Operation ‘El Dorado’

• In the operational phase there have been two arrests, 14 entries and inspections in Galicia, Barcelona and Madrid, as well as several embargoes on financial assets, real estate and fuel
• The organisation was pocketing VAT charged on fuel sales to service stations and, in parallel, was taking part in an intra-EU fraud ring involving sales of I.T. materials
• The companies had accumulated a tax debt of 8 million euros and cooperated in the defrauding of a further 16 million through intra-EU fraud

November 24, 2016.- The Tax Agency has dismantled an organization dedicated to VAT fraud in the sectors of the marketing of petroleum products and computer and electronic products that operated throughout the national territory and also at the intra-community level. The fraud ring was committing two-way fraud. On one hand, they were pocketing VAT corresponding to sales of hydrocarbons to service stations. On the other, they were connected to an intra-EU fraud ring taking part in sales of I.T. and electronic products to other EU countries.

Within the framework of the operation, known as 'El Dorado', and based on preliminary investigations by the Central Court of Investigation no. 6 of the Supreme Court, on 7th November last a total of 14 entry and inspection operations were carried out in Galicia, Barcelona and Madrid and two individuals were arrested in the Catalan branch of the ring.

 

It had been operating since 2015

The preliminary investigations began earlier this year when the Vigo Combined Customs Surveillance Unit, in collaboration with the National Fraud Investigation Office (ONIF), detected two companies connected to two individuals who had been operating in the hydrocarbons sector since 2015, selling wholesale to service stations. However, the alleged leader of the dismantled fraud ring had been operating in the sector prior to this and had been identified in relation to other fraud activities in the past.

The fraud perpetrated in the hydrocarbons sector involved the appropriation of VAT that the companies in the organisation should have paid on their sales of hydrocarbon products to service stations. The companies that operate in this sector are liable for significant amounts of VAT because, since they acquire the fuel in a tax warehouse (as hydrocarbons wholesaler), they don't pay the indirect tax and, subsequently, they sell the fuel on to service stations, charging VAT. From that moment, the sellers must deposit this VAT almost in full. However, the companies in the ring did not make the payments and had accumulated a tax debt of over 8 million euros.

By means of this systematic appropriation of VAT, the organisation did not just defraud the Public Revenue, but was also engaging in disloyal competition in the sector, since it was able to sell to retailers at lower prices than those afforded by the players who were compliant with their obligation to pay the Public Revenue the VAT charged on to its customers.

In addition to this fraudulent activity, through these same two companies the organisation participated in a fraud ring involving the sale of electronic and computer equipment purchased from Spanish companies and sold to other EU countries, with an estimated VAT fraud figure of 16 million euros.

The operation deployed on November 7th in Barcelona culminated in two arrests and 14 entry and inspections at homes and offices relating to the ring, located in Galicia, Barcelona and Madrid. As a result of the actions undertaken, financial assets have been embargoed and several preventative embargoes have been put in place on real estate and fuel located in tax warehouses.

The operation was directed by the Tax Agency's Customs Surveillance Unit (Galicia, Catalonia, Andalusia and Central Operations), ONIF customs offers and staff from the Central Computer Audit Unit (UCAI), with the collaboration of staff from the Regional Inspection Departments in Barcelona, Galicia and Andalusia, as well as computer audit personnel from Barcelona and Galicia.