EUROPEAN PUBLIC PROSECUTOR's OFFICE,ΔΙΚΑΙΟΣΥΝΗ,update

 

19/11/2025   European Public Prosecutor's Office News

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Press release

Investigation ‘Broken Wall’: Searches, seizures and arrests in probe into €19 million VAT fraud and smuggling of goods from China (Luxembourg, 19 November 2025) – At the request of the European Public Prosecutor’s Office (EPPO) in Bologna and Turin (Italy), the Italian Financial Police (Guardia di Finanza) and Italy’s Customs and Monopolies Agency (Agenzia delle Dogane e dei Monopoli) in Florence carried out searches and preventive seizures, and arrested two individuals, as part of an investigation into a €19 million VAT fraud linked to the smuggling of goods from China. The investigation concerns a fraudulent scheme where large quantities of goods were allegedly smuggled from China to Italy, by abusing the Customs Procedure 42 (CP42). This procedure, created to simplify cross-border trade, exempts importers from paying VAT in the country of importation, if the imported goods are subsequently transported to another EU Member State. The tax must then be paid upon release of the goods. Based on the evidence, the smuggled goods are believed to have never left the Italian territory. After being cleared by customs, they were released onto the Italian market with artificially lowered prices due to the tax exemption provided by CP42. For the scheme to appear credible, the suspects allegedly used a tax warehouse in Sesto Fiorentino and a vast number of both Italian and foreign shell companies, simulating intra-community sales. The investigation also revealed an abuse of Customs Procedure 45. This practice applies to VAT warehouses, which store items under tax suspension until they are sold to the end buyer. After extracting the items and issuing self-invoices, the importers sent fictitious invoices to EU corporations while the goods were already unlawfully circulating in Italy, and no VAT was paid. Earlier in this investigation, searches in Bulgaria, Czechia, Germany, Hungary, Poland and Spain revealed the absence of adequate business structures of the companies participating in the scheme.   more

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