Dismantling of a big organisation specialised in EU VAT fraud and money laundering in Spain

Ms. Ana Ortega's picture
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Spanish Tax Agency officials and National Police agents have carried out a joint investigation uncovering one of the biggest networks specialized in VAT fraud at EU level and money laundering (Dreams operation). The complexity of the investigation required international coordination, both at the police level, through Europol, and the legal level, through Eurojust. The operation has been led by a Spanish Court.

As a result of the operation, 58 people were arrested in several cities of Spain, Germany, Belgium and Portugal. 62 searches were carried out in Spain and another 39 in different parts of Europe. The investigations uncovered VAT fraud spread across Europe, amounting to a charge of almost 60 million euros, 45 million of which affects the Spanish Treasury.


Origins of the investigation

The investigations began in 2015 following a financial intelligence report regarding a criminal organisation specialised in VAT fraud, derived from the sale of electronic goods, both real and fake, and money laundering.

The criminal organisation was allegedly managed from Spain by two men, believed to have been operating for more than nine years across Europe.

The organisation, mostly made up of Spanish, Italian and Portuguese citizens, involved a network of more than 100 companies (mostly fictitious or shell companies), constituted in more than ten countries around Europe and the USA.


Modus operandi

The criminal organisation had two core centers in Spain, from where they controlled the management of several instrumental companies (both Spanish and foreign). The only function of these fictitious or shell companies was to avoid paying VAT on products imported into Spain, destined for consumption at abnormally reduced prices, thus creating unfair competition with other traders in the affected sectors (primarily electronics).

The damage to the Spanish Treasury was even bigger since some of the products were re-entered into the fraudulent loop, simulating their sales outside of Spain and applying for a refund of Spanish VAT, which had not been previously paid.

Throughout the network, there was a significant structure in place to issue fake or cover-up invoices, which were both used for VAT fraud on electronic products and to bring high-end vehicles into Spain at significantly reduced prices. Investigators were able to prove that the organisation had issued fake invoices for a value of almost 250 million euros over three years.

The money laundering was done by buying real estate in Spain and the USA, a spring, luxury cars and investments in the European audio-visual sector.

In the searches, the Police and Tax Agency officials have seized 52 luxury cars, IT material, a gun, 400.000 € in cash and lots of documents.