EPPO Italy: 11 Arrested In Plastics VAT Fraud Scheme

• The European Public Prosecutor's Office (EPPO) in Italy orchestrated the arrest of 11 suspects in connection with a €100 million VAT fraud scheme involving the plastics trade.
• An organized crime group allegedly used shell companies across Italy, Austria, Bulgaria, Czechia, Hungary, and Romania to issue €500 million in false invoices between 2018 and 2023.
• Authorities seized assets valued up to €25 million and are investigating over 50 individuals for various financial crimes, including participation in a criminal organization and tax evasion.
• The fraudulent scheme allowed products to be sold below market value, distorting competition and harming legitimate businesses in the plastics sector.

This extensive operation highlights the European Public Prosecutor's Office's aggressive enforcement against sophisticated cross-border VAT fraud, particularly within specific industrial sectors like plastics.

The European Public Prosecutor's Office (EPPO) in Turin, Italy, has spearheaded a significant enforcement action, leading to the arrest of 11 individuals implicated in a large-scale VAT fraud scheme within the plastics trade. Eight suspects have been placed in pre-trial detention, while three others are under house arrest, following an investigation targeting an organised crime group. This operation also included an order to seize assets valued at up to €25 million, underscoring the financial scale of the alleged illicit activities.

The investigative measures were executed on a Tuesday by approximately 120 officers from the Italian Financial Police (Guardia di Finanza) based in Turin and Ancona. They received additional support from units across several Italian regions, including Piedmont, Marche, Veneto, Lombardy, Apulia, and Calabria. Searches were conducted at the suspects' homes and offices, notably employing 'cash dogs'—specialized canine units trained to detect currency—to uncover hidden assets.

This extensive operation highlights the European Public Prosecutor's Office's aggressive enforcement against sophisticated cross-border VAT fraud, particularly within specific industrial sectors like plastics. The coordinated effort across multiple regions and the use of specialized units demonstrate the comprehensive approach taken by authorities to dismantle complex financial crime networks operating within the European Union.

The investigation uncovered a complex VAT fraud scheme originating in Italy's Marche region, which leveraged a network of shell companies to facilitate illicit transactions. These entities acted as intermediaries in the sale of industrial plastics products, operating across multiple European countries including Italy, Austria, Bulgaria, Czechia, Hungary, and Romania. A key characteristic of these shell companies was their frequent lack of genuine business activity, systematically failing to declare and remit VAT.

Between 2018 and 2023, the suspects are alleged to have fraudulently issued and utilized invoices for non-existent transactions totaling €500 million. This elaborate deception resulted in an estimated VAT evasion of approximately €100 million. The fraudulent setup not only enriched the perpetrators but also enabled them to sell plastics products at prices significantly below market value, thereby distorting competition and causing substantial harm to legitimate businesses operating in the sector.

Despite the fraudulent invoicing, the actual plastics products were delivered and utilized by legitimate Italian companies located in Piedmont, Lombardy, and Tuscany for their industrial processes. This highlights the dual nature of the scheme, where physical goods moved through legitimate supply chains while the financial transactions were manipulated for illicit gain through false invoices in Italy and other EU member states.

This recent wave of EPPO Italy plastics VAT fraud arrests is part of a broader, ongoing investigation into the organised crime group. Earlier phases of this inquiry have already led to significant legal outcomes, with ten suspects previously convicted by the Tribunal of Nola for VAT fraud, the use and issuance of false invoices, and related tax crimes. Additionally, two other defendants received convictions on September 21, 2026, further demonstrating the sustained efforts to prosecute those involved.

Currently, over 50 individuals remain under investigation for a range of alleged offenses, including participation in a criminal organisation, VAT fraud, issuing and using false invoices, failure to file tax declarations, tax evasion, and unlawful tax compensation. The European Public Prosecutor's Office, as the independent public prosecution body of the European Union, is specifically tasked with investigating, prosecuting, and bringing to judgment crimes that impact the financial interests of the EU.

The investigation continues its efforts to identify further connections within the extensive fraudulent network and to freeze additional assets, aiming to recover the estimated illicit proceeds generated by the criminal enterprise. It is important to note that, in accordance with Italian law, all individuals involved are presumed innocent until proven guilty in the competent courts.

This case highlights the EPPO's aggressive enforcement against cross-border VAT fraud, particularly within specific industrial sectors like plastics. Lawyers and compliance officers advising companies involved in EU-wide trade, especially those using intermediaries, should review their VAT compliance frameworks and supply chain due diligence processes to mitigate exposure to similar sophisticated fraud schemes and avoid potential implication.

Source: Original reporting via European Public Prosecutor's Office