- The organisation defrauded at least 5 million euros in two years through a scheme involving 'fake' companies and front men.

- 14 people arrested, 14 homes and businesses searched, and several bank accounts and safety deposit boxes blocked.

 The Tax Agency has dismantled an international organization dedicated to VAT fraud in the IT sector. The plot, which had branches in several European countries, is believed to have defrauded at least five million euros between 2011 and 2012 through a scheme involving "shell" companies, "front companies" and front men.

After almost a year of investigations, yesterday, under the direction of the investigating court number 5 of Vigo, officials of the Tax Agency developed a broad device that has allowed the arrest of 14 alleged members of the organization, as well as the blocking of various bank accounts and safety deposit boxes of those supposedly involved in the plot.

The operation, called 'Marcianitos', begins with a series of investigations begun in April 2012 into a group of companies dedicated to VAT fraud in the computer sector.

According to the results of the joint investigation developed by Customs Surveillance of Galicia (Pontevedra Operational Unit and Regional Fiscal Unit) and the Regional Financial Inspection Unit of Galicia (ONIF Galicia), in collaboration with the ONIF Central, those responsible for the organization would have created a plot to defraud VAT in the marketing of game consoles and other computer products, creating a complex business structure with companies in Spain, Portugal and Romania.

The dismantled network operated through companies established in Galicia, Madrid, Catalonia, northern Portugal and Romania, although it supplied distributors throughout Spain.

 The scheme of fraud

The merchandise subject to the fraud travelled directly from northern Europe (Denmark, Belgium and Holland) to Spanish logistics warehouses, which in turn sent it to the final marketers. However, to carry out the VAT fraud, a series of companies created in other European countries (Portugal and Romania) and in Spain were involved in this scheme.

The fraud mechanism consisted in that the products, despite travelling directly to Spain, were invoiced by companies in northern Europe to remote shell companies created in Romania and Portugal. These companies were, nominally, the first recipients of the merchandise, limiting themselves to re-invoicing it to other Spanish fictitious companies, which also did not receive the merchandise and which, in turn, re-invoiced other Spanish companies (shell companies), also created for the occasion, which finally invoiced the real distribution companies.

In this way, while the merchandise went directly from a company in northern Europe to a Spanish distributor, the invoicing was carried out following a circuit that included, in addition to the issuer and the receiver of the merchandise, up to three intermediaries (shell companies in Romania and Portugal, shell companies in Spain and front companies in Spain).

Given that, in accordance with the community VAT regulations, this indirect tax does not have to be paid in intra-community purchases, but it does apply in domestic sales in Spain, Spanish trout would have to pay very high amounts of VAT, as they do not bear VAT in your purchases and have an impact on your sales.

However, these companies manipulated their tax data, creating fictitious input VAT quotas, thus enabling the artificial reduction of the amount payable to the Public Treasury. Therefore, the tax fraud occurred at the time when the Spanish trout, which received an exempt intra-community delivery and charged VAT on the sale to the Spanish shell companies, did not pay those tax amounts to the Treasury. In the later stages of fictitious billing, the companies already paid VAT on purchases and passed it on to sales, like normal companies, but the scheme had already managed to offer the marketer in Spain lower prices than those of its competitors. The fraud committed by the Spanish trout thus served to erode, at the expense of the public coffers, free business competition.

Estimates of the amounts defrauded by this organisation reach 3,300,000 euros in 2011 and, at least (given that the operations of the last weeks of the year are still pending analysis), 1,700,000 euros in 2012.

 Straw men

The investigation revealed that a significant part of this criminal organisation was dedicated to the continuous creation of remote shell companies, shell companies in Spain and front companies, for which they contacted people without resources who, in exchange for a small fee, they made appear as administrators of these fictitious companies. In some cases, even citizens who were serving prison sentences abroad were listed as administrators of these companies.

In addition, to give credibility to the fictitious movements of the merchandise – which, while formally bought and sold between companies in various European countries, in reality did not move from the Spanish logistics warehouse to which it had been initially transferred – a continuous transfer of money was carried out between bank accounts, all of them operated over the Internet.

 Searches and arrests

In the operation carried out yesterday, 14 arrests were made and a similar number of searches were carried out at the homes of those arrested and at the headquarters of the companies involved, with the following breakdown:

Arrests :

1 in Guadalix (Madrid), 3 in A Estrada (Pontevedra), 8 in Vigo, 1 in Melide (Coruña) and 1 in Arzúa (Coruña).

Records :

- 6 addresses of individuals: 2 in Vigo, 1 in A Estrada, 2 in Redondela (Pontevedra) and 1 in Madrid.

- 7 addresses of companies related to the plot: 5 in Madrid (Alcorcón, Coslada and Guadalix de la Sierra) and 2 in Catalonia (Lleida and Cerdanyola).

- 1 consultancy in Ourense.

 The searches and arrests are accompanied by extensive precautionary measures against the criminal organisation, including the freezing of balances in bank accounts and safety deposit boxes of those allegedly involved. In addition, a large volume of documentation has been seized from the company registers and computers have been seized in order to upload the information in the coming days in the presence of the judicial authority, with a view to carrying out the appropriate analysis.