According to the European Public Prosecutor's Office (EPPO) on the 28th, four suspects suspected of tax fraud were arrested in a search operation at Liege Airport in Belgium.

In the operation code-named "Silk Road", the Belgian police, customs and tax authorities searched the private residences of the gang at Liege Airport, Zeebrugge Port and three other cities, and confiscated assets and related evidence.

The company is suspected of establishing a complex system to evade VAT. It is estimated that between 2019 and 2022, the gang evaded at least 303 million euros in VAT and caused 6.6 million euros in tariff losses.

The warehouse at Liege Airport that was searched (Source: EPPO)

The EPPO said in a statement that it suspected the company of using three private customs agencies in Belgium and fake companies in other EU member states in order to profit from VAT import exemptions. It is reported that they used shell companies located in France, Germany, Hungary, Italy, Poland and Spain, using fake invoices and forged shipping documents. In some cases, they also used information from real companies, but these companies did not know that their VAT numbers and company information had been stolen.

The Belgian-based companies acted as representatives of Chinese exporters and claimed that the goods entering through Liege, including electronic devices, toys and countless accessories, were destined for other EU member states, thereby evading the payment of import VAT. They used the private Belgian customs agency to set the final destination of the declared goods as shell companies in other EU member states.

In reality, these shell companies would not receive the goods. The purpose of setting up shell companies is to divert the attention of inspectors and create a false business chain to make inspections more difficult. The gang sold the goods to other real companies or to consumers through e-commerce platforms. Buyers or consumers paid the full price for the products, including VAT that was never declared or paid to the tax authorities.

According to EU Customs Procedure 42, if the imported goods are subsequently shipped to another EU member state (the final destination), the importer does not have to pay VAT in the importing country. The procedure was established to simplify cross-border trade.

The crimes being investigated include counterfeiting, customs and VAT fraud, money laundering and participation in a criminal organization.

The Luxembourg-based EPPO was established in 2017 and began operations in 2019. It specializes in investigating and prosecuting individuals, organizations or companies suspected of misusing EU funds, large-scale VAT fraud or other financial crimes. In November 2022, the European Public Prosecutor's Office worked with law enforcement agencies in 14 EU countries to crack down on a criminal network involved in 2.2 billion euros in VAT fraud.

Liege Airport is an important hub for cargo air transport between China and Europe and is the European home of Chinese e-commerce giant Alibaba and its logistics division Cainiao Network.

Article source: Exploring the New Silk Road

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