The European Public Prosecutor’s Office announced on Tuesday that they had uncovered a scheme of VAT fraud on goods imported from China in Belgium, which is suspected to have facilitated more than 300 million euros in tax evasion.
Four people were arrested and ten searches were carried out in different places in Belgium, notably at Zeebrugge airport (north) and Liège airport (east), one of the most important platforms in Europe for e-commerce with China.
Damages of at least 303 million euros VAT
“It is estimated that between 2019 and 2022 the investigated activities caused a damage of at least 303 million euros in VAT evasion and 6.6 million euros in customs duties,” according to a press release from the European Public Prosecutor’s Office (EPPO).
The money would have been funneled at the expense of European taxpayers via the customs procedure known as ‘CP42’, which provides that an importer is exempt from VAT in the EU country through which the goods pass before it is sold in another member state .
However, according to the European Public Prosecutor’s Office, false final destinations were declared thanks to the use of letterbox companies in France, Germany, Hungary, Italy, Poland and Spain. Therefore, the VAT on these goods – electronic devices, toys and amount of accessories – was withheld by the seller.
“The goods were finally sold to the final consumer, who paid the full price of the products including VAT”, explains the press release. However, investigations have shown that this tax to be paid by the final consumer ” was never reported or paid by the suspected criminal organization to any tax authority”.
A dish launched in 2021
According to the Belgian newspaper L’Echo, the company at the center of the investigation is the logistics company Easylog Solutions, which served as a relay in Belgium for a fraudulent system developed by the Chinese. This is one of the largest files ever from the Belgian section of the European Public Prosecutor’s Office.
This jurisdiction, in which 22 EU countries participate, was created in June 2021 with the task of investigating and prosecuting crimes that could damage the Union’s financial interests, including cross-border VAT fraud and cross-border crime.