Misuse of funds to VAT fraud: The state of combatting fraud across the EU
The European Public Prosecutor's Office had over 2,000 active fraud-related investigations by the end of 2024, with total estimated damages amounting to €24.8 billion. VAT fraud continues to be the most significant concern.
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At the end of 2024, the European Public Prosecutor's Office (EPPO) had 2,666 active investigations relating to fraudulent crimes - an increase of 38% from the previous year.
This resulted in an estimated damage to the EU budget of €24.8 billion, which was 22,5% more than in 2023, according to the latest annual report of EPPO.
EPPO investigates and prosecutes crimes affecting the financial interests of the EU, such as the misuse of funds, money laundering, VAT fraud, and corruption.
More than half of the estimated €13.15 billion in damage is linked to cross-border VAT fraud.
Germany (179) and Italy (149) recorded the highest numbers of active VAT fraud investigations amongst 22 EU countries, with an estimated total damage of €3.89 billion and €4.65 billion, respectively.
"EU fraud has become highly attractive to very dangerous criminals, partly due to a historical uneven judicial response in this field," the European Chief Prosecutor, Laura Codruța Kövesi, explains.
In November 2024, the EPPO carried out a vast investigation, code-named "Moby Dick", in the Italian cities of Milan and Palermo.
This operation led to authorities freezing 129 bank accounts, and seizing 192 real estate properties, along with 44 luxury cars and boats.
The suspects had established companies in Italy and other EU Member States, as well as in non-EU countries, to trade the goods through a fraudulent chain of missing traders that would vanish without fulfilling their tax obligations.
Other companies in the fraudulent chain would subsequently claim VAT reimbursements from the national tax authorities.
Related Spain busts international crime ring for alleged luxury car import tax scam
Who has been reporting these crimes to EPPO?
The EPPO processed 6,547 crime reports last year - a rise of 56% compared to 2023.
Over 70% of the reports came from private parties and close to 27% from national authorities.
Only 1,7% came from institutions, bodies, offices, and agencies of the EU.
"There was still no improvement in terms of detection and reporting from their side, even three years after the start of EPPO operations," EPPO's annual report stated.
From an economic recovery package to fraud suspicions
By the end of 2024, the EPPO had 311 active cases related to NextGenerationEU, with 307 from the Recovery and Resilience Facility (RRF).
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This is about 17% of all spending fraud investigations.
The primary methods of fraud related to the RRF include the submission of false, incomplete, or misleading information to unlawfully secure funds.
Common tactics also involve the forgery and manipulation of invoices and contracts, often accompanied by false statements or documents intended to conceal disqualifying criteria.
Bribery of public officials and bid rigging have also been instrumental in ensuring that contracts with inflated prices are awarded to specific companies.
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