A joint investigation by the European Public Prosecutor’s Office in Palermo and Milan has revealed the existence of a criminal organization with strong ties to the mafia and the Camorra, responsible for VAT tax evasion worth hundreds of millions of euros. The authorities have executed 47 precautionary measures, accompanied by seizures for a total value of 520 million euros. This operation has led to the discovery of false invoicing for a total amount of 1.3 billion euros.
In particular, the investigation focused on a complex carousel fraud involving intra-Community VAT in the trade of IT products. Among the recipients of the restrictive measures, European arrest warrants were issued for seven individuals. The Preliminary Investigation Judge (GIP) ordered:
The investigations also highlighted the involvement of well-known members of Sicilian organised crime, such as Tony Lo Manto, who provided financial support to the illicit business.
Carousel fraud is carried out by exploiting the non-taxable regime for intra-Community trade transactions. A fictitious entity, known as a “paper mill”, purchases goods without VAT and resells them to a national company applying the ordinary Italian rate. However, the paper mill does not pay the tax to the treasury, causing significant tax losses. These organizations use front men to run the paper mills, which operate without tax compliance and cease operations after short periods. This method allows them to multiply their illicit profits through a proven system.
The operation represents a significant step in the fight against organised crime and tax fraud in Europe. The European Public Prosecutor’s Office continues to monitor the phenomenon of carousel fraud, involving more countries in the European Union to effectively combat these crimes. International cooperation will be essential to eradicate these practices and ensure greater economic integration without fraud.
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