The Tax and Customs Authority (AT), through the Oporto Tax Directorate and the Northern Directorate of the Judiciary Police, as part of a joint investigation team led by the Oporto Department of Investigation and Penal Action, conducted 70 searches last January 13th 2021, domiciled and not domiciled, as well as the execution of 7 warrants of arrest outside the flagrante delicto, having as targets companies and individuals operating in the car trade, for suspicion of the practice, among others, of crimes of Fiscal Fraud, Money Laundering and Criminal Association.
This criminal scheme is based on the operation of several companies, all based within the national territory, and a large number of them present themselves as non-reporting companies (they do not submit the appropriate tax returns, particularly in terms of VAT).
Those companies were established for the sole purpose of formally making large intra-Community acquisitions of used cars under the general VAT regime and then invoicing them to other national companies (which have car stands for public sale), artificially and deliberately changing the VAT regime applied and mentioned on those invoices (transforming the general regime to the profit margin regime).
In so doing, they allow the latter to sell the said vehicles on national territory by applying the profit margin regime (application of the VAT rate only to the value of the difference between the sale price and the purchase price, already including VAT), instead of the general VAT regime (application of the VAT rate to the sale price).
With this criminal act, those agents managed to introduce those vehicles on the national market at a retail price significantly lower than the normal market price, thus generating an additional effect of unfair competition in the sector.
The suspects thus obtained an illegitimate financial advantage in terms of VAT, which at this stage is estimated at around 4.3 million euros.
To carry out this operation, 60 Tax Inspectors from the Oporto Tax Directorate, 7 Experts from the Computer Forensic Unit of the Tax and Customs Authority and about 160 members of the Judiciary Police have participated.