VAT fraud with more than 800 million euros of estimated damage in Portugal – Public Finances

Portugal opened 26 investigations with the European Public Prosecutor’s Office in 2023, bringing the total number of active investigations to 43, representing an estimated loss of 928.6 million euroswith VAT fraud being responsible for almost all of this amount.

According to data from the annual activity report of the European Public Prosecutor’s Office (EPPO), released this Friday, the 26 investigations opened in 2023 represent a estimated loss to the community budget of 186.6 million euros. Of the 43 active investigations, 15 concern VAT fraud and the resulting loss is estimated to be 848.5 million euros.

In 2023, Portugal obtained by court order the asset freeze worth 12.3 million euros. The country has an indictment produced last year, within the scope of the so-called Operation Admiral, which accused 27 defendants – 12 people and 15 companies – for crimes of criminal association, corruption, tax fraud and money laundering and in which, for acts carried out only in In Portugal, tax fraud of around 80 million euros is estimated through a chain of companies that evaded paying VAT, with “the use of false invoices and fraudulent tax declarations”, according to the EPPO in a statement in December.

Portugal has not yet concluded any case and only the Operation Admiral process is in the trial phase.

In 2023 Portugal received 41 complaints and reports, mostly from national authorities. Despite representing almost all of the estimated losses in active investigations, VAT fraud represents just 31% of crimes under investigation by European national prosecutors at EPPOwith money laundering representing 21% of crimes under investigation and fraud in obtaining subsidies 13% of crimes.

Community funds for agriculture and rural development, for urban and regional development and the recovery and resilience program are the European funding programs with the most cases under investigation by national prosecutors.

EPPO currently has 22 member states (Portugal, Austria, Belgium, Bulgaria, Cyprus, Croatia, Czech Republic, Germany, Estonia, Spain, France, Finland, Greece, Italy, Lithuania, Luxembourg, Latvia, Malta, Netherlands, Romania , Slovenia and Slovakia) and has Public Prosecutor José Ranito as the Portuguese European prosecutor. The body, which functions as an independent and highly specialized Public Prosecutor’s Office, entered into activity on June 1, 2021 and has the power to investigate, initiate criminal proceedings, bring charges and sustain them in the investigation and trial against the perpetrators of criminal offenses. harmful to the Union’s financial interests (e.g. fraud, corruption or cross-border VAT fraud exceeding €10 million).

VAT fraud damages the community budget by 11.5 billion euros

As regards the Community budget, the VAT fraud represents 11.5 billion euros and almost 60% of the losses caused to community funds in investigations by the European Public Prosecutor’s Office, which warns of a lack of means to combat criminal organizations conceived as companies. According to data from the European Public Prosecutor’s Office (EPPO) 2023 activity report released today, the body had opened 1,371 investigations in 2023, bringing the total number of ongoing investigations to 1,927which represent financial losses for the European Union estimated at 19.2 billion euros, 59% of which relate to VAT fraud.

Even so, EPPO managed to guarantee with court orders the asset freeze with a total value of 1.5 billion euros.

More than 200 ongoing investigations, with losses estimated at 1.8 million euros, concern ‘NextGenerationEU’, the green and technological transformation program for community space created in reaction to the pandemic period, which is now starting to make payments and which was the basis of recent warnings from European Attorney General Laura Kövesi, now reiterated, regarding the need to reinforce EPPO resources to combat crime associated with financing.

Laura Kövesi argued that an EPPO that is “ill-equipped and has few human resources cannot seriously expect significant progress” in recovering proceeds from crime.

The European Attorney General warns that the VAT fraud is seen by criminal groups as an area without major legal consequenceswhere organized crime operates as if it were a company, evaluating risks and opportunities and maximizing profit, using proceeds from criminal activities to finance VAT fraud crimes.

Laura Kövesi sees how “extremely worrying” that for so-called ‘white collar’ crimes consideration is being given to reducing sentences or shortening statutes of limitationsarguing that the punitive capacity of the judiciary is called into question.

The official points out that investigations often come across “obstinate criminals” capable of acts of “extreme violence” to protect their interests and who have “almost unlimited means of corrupting our democratic institutions”, adding that there are not two separate criminal realities – violent crime such as drug trafficking and human trafficking, on the one hand, and economic crime and corruption – but two realities that “go hand in hand” and feed each other.

“Until we understand this, we will not be able to stop the growth and expansion of large organized crime groups”, he defended, adding that it is necessary to redefine strategy and priorities.

It emphasizes that the estimates of 4.1 billion euros of assets recovered annually by European judicial authorities represent, at best, “less than 2% of the profits from criminal activity in the European Union”.

Hence he argues that the priority, more than “following the money”, should be ‘focusing on the money’: “If we want to seriously affect the ability of criminals to operate, let alone the growth and expansion of their activities, we must remove ‘white collar’ criminals out of the equation. Our strategy must be to cripple the financial capacity of organized crime.”

In 2023, EPPO produced 139 indictments, an increase of more than 50% compared to 2022, with 458 people charged last year, and archived 166 cases, having received 4,187 complaints, 26% more than in 2022, the majority of which were from private individuals. and national authorities.

Currently, there are 155 cases opened by EPPO in the trial phase. The data also shows that 54 have already had a final decision, which in 48 cases was a conviction.

Subsidy fraud and VAT fraud represent around half of the cases investigated by EPPO.

EPPO currently has 22 member states (Portugal, Austria, Belgium, Bulgaria, Cyprus, Croatia, Czech Republic, Germany, Estonia, Spain, France, Finland, Greece, Italy, Lithuania, Luxembourg, Latvia, Malta, Netherlands, Romania , Slovenia and Slovakia) and has Public Prosecutor José Ranito as the Portuguese European prosecutor.

The body, which functions as an independent and highly specialized Public Prosecutor’s Office, entered into activity on June 1, 2021 and has the power to investigate, initiate criminal proceedings, bring charges and sustain them in the investigation and trial against the perpetrators of criminal offenses. harmful to the Union’s financial interests (e.g. fraud, corruption or cross-border VAT fraud exceeding €10 million).