EPPO Germany: VAT Fraud Criminal Organisation Convictions Secure 2 Sentences

• The European Public Prosecutor's Office secured convictions against two individuals in Germany for a €200 million intra-community VAT fraud scheme.
• The Düsseldorf Regional Court sentenced a Turkish national to seven years and two months, and a Danish citizen to five years and eight months in prison.
• This marks the first time an EPPO case in Germany has resulted in convictions recognizing defendants as members of a criminal organisation.
• The elaborate fraud involved numerous shell companies, encrypted communications, and the use of a Hawala network for money laundering.
• The scheme caused an estimated €200 million in damages to EU and national budgets between 2019 and 2023.

The Düsseldorf Regional Court VAT fraud judgment is the first instance in an EPPO case in Germany where a court has definitively established that defendants acted as members of a criminal organisation.

The European Public Prosecutor's Office (EPPO) in Hamburg, Germany, recently secured significant convictions against two individuals involved in a vast intra-community VAT fraud scheme, following an extensive investigation dubbed Investigation Goliath. On October 23, 2026, the Düsseldorf Regional Court VAT fraud ruling saw a Turkish national sentenced to seven years and two months in prison, while a Danish citizen received a sentence of five years and eight months. The Danish national had been apprehended in Kenya on May 23, 2024, as part of the ongoing probe.

These sentences follow prior convictions for both individuals in March 2025, related to other instances of tax evasion, for which they are currently serving sentences exceeding five years in Germany. In the recent ruling, the Turkish national was found guilty of being a member of a criminal organisation and a perpetrator of VAT fraud across 26 distinct cases, acting as a 'de facto' manager. This individual also aided and abetted VAT fraud concerning ten shell companies, which functioned as missing trader fraud EU entities and buffers within the complex scheme.

The Danish national was similarly convicted for supporting a criminal organisation and for aiding and abetting VAT fraud in five separate cases. While these two individuals have been sentenced, two other defendants indicted in this case are currently incarcerated in Denmark and await their respective trials. Proceedings against a third defendant, who served as a managing director for one of the primary companies but was not directly implicated in the VAT fraud itself, were discontinued in accordance with Section 153 of the German Code of Criminal Procedure.

The court's findings revealed that the convicted individuals initially joined an international criminal organisation specializing in the trade of electronic goods. To amplify the illicit gains from VAT fraud, the defendants subsequently devised and controlled their own sophisticated network. This operation necessitated the establishment of numerous shell companies, both domestically and internationally, to facilitate the fraudulent activities.

The actual commerce of products, including AirPods and other electronic devices, was orchestrated from an office situated in Istanbul, Turkey. This hub was managed by one of the defendants along with other members of the criminal enterprise. The organisation maintained a high degree of secrecy, employing encrypted communication channels and aliases to obscure the identities and activities of those involved. Furthermore, the defendants collaborated closely with a former notary who facilitated the notarization of documents in the absence of the straw men used in the scheme.

A critical component of the operation involved sophisticated methods for laundering the substantial profits generated. The court determined that the defendants utilized a Hawala network money laundering EU mechanism, an informal financial transfer system relying on a network of trusted brokers, to move the illicit proceeds. This elaborate intra-community VAT fraud scheme inflicted an estimated damage of €200 million on the budgets of the European Union and its member states between 2019 and 2023.

These EPPO Germany VAT fraud criminal organisation convictions represent a pivotal moment in the fight against financial crime within the European Union. The Düsseldorf Regional Court VAT fraud judgment is the first instance in an EPPO case in Germany where a court has definitively established that defendants acted as members of a criminal organisation. This legal recognition is crucial, as it underscores the inherently organised nature of large-scale VAT fraud schemes and provides a stronger framework for holding perpetrators accountable.

The successful prosecution under Investigation Goliath has significant implications for how similar missing trader fraud EU cases may be adjudicated in the future, potentially leading to more severe penalties for those involved in such structured criminal enterprises. The European Public Prosecutor's Office convictions highlight the EPPO's mandate as the independent public prosecution office of the European Union, tasked with investigating, prosecuting, and bringing to judgment crimes that impact the financial interests of the EU.

The ruling serves as a stark warning to those contemplating or engaging in complex financial fraud, particularly given the EPPO's demonstrated capability to dismantle sophisticated operations, including those leveraging informal financial systems like the Hawala network. While this decision was rendered at first instance and remains subject to appeal, it firmly establishes a precedent for treating serious VAT fraud as organised crime, carrying commensurate legal consequences.

Lawyers advising clients involved in intra-community trade or facing VAT fraud allegations in the EU, particularly Germany, must note the EPPO's successful prosecution of such schemes as organised crime, which carries severe penalties and indicates increased scrutiny of complex fraud mechanisms like Hawala networks. Compliance officers should review internal controls for VAT and AML to identify and mitigate risks associated with sophisticated fraud operations.

Source: Original reporting via the European Public Prosecutor's Office.