Ina Ree­se Tax & Legal Prac­ti­ce – Flens­burg | Harrislee

Operation Alba: International VAT fraud in the motor trade uncovered

Ope­ra­ti­on Alba: EUS­tA unco­vers Euro­pe-wide VAT fraud in the vehic­le trade. Los­ses amount to around 300 mil­li­on euros; over 70 suspects. 
Operation Alba: International VAT fraud in the motor trade uncovered

Operation Alba: International VAT fraud in the motor trade uncovered

A Euro­pe-wide fraud net­work ope­ra­ting in the second-hand car trade has been unco­ver­ed by the Euro­pean Public Prosecutor’s Office (EPPO) and natio­nal aut­ho­ri­ties. The resul­ting los­ses amount to around 300 mil­li­on euros. Inves­ti­ga­ti­ons led to arrests, sear­ches and sei­zu­res in Ger­ma­ny, the Net­her­lands and Poland.

How the fraud scheme worked

The case began in 2021 with a tip-off from the Ita­li­an tax aut­ho­ri­ties to the Fede­ral Cen­tral Tax Office. The alle­ga­ti­on was that tho­se invol­ved had pro­vi­ded incom­ple­te infor­ma­ti­on regar­ding the purcha­se and resa­le of vehic­les impor­ted from Ger­ma­ny to Ita­ly. The Müns­ter Tax Inves­ti­ga­ti­on Unit sub­se­quent­ly laun­ched an inves­ti­ga­ti­on, which was later taken over by the EUS­tA in Cologne.

Essen­ti­al­ly, the suspects abu­sed the so-cal­led ‘dif­fe­ren­ti­al taxa­ti­on’ sche­me. This VAT pro­ce­du­re is actual­ly inten­ded for trad­ers who purcha­se second-hand goods from pri­va­te indi­vi­du­als and resell them. It pro­vi­des that VAT is levied only on the trade mar­gin – that is, the dif­fe­rence bet­ween the purcha­se pri­ce and the sel­ling pri­ce – and not on the full value of the vehic­le. This signi­fi­cant­ly redu­ces the tax bur­den and makes the sys­tem attrac­ti­ve to legi­ti­ma­te dea­lers. In this case, howe­ver, this sche­me was deli­bera­te­ly exploi­ted to eva­de VAT on final sales in other countries.

The suspects purcha­sed vehic­les from key figu­res in the net­work who had alre­a­dy been con­vic­ted, and then sold them as vehic­les sub­ject to mar­gin taxa­ti­on to car dea­lers in Ger­ma­ny, the Net­her­lands and Por­tu­gal. This part of the sche­me alo­ne resul­ted in a tax loss of more than 3.2 mil­li­on euros.

Scope and findings of the investigation to date

The enti­re fraud sche­me was acti­ve bet­ween 2017 and June 2023. The total loss is esti­ma­ted at around 300 mil­li­on euros. To date, assets worth around 15 mil­li­on euros have been reco­ver­ed. In the most recent ope­ra­ti­ons, the aut­ho­ri­ties sei­zed, among­st other things, luxu­ry vehic­les, high-end wat­ches, cash, jewel­lery and pro­per­ty with a total value of over 2.5 mil­li­on euros.

Sin­ce the inves­ti­ga­ti­on began, nine peo­p­le have been con­vic­ted by a final jud­ge­ment. The pri­son sen­ten­ces ran­ged from two to seven years. In total, more than 70 peo­p­le are suspec­ted of having been invol­ved in the fraud or of having actively sup­port­ed the main perpetrators.

What retailers and tax advisers should learn from this

This case illus­tra­tes how vul­nerable the mar­gin sche­me is to abu­se and the ext­ent to which tax aut­ho­ri­ties and public pro­se­cu­tors coope­ra­te across bor­ders. For car dea­lers and other busi­nesses that trade in second-hand goods and app­ly the mar­gin sche­me, this means that accu­ra­te docu­men­ta­ti­on and careful scru­ti­ny of the sup­p­ly chain are not mere for­ma­li­ties, but a serious com­pli­ance issue.

Anyo­ne who purcha­ses and resells vehic­les or other second-hand goods under this sche­me should be able to pro­vi­de a com­ple­te chain of evi­dence regar­ding the ori­gin of the goods. If the­re are any doubts regar­ding the relia­bi­li­ty of a sup­pli­er or their eli­gi­bi­li­ty for the mar­gin sche­me, tax advice should be sought at an ear­ly stage. In cases of suspec­ted irre­gu­la­ri­ties, cri­mi­nal tax law may also app­ly, which fur­ther empha­si­s­es the importance of careful documentation.

Source: North Rhi­ne-West­pha­lia Tax Aut­ho­ri­ty, press release dated 10 July 2026

Source: Hau­fe: Tax

This post and the accom­pany­ing image were crea­ted with the help of AI and have been edi­to­ri­al­ly reviewed.

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