Unmasking the Phoney Hare: EU Tax Authorities Recover 240 Million in Evaded Taxes
Fake Hare Uncovered: €250 Million in Recovered Tax Funds - "Quarter-billion dollars recouped": tax collectors recoup significant figures
Here's the lowdown on a major swoop by tax investigators that nabbed nearly a whopping quarter billion euros in evaded taxes from worldwide car smugglers. After the international operation "Huracán" against VAT fraud a couple of years ago, North Rhine-Westphalian tax sleuths discovered additional fishy cases, according to the NRW Finance Ministry in Düsseldorf.
Investigators dug up documents that tagged additional go-betweens believed to be part of the criminal VAT carousel. With more details trickling in, the amount of around 240 million euros is predicted to exceed 300 million, benefitting multiple EU countries. The local rag, the "Rheinische Post," had previously spilled the beans on this dope scandal.
The roots of the probe known as "False Hare" can be traced back to a tangled web of shell companies used for years to evade VAT in the car biz. The initial shockwave in Düsseldorf resulted in multiple-year prison sentences, and the files spanned over 100,000 pages.
How the Fraudster’s Lair Worked
The con worked like this: A "buffer company" in North Rhine-Westphalia purchased cars domestically, claiming the paid VAT as input tax. It then offloaded the vehicles to EU member states. The traders abroad were the "ghost traders": they vanished shortly after re-selling the rides, taking the VAT with them.
"The fraud rings shuffle money and goods between genuine but unregistered companies in Germany and sham but registered companies in various other countries," explained Stephanie Thien, head of the new state office for combating financial crime. Through further evaluations, the investigators have now managed to pinpoint additional crooks and connections within the EU.
"The bigwigs have set up a cunning VAT fraud carousel with their web of shell companies, whirling across several EU borders," reported NRW Finance Minister Marcus Optendrenk (CDU), giving a shout-out to the tax investigators for their tireless and effective detective work.
Operation “Huracán”
Operation “Huracán,” named after a high-end sports car, shone a light on organized international VAT fraud in June 2023. During the massive raid in seven countries, swanky vehicles and real estate were seized. Over 2,000 investigators were involved, with the trade of over 10,000 cars in the balance.
The investigations started in January 2021: An Italian tax office reported missing information on the purchase and potential resale of cars imported from Germany to Italy.
- Quarter billion
- Car
- Düsseldorf
- EU
- Germany
- Shell companies
- Fraud ring
- Cross-border transactions
- Ghost traders
Additional Insights:
A fraudulent system known as a "carousel" or missing trader fraud can be found in the automotive sector, often referred to as a "False Hare" scheme. The scheme operates as follows:
- Setup: A series of companies across multiple EU member states are established.
- Car Purchase and Export: The chain kicks off when a company in one EU country buys cars (new or used) and sells them VAT-free to a company in another EU country, exploiting the VAT exemption on intra-community supplies.
- False Resale and Reimportation: The cars are then "resold" through a chain of companies in various countries, including fake or shell companies. They may be physically moved or only appear on paper. The final step is often the reimportation of the vehicles back to the original country, where VAT is charged on the import.
- VAT Fraud via Missing Trader: Because of the complicated cross-border transactions, the missing trader collects VAT from the buyer but never remits it to the tax authorities, causing significant revenue loss. The "False Hare" aspect refers to the rapid movement or "hopping" of cars and transactions between jurisdictions to confuse and delay tax enforcement.
Such fraud schemes exploit EU VAT system rules on cross-border transactions, where VAT on goods moving between member states is not charged by the seller but is due in the buyer's country as a "reverse charge." Fraudsters exploit timing and jurisdictional loopholes to evade VAT payments, making pollution a challenge for authorities to track the flow of goods and money, thereby avoiding detection and prosecution.
If you need detailed updates or case studies, official EU tax authority publications or investigative journalism on VAT fraud in the automotive sector would be the best sources.
- The car smuggling operation, revealed by EU tax authorities, uncovered almost 240 million euros in evaded taxes, with the expected total exceeding 300 million, affecting multiple EC countries.
- The False Hare probe, originating from North Rhine-Westphalia, Germany, unearthed a complex web of shell companies, used to evade VAT in the car business, with recipients being ghost traders across various EU member states.
- The international VAT fraud carousel, uncovered by Operation Huracán, spanned multiple EU borders, involving a network of fake or shell companies, resulting in the seizure of luxury vehicles and assets.
