Five arrested in luxury-car VAT fraud investigation

Authorities arrested five people in Austria and Germany as part of a European investigation into suspected VAT carousel fraud involving luxury cars, ORF reported. Police carried out 12 searches in Tyrol and Vorarlberg on Wednesday, with three arrests in the two Austrian states.

Two other Austrian citizens were arrested in Germany by German officers. In Tyrol, one person was arrested and two others were brought in for questioning, said Christian Viehweider, a spokesman for Tyrol police. The operation there involved Cobra officers, the rapid intervention group and police from the districts.

Austria’s investigation focused on deliveries of new vehicles worth about 80 million euros. The estimated tax revenue loss linked to those deliveries exceeds 10 million euros, according to the Finance Ministry. Across the wider European case, the estimated VAT loss is more than 100 million euros.

The investigation was part of Operation J.A.V.E.L.I.N., a Europe-wide operation covering several lines of inquiry and numerous countries. Authorities seized business documents, electronic data storage devices, valuable assets and properties. The full inventory, valuation and analysis of the seized material is still under way.

In carousel fraud, criminal businesses allegedly move high-value goods among traders in different EU countries to exploit gaps in the tax system. They may claim VAT refunds on taxes they have not paid. The ministry said this type of fraud remains difficult for tax authorities to trace. The EU estimates that VAT fraud costs at least 50 billion euros a year.