounts which some companies did not pay to the authorities, while other companies in the chain did use them to claim deductions or refunds of that tax.

In this way, some companies failed to pay the IVA they were liable for, while others benefited from those sums. Spanish companies also made sales to companies in other EU countries, which allowed the fraud to extend beyond Spain.

To conceal these transactions, the network used companies with different roles within the scheme and individuals who were listed as the heads of the businesses, even though they were acting on behalf of others. This made it difficult to trace the money and identify those truly responsible.

The operation in Spain involved 12 searches in various locations in Malaga and Valencia. During the raids, the police seized 110,000 euros in cash, gold coins valued at over 300,000 euros and high-end jewellery and watches.

In addition, the authorities have frozen property, several vehicles, numerous bank accounts and other financial assets. The total value of these assets has yet to be determined, although the value of the frozen property exceeds seven million euros.

Outside Spain, the operations involved more than 300 house searches and more than 40 arrests, including in Italy and Portugal.

The Spanish police even travelled to Italy to assist investigators during the searches.

As part of the investigation in Spain, the police have also identified a Valencian company listed on an alternative Italian stock market, whose main shareholders are Italian nationals.

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