Italian financial investigators have uncovered a massive value-added tax (VAT) evasion scheme worth €42.8 million involving the sale of luxury cars imported from Germany. The operation, coordinated by the European Public Prosecutor’s Office (EPPO) and the Prato Finance Police, exposed a network of shell companies that allegedly traded vehicles through fake invoices to avoid tax payments.
Authorities said the scheme ran between 2019 and 2024 and centered on so-called “carousel fraud.” In this setup, companies buy goods VAT-free within the European Union and resell them at inflated prices in another country, pocketing the tax without passing it to the state.
Investigators believe the group imported more than 1,700 high-end cars from Germany to Italy using false documents and companies registered under the names of strawmen. This allowed them to sell the vehicles at artificially low prices while evading VAT payments.
The fraud first came to light after a consumer reported difficulties registering a German car purchased from an Italian dealership. That complaint triggered an investigation that quickly uncovered the wider network.
As part of the operation, authorities seized 40 luxury cars valued at about €3 million, 53 bank accounts holding €1.29 million, and capital shares in eight companies worth more than €70,000. They also confiscated real estate worth around €1 million, nine luxury watches, and several items of jewelry, including a diamond ring and gold accessories.
According to EPPO officials, the case highlights how cross-border financial crimes can exploit EU trade rules and the need for closer cooperation among European enforcement agencies,