A VAT carousel is one of the most serious Allegations in criminal tax law. It becomes particularly risky if... foreign companies issue fictitious invoices and these Invoices can be used to claim input tax or Cross-border supply chains are only a sham. For Affected companies are usually not just concerned about this additional tax demands, but also quickly about tax evasion, Searches, international investigations and the Securing assets. Europol and the European Prosecutors describe such models as cross-border VAT fraud structures that are targeted the VAT-free treatment of intra-community deliveries exploit.
What is a sales tax carousel?
From One speaks of a sales tax carousel when goods or at least the associated invoices for several companies and often run across several EU states in order to evade sales tax or to obtain unauthorized input tax refunds. This is typical the so-called missing trader model: intra-community Deliveries will initially be VAT-free, later on Domestic sales tax charged, but by one party not removed. The same goods are available in more complex variants or invoices “passed on” several times through different companies, so that the transactions appear genuine to the outside world.
Which Do foreign companies and fictitious invoices play a role?
In Many proceedings involve foreign companies Focus on paper as suppliers, intermediaries or service providers appear, but actually not a real one have an economic function. Such companies often serve to Issuing fictitious invoices, service relationships only to pretend or to imitate the actual flow of payments and goods disguise. The EPPO is involved in several current proceedings cross-border sales tax fraud expressly via shell companies, fictitious invoices, searches and seizures and coordinated measures reported in several states. This shows how serious authorities are about the use of foreign front companies Follow the carousel process now.
Why Bogus invoices are so dangerous for tax purposes
For For companies, the input tax deduction is particularly important Risk point. According to § 15 UStG, input tax deduction requires: that the legally owed tax for an actual Delivery or other service from another entrepreneur has been incurred and a proper invoice is available. It's missing of a real service or is the invoice just a sham created, the input tax deduction is regularly at risk. In addition, there is § 14c UStG: Anyone who pays VAT in an invoice incorrectly or unjustified, this tax itself can owe. In addition, § 14 UStG requires a reliable one Audit trail for authenticity of origin, integrity of content and Readability of the invoice.
Fast in the area of tax evasion
Where If bogus invoices are used, the accusation is often made Tax evasion according to Section 370 AO in the area. It is punishable thereafter, in particular, if incorrect or incomplete information provided or facts that are significant for tax purposes are kept secret and taxes are reduced as a result. Exactly that is often the core of the accusation in sales tax carousels: invoices and supply chains should appear orderly to the outside world, although in reality there are no real achievements or the Structures are aimed solely at tax avoidance. In In principle, there is a risk of up to a fine or imprisonment five years, in severe cases significantly more.
Not Every foreign invoice is automatically punishable
Important is at the same time: Not every invoice from abroad is suspicious, and not every incorrect documentation automatically means one Sales tax carousel. But it becomes problematic when the... cannot understand the economic substance of the business partner delivery routes remain unclear, the same goods or invoices walk through different countries several times or receipts and real ones Business processes do not fit together. That's exactly why reliable cross-border business relationships Documentation is crucial.
When is the EPPO investigating?
The European Public Prosecutor's Office (EPPO) is responsible for criminal offenses detriment to the financial interests of the European Union responsible. This also includesserious cross-border Sales tax fraud, especially if the damage is at least 10 million euros and the case at least two EU member statesconcerns. The EPPO works as an independent European authority with a central office and European Delegated prosecutors in the participating states; the Proceedings are then conducted before national courts. For For companies with cross-border supply chains, this means: A The process can very quickly take on international dimensions.
How do EPPO investigations work in practice?
EPPO process are often characterized by simultaneous searches, Seizures, Arrests and close coordination between several states. The official announcements from the EPPO Current VAT carousel proceedings show that investigations occur regularly be carried out in parallel in several countries and that Business premises, apartments, accounts and means of communication come into view at the same time. This is special for those affected stressful because the procedure often begins at a very early stage Stage creates massive pressure.
Asset recovery: It's not just about taxes, it's about your assets
In Proceedings due to sales tax carousels play the role Asset recovery almost always plays a central role. According to § 73 StGB, the court orders the confiscation of what is due the unlawful act was obtained. The concrete one is enough Security is not valid or is not the original item If there is no longer any, § 73c StGB allows the confiscation of the value of proceeds of crime. In addition, in appropriate cases, the extended one is used Confiscation according to § 73a StGB. For companies and those responsible This means: Even if funds or items are no longer available present in their original form can continue to be available their economic value can be accessed.
Asset arrest already in the preliminary investigation
Special What is crucial is that asset recovery does not just happen at the end of criminal proceedings becomes relevant. According to § 111e StPO can a asset arrest during the preliminary investigation be ordered if the requirements for the recovery of value are met expected to be available. According to § 111f StPO this is Arrest may be carried out through seizure. This can be practical blocked accounts, frozen claims or blocked ones Assets lead long before a court decides about guilt or decided innocence. This is exactly why such procedures are used Fast and strategic action is particularly important.
What Affected companies should now take note
If Your company with the accusation of a sales tax carousel faced with foreign fictitious invoices or EPPO measures the matter should be taken seriously from the start. It's usually not just the tax classification that's important, but also also the question of what role the company plays in the supply chain actually had which documents were reliable and whether there was one proper audit trail can be demonstrated. Just at The defense is therefore allowed to do so in cross-border constellations not only be thought of nationally.
Our legal advice
For allegations relating to the sales tax carousel, foreign Bogus invoices, EPPO investigations and asset recovery Companies, managers and those responsible should not Wait until charges are filed. Already the first measures of the Tax investigators, the public prosecutor's office or the EPPO can do this Set the course for the entire process. Especially in cases like this What is needed is a law firm that experiences criminal tax law works to classify cross-border issues safely can and communicate with national and international Strategically leads investigative authorities. We are the right people for this law firm, because we handle procedures with a foreign connection not only legally, but also practically from an international perspective Think investigations.