Milan Court: Chinese Couple Behind €33M EU VAT Carousel Scheme

• A €33 million VAT carousel scheme involving Chinese importers has been identified by investigators.
• Two individuals suspected of managing the scheme have been placed under house arrest, and searches were carried out at their homes.
• The investigation was conducted by the European Public Prosecutor's Office (EPPO) in Venice, Italy, with assistance from the Venice Financial Police.
• The case highlights the need for companies importing goods from China into the EU to ensure compliance with tax regulations.

The scheme involved numerous companies, formally managed by front persons with no police records and no assets, but actually controlled by a Chinese couple based in Milan.

A complex VAT carousel scheme, designed to conceal the unlawful introduction of goods into Italy and their subsequent resale on the domestic market without payment of the VAT due on sales transactions, has been identified by investigators. The scheme involved numerous companies, formally managed by front persons with no police records and no assets, but actually controlled by a Chinese couple based in Milan. This couple allegedly exercised de facto control over the companies since 2019, using them to commit a VAT carousel fraud with an estimated damage of over €33 million. The investigation revealed that most of the missing trader companies involved generated sales worth millions of euros while failing to comply with their tax reporting obligations, resulting in a VAT evasion exceeding €33.4 million.

The European Public Prosecutor's Office (EPPO) in Venice, Italy, requested the judge for preliminary investigations at the Court of Milan to issue a house arrest order against two individuals suspected of managing and using several companies to commit VAT carousel fraud. The EPPO is responsible for investigating, prosecuting, and bringing to judgment offences affecting the financial interests of the EU. In this case, the investigation was conducted by the Venice Financial Police (Guardia di Finanza), which identified a Chinese couple as main suspects in the VAT carousel scheme. Searches were also carried out at the suspects' homes, but due to the lack of funds or assets attributable to them in Italy, the seizure of assets could only be enforced to a limited extent.

The €33 million VAT fraud investigation highlights the need for companies importing goods from China into the EU to ensure compliance with tax regulations. Lawyers and compliance officers should watch for potential VAT exposure in their clients' supply chains, particularly if they import goods from China into the EU. The case also underscores the importance of effective anti-money laundering measures and the role of law enforcement agencies in preventing financial crimes affecting the EU's financial interests.

Lawyers and compliance officers should watch for potential VAT exposure in their clients' supply chains, particularly if they import goods from China into the EU.

Source: Original reporting via [Source]