site.btaBulgaria Carries Out Over 80 Searches in VAT Fraud Investigation Under EPPO

The European Public Prosecutor’s Office (EPPO) said that at its request Bulgaria has carried out more than 80 searches and investigative measures ar since Thursday in an investigation into cross-border VAT fraud, causing an estimated damage of over EUR 13 million. Six Bulgarian citizens were arrested.

The searches were carried out in nine cities, including Sofia, Haskovo, Plovdiv, Ruse, Dobrich, Vratsa, Dimitrovgrad, Kozloduy and Mizia, by the General Directorate for Combatting Organized Crime, with the support of Bulgaria’s State Agency for National Security.

Documents and evidence were seized, as well as mobile phones, golden coins and medals for investment, and over EUR 255, 000 in cash.

The criminal group has been active since 2019, operating a VAT carousel fraud scheme – a complex criminal scheme that takes advantage of EU rules on cross-border transactions between its Member States, as these are exempt from value-added tax (VAT).

The scheme under investigation aimed at establishing and exercising control over ‘missing trader’ companies. Through more than 60 companies established in Bulgaria, Greece and Romania, fictitious commercial transactions were declared, in order to claim VAT refunds from the national tax authorities, to which the suspects were not entitled, since the supposed suppliers, also controlled by the group, had disappeared, without making any payments.

One of the schemes involved simulated trading in animal feed, generating a total turnover of more than EUR 51 million. Another scheme involved fake deliveries of goods in the construction sector.

The damage caused as a result of the activities under investigation is estimated at EUR 13.2 million.

Fight against such “carousel” schemes is one of the main priorities of the European Public Prosecutor’s Office, whose mandate covers fraud involving EU funds and cross-border VAT fraud causing losses of over EUR 10 million. In its first annual report, EPPO noted dozens of active cases in Bulgaria involving misuse of EU funds and VAT fraud, and the country regularly appears in major operations of the office, such as Operation Display targeting VAT fraud in 10 EU countries, an investigation into EUR 19 million in fraud involving used mobile phones across six countries, as well as a case concerning a EUR 50 million VAT scheme in the trade of electronic goods involving Bulgaria, Germany, and Poland.