EPPO: Troja Mobile Phone VAT Fraud Uncovered, €30M Loss

• The European Public Prosecutor's Office (EPPO) launched "Troja," an investigation into a criminal organization selling over one million used mobile phones as new.
• The scheme caused an estimated €300 million damage to EU consumers and over €30 million in VAT losses to EU Member States.
• The organization allegedly abused the EU margin taxation scheme by selling used phones as new, thus avoiding full VAT payments.
• The large-scale operation involved over 160 searches in 19 countries and resulted in seven arrests, including the organization's leaders.
• The investigation, initiated by an OLAF report, highlights coordinated European efforts against cross-border financial fraud.

The fraudulent activity has inflicted an estimated damage of at least €300 million on EU consumers and resulted in a significant VAT loss exceeding €30 million for several EU Member States.

The European Public Prosecutor’s Office (EPPO) has recently spearheaded a major international operation, code-named ‘Troja’, targeting a sophisticated criminal organization. This extensive investigation, initiated following a report from the European Anti-Fraud Office (OLAF), uncovered a scheme suspected of selling over one million used mobile phones as if they were brand new. The fraudulent activity has inflicted an estimated damage of at least €300 million on EU consumers and resulted in a significant VAT loss exceeding €30 million for several EU Member States.

The criminal enterprise allegedly sourced used components, assembling mobile phones in locations such as Hong Kong and the United Arab Emirates. These devices were then meticulously cleaned and repackaged to appear new before being shipped to the Netherlands. From there, they were transported to warehouses in Germany, ultimately reaching end customers across the entire European Union through various online marketplaces.

The scale of the enforcement action was considerable, involving 1770 police, tax, and customs officers who conducted over 160 searches and seizures across 19 countries, including Austria, Belgium, Bulgaria, Croatia, Cyprus, Estonia, Finland, Germany, Italy, Latvia, Lithuania, Luxembourg, Poland, Portugal, Romania, Slovakia, Spain, Switzerland, and the Netherlands. A witness was also heard in the UK. These operations, which commenced on September 29, 2026, led to seven arrests in Austria, Germany, and Spain, including the apprehension of the organization's two alleged leaders.

Central to the 'Troja' investigation is the alleged abuse of the EU margin taxation scheme, a specific VAT regime designed for second-hand goods. Evidence suggests that since 2018, shell companies operating in several EU Member States, including Austria, Bulgaria, Germany, and the Netherlands, as well as Switzerland, fraudulently applied this reduced VAT scheme to the online sale of these mobile phones. This illicit practice was employed to artificially inflate their profits. The margin taxation scheme dictates that a reseller only pays VAT on the profit margin—the difference between the purchase price and the selling price—and is strictly applicable only to resold goods on which VAT has already been paid.

However, by presenting these used devices as new, the criminal organization circumvented the legal requirement to charge and remit VAT on the full price of the item. This deliberate misrepresentation not only misled customers but also created a substantial VAT deficit in every country where these fraudulently marketed mobile phones were sold. The EPPO, as the independent public prosecution office of the European Union, is specifically tasked with investigating, prosecuting, and bringing to judgment crimes that affect the financial interests of the EU, making this EPPO Investigation Troja mobile phone VAT fraud a direct fulfillment of its mandate. The initial report from OLAF underscores the collaborative European effort against such financial crimes.

The widespread nature of this Cross-border used electronics fraud highlights the vulnerabilities within the European market when sophisticated criminal networks exploit taxation schemes. The alleged scheme not only defrauded consumers who believed they were purchasing new products but also deprived multiple EU Member States of significant tax revenues, contributing to the overall VAT carousel fraud EU problem. The coordinated enforcement action, spanning nearly two dozen countries, demonstrates the growing capacity and determination of European authorities to combat complex transnational financial crime.

This operation serves as a stark reminder of the ongoing challenges posed by EU margin taxation scheme abuse and the necessity for robust international cooperation. The involvement of such a large number of law enforcement personnel and jurisdictions underscores the commitment to dismantling criminal organizations that operate across national borders to exploit legal loopholes and defraud both consumers and public treasuries. The EPPO's proactive stance, following OLAF's initial findings, signals heightened regulatory scrutiny on cross-border trade, particularly concerning the correct application of VAT rules in the electronics sector.

This investigation signals heightened regulatory scrutiny by EPPO and OLAF on cross-border electronics trade, particularly concerning the misuse of VAT margin schemes. Compliance officers in the electronics sector must review their supply chain due diligence and VAT compliance protocols to mitigate exposure to similar fraud allegations.

Source: Reporting based on EPPO press release.