Tax fraud in North Rhine-Westphalia: Large raid against carousel fraudsters!

Tax fraud in North Rhine-Westphalia: Large raid against carousel fraudsters!

On February 7, 2025, the state office initiated extensive search measures in North Rhine-Westphalia to combat financial crime (LBF NRW). These raids are part of a pressing examination against a suspected ring of carousel fraudsters who, according to estimates, have evaded at least 6 million euros in sales tax. The investigation is under the code name "Dutch Windmill" and were initiated on the basis of the knowledge of the European public prosecutor's office in Rotterdam.

At the center of the investigation is a car dealer from North Rhine-Westphalia, which used used vehicles from domestic companies. He stated that he received invoices with a proven sales tax, which he asserted as input tax and received reimbursed. However, the vehicles were sold as margin vehicles to companies in the Netherlands and Slovenia. In this special margin tax system, VAT is lost to the full sales price when the vehicle is sold by a private individual.

The mechanics of carousel fraud

The so-called carousel fraud, also known as Missing Trader Intra-Community (MTIC) MARD, is a common form of tax fraud within the EU, in which several companies are involved in various member states. In this fraud, a dealer in the supply chain does not carry out the sales tax paid by customers to the tax office. In turn, buyers claim input tax and receive them from the tax authorities, which leads to significant loss of tax income.

• description of the carousel business:
• company S were sold to intermediary Z in other EU countries without sales tax.
• Z sells the goods to entrepreneurs U and must pay sales tax, but does not do so.
• u sells the goods back to S and receives input tax refund from the tax office.

The "Missing Trader", which in this case functions as a middleman, disappears from the market before the due date of sales tax. The structure of such carousel transactions makes it difficult to uncover the fraud practices, as they were increasingly being pushed across borders. Often it is high -priced but physically small products such as mobile phones or computer chips that are used in these machinations.

financial effects and control

According to estimates, the EU countries lose around 50 billion euros annually due to carousel fraud, while Germany is affected between 5 and 14 billion euros alone. The total damage by organized gang fraud within the Union is estimated at up to 140 billion euros annually. These considerable sums illustrate the dimension of the problem.

To combat fraud, some countries, including Germany, have taken measures. In 2011, the reverse charge procedure for certain goods was introduced, while in 2013 the obligation to provide evidence for tax-free intra-Community deliveries was established. EU Commission and Economic Commissioner Pierre Moscovici also require reforms in VAT survey to put such frauds a stop.

A arrest warrant was issued against the main suspect of the current investigations and measures to ensure assets were initiated. The LBF NRW has bundled the entire North Rhine-Westphalian tax investigation under one roof since January 1, 2025, which is intended to contribute to the committed combating of financial crime. It is the first state authority of this kind in the Federal Republic of Germany and underlines the growing seriousness in dealing with tax fraud and its criminal structures.

The developments as part of the "Dutch Windmill" operation are closely observed by the financial administration in North Rhine-Westphalia, while the European partner countries also urge increased cooperation in order to effectively prevent such fraudulent machinations.