European investigators have dismantled a massive €18 million VAT fraud involving the import of goods from China, mainly textiles, footwear and toys.
The majority of cases occurred on the China-Greece-Italy shipping route, with the port of Piraeus as the main entry point and Italy as the main final destination.
The first cases that were caught date from the middle of last year. Subsequently, a major action was launched under the leadership of the EU anti-fraud agency OLAF in collaboration with the customs authorities of eight EU countries.
Claiming a VAT refund usually occurs with goods that enter the EU via one Member State, but have another EU country as their final destination. VAT is then due in that other EU country, but that trader is now bankrupt or has disappeared.
As a further by-catch of this operation, two large consignments of counterfeit goods were also seized. They contained 127,000 counterfeit hats and clothing items, as well as 4 million packs of cigarettes.
The Greek port of Piraeus is fully owned by the Chinese transport company Cosco, which bought the quays and port facilities for several billion euros in 2016 when Greece was in danger of going completely bankrupt during the banking crisis.
Under pressure from the European Union's financial supervisors, Greece then had to make major cuts and thoroughly reform its economy. The Chinese Cosco bought all port rights and invested heavily in two new container terminals and now Piraeus is the fourth container port in Europe.
The damage caused by VAT fraud in Brussels is estimated at 50 billion euros. In addition, there is hundreds of millions of euros in damage due to other fraudulent facts, such as tampering with subsidies or corruption.
An earlier cross-border investigation by European prosecutors, OLAF and national police services unraveled a network of hundreds of people and several thousand companies after a few months. Together they had committed a VAT fraud of 2.2 billion euros. That was the largest VAT carousel ever exposed in the EU.