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The Tax Agency dismantles two major electronic sector VAT fraud plots

In collaboration with other European administrations. The total amount defrauded amounts to around 300 million euros. The operations took place between June 2008 and January 2009 and were not made public so as not to interfere with judicial investigations.

March 9, 2009 . Between June 2008 and January of this year, the Tax Agency dismantled two major VAT fraud schemes in the electronic components sector for a total amount defrauded of around 300 million euros. More than 250 properties were seized during the operations and current accounts used for international transfers were blocked.

As a final investigative action in the case, and by order of the Judge, a search was carried out last January at the headquarters of a major electronic material distribution company based in the Netherlands. This company had invoiced 1,200 million euros in the last 10 years, mostly directed to Spain to intermediary companies, known as 'truchas', which distributed the merchandise without VAT. In total, the amount defrauded in Spain is around 140 million euros, while the fraud in different European countries amounts to another 160 million euros.

During the course of the court search, a large amount of documentation was seized and is currently being investigated by the Dutch Fiscal Police Service (FIOD). This registration is a first step towards extending criminal liability to those providers based in EU member countries who favour and encourage the continuation of these frauds. To this end, the Tax Agency has counted on the collaboration of other European Agencies.

Prior to this intervention, the Azahar and Basile operations were carried out in the week of June 23-27 of last year, which were the culmination of investigations carried out over a year and a half by the Tax Agency. They were attended by personnel from the Financial and Tax Inspection Area together with personnel from Customs Surveillance.

The Tax Agency analysed information from various sources and, in particular, that derived from the collaboration agreement signed by the Tax Agency and the National Committee of BSA (Business Software Association).

These actions demonstrate the Tax Agency's commitment to combating fraud, which led to the launch of the 2005 Tax Fraud Prevention Plan in 2005, updated in 2008, and the ongoing development of investigations to combat these fraudulent schemes.

Operation Orange Blossom

In Operation Azahar, a plot that profited from two VAT fraud techniques known as “carousel fraud” and “cheap reduction fraud” was dismantled. The first consisted of faking intra-community acquisitions of goods and software that, after passing through two companies of the organization, left our country again, requesting at that time the Treasury to refund or compensate the VAT payments that no one paid.

The organisation was controlled by a family group which, using this procedure, allegedly defrauded around 40 million euros in 2007 and 2008.

The scheme involved Portuguese companies and Romanian subjects with criminal records. The Tax Agency had been following the trail of this organisation for years, as it had been the subject of charges for tax crimes since 2002.

During the proceedings, which took place in Madrid, nine searches were carried out, sealing off the company responsible for the main fraud. As regards the measures adopted on the assets of those allegedly responsible, aimed at compensating for the damage caused, it should be noted that the Court has ordered, at the request of the investigation, the prohibition of the sale of nine properties, as well as the freezing of current accounts.

Operation Basile

In Operation Basile, the organization detected is considered to be one of the most active in the world of organized fraud in the electronics sector. It was controlled by a person who remained hidden from the authorities since he was charged in other proceedings opened in Toledo for events similar to the current ones. The organization had developed a complex network of people who acted as front men and in auxiliary roles depending on the head of the organization. They had companies abroad, both to channel fraud and close VAT carousels, and to launder the money obtained.

The operation took place in several phases, mainly in Madrid but also in Catalonia, Andalusia, the Canary Islands and Castilla La Mancha, and resulted in the dismantling of the organisation and the search of 28 premises and addresses from which they operated.

The VAT tax payments that the organization is estimated to have defrauded amount to more than 100 million euros in the last four years.

On the other hand, and from the point of view of the recovery of defrauded taxes, the investigations into the network of front men and interposed companies of the organization, which also had the services of a law firm, have allowed the detection and seizure of more than 250 properties valued at around ten million euros. The current accounts used to make international transfers of millions of dollars were blocked by court order.