One of the most high-profile operations in recent years related to tax fraud has concluded in Spain. At the center of the investigation is a group that, according to authorities, organized a sophisticated VAT evasion scheme in the electronics trade. As a result of the investigation, 36 people have been arrested and nearly a hundred bank accounts have been frozen.
The investigation lasted more than two years and spanned not only Madrid but also other regions of the country, including Alicante and Murcia. The operation, named Marengo Rosso, was international in scope: searches and arrests were carried out simultaneously in nine countries, including the Czech Republic, Italy, Portugal, and Poland. In February 2023, law enforcement conducted nearly forty searches, enabling them to uncover the entire criminal network.
The scheme operated using the so-called ‘carousel’ method: shell companies in various EU countries issued fraudulent documents for the delivery of mobile phones and other devices. Due to specific features of European legislation, such transactions were exempt from VAT, allowing the perpetrators to then claim tax refunds they were not entitled to. The acquired electronics were sold online at lower prices, enabling rapid turnover of large sums.
The damage caused to the EU and Spanish budgets is estimated at over 24 million euros. In addition to tax evasion, those involved also engaged in money laundering, using accounts in Hong Kong and Singapore. The seized assets include around twenty properties and several luxury cars. Prosecutors are seeking multi-million euro fines and a ban on state subsidies for the companies implicated in the scheme.
Investigators paid particular attention to the Spanish group’s connections with similar organizations in Italy. One of those detained in that country was found to have led another criminal cell, leading to further arrests and the seizure of assets worth about 40 million euros.
Operation Marengo Rosso is a continuation of a series of high-profile cases involving VAT fraud in Europe. A year earlier, an even larger scheme was uncovered, with damages exceeding half a billion euros. In that case, the trail of suspects also led to Spain, where arrests and searches were carried out.
European law enforcement officials emphasize that such crimes not only cause massive budget losses but also pose a threat to internal security. In recent years, combating these schemes has become a priority for EU financial and judicial authorities.
