October 1, 2019

Busted - Cell Phone VAT Fraudsters Caught

Speaking of cell phones: This month the Hungarian, German, Austrian, Slovakian and Latvian authorities (with support of Eurojust and Europol) had a successful four-day operation against large-scale VAT fraud involving sales of cellphones by an organized crime group in Hungary. 37 searches were carried out, hearings conducted on nine suspects, six suspects are in pre-trial detention, and goods valued EUR 7 million were seized (including cash, luxury cars, real estate, company shares and bank accounts). Illegal VAT payments claimed from the Hungarian tax authorities, amounted to EUR 1 million were blocked.

It was called the Missing Trader Intra-Community (MTIC) fraud scheme, where alleged perpetrators purchased cell phones from companies located in different EU Member States, using companies that failed to pay VAT on the sales in Hungary. The phones were then sold through a chain of buffer companies to a Hungarian wholesaler, and exported quickly at a lower price. VAT was being illegally reclaimed by the criminal organization (since 2017) resulting in an estimated loss of nearly EUR 13 million in Hungary.


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