62 suspects detained in EPPO investigation into VAT fraud of at least EUR 410 million

The European Public Prosecutor’s Office detained 62 suspects and coordinated more than 300 searches in a cross-border investigation into a carousel fraud scheme that allegedly caused losses of at least EUR 410 million in VAT revenue for several Member States. The “Hermes” investigation targets two criminal groups suspected of cooperating to market mobile phones and other electronic devices through networks of companies established to exploit VAT rules applicable to transactions between EU Member States.

In brief More than 300 searches took place in Austria, France, Germany, Italy, Malta, the Netherlands, Portugal and Spain. Sixty-two people were detained: 39 in Portugal, 20 in Spain and three in Italy. EPPO estimates the VAT losses at at least EUR 410 million and says that freezing orders covering up to EUR 310 million were executed. The investigation targets two distinct groups that prosecutors say used each other’s companies, logistics and financial channels. The EPPO office in Bucharest is participating in the investigation, but the official statement does not mention searches or detentions in Romania.

The coordinated action on 7 October targeted the homes of suspects, the premises of companies investigators believe are part of the network, as well as the offices of tax advisers, lawyers and transport companies. The operations were carried out simultaneously in eight countries, while the 62 detentions were concentrated in Portugal, Spain and Italy.

Authorities also executed freezing orders worth up to EUR 310 million. Bank accounts and company holdings were frozen, and real estate and vehicles, including luxury cars, were seized. EPPO separately mentions cash and gold coins worth up to EUR 9 million.

The EUR 310 million figure does not represent money definitively recovered for public budgets. It is the value up to which freezing measures were authorised or executed to protect assets during the investigation and any potential court proceedings. The loss under investigation, estimated separately by EPPO, is at least EUR 410 million.

The mechanism under investigation exploits a known vulnerability in the European VAT system. In transactions between VAT-registered businesses in different Member States, goods can move without the supplier immediately charging VAT. In a “missing trader” scheme, goods are purchased cross-border without VAT and then resold with VAT within a country, while the company that collected the tax disappears without remitting it to the authorities.

The chain can continue through several intermediary companies. At another point in the circuit, a company may request a VAT refund that it claims to have paid, meaning that the public budget loses both the tax not remitted by the missing trader and, in certain configurations, the amounts refunded within the fraudulent chain.

In the “Hermes” case, prosecutors allege that intermediaries were established in Spain, Italy, Portugal, Austria, France and Malta. The goods were passed through chains of companies and missing traders, while other companies claimed VAT refunds from national tax administrations.

The investigation does not concern a single organisation. EPPO describes two distinct criminal syndicates that allegedly built their own carousel fraud schemes but cooperated to maximise their profits. They are said to have used some of the other group’s companies and goods, shared logistical capacities and transferred money through partner companies in operations suspected of money laundering.

According to prosecutors, the suspects also used encrypted communications for coordination. This element, together with the dispersal of companies across several jurisdictions, shows why the investigation requires the simultaneous cooperation of multiple EPPO offices and national authorities.

Investigators also found links to other major European investigations into VAT fraud. EPPO says the two groups used a similar modus operandi and, in part, the same individuals as the networks investigated in the “Admiral” and “Moby Dick” operations.

“Admiral”, publicly launched in 2022, investigated VAT fraud estimated at approximately EUR 2.2 billion at the time and involved hundreds of searches and activities in numerous countries. “Moby Dick” targeted another electronics fraud network, with estimated losses of EUR 520 million and links to mafia organisations. In September 2026, six people were convicted in part of the “Moby Dick” case, and the court ordered the confiscation of more than EUR 300 million.

EPPO says that one of the “Hermes” suspects had previously led a network responsible for a VAT fraud scheme targeting Sweden between 2019 and 2023. After Swedish authorities intervened and the companies involved went bankrupt, the suspect allegedly moved to Portugal and created a new structure using companies controlled through relatives and trusted associates.

This branch of the network is also suspected of providing money-laundering services to other criminal groups. For EPPO, the case illustrates the ability of organisations specialising in tax fraud to reorganise geographically after an intervention by the authorities and recreate company chains in other jurisdictions.

The investigation involves the EPPO offices in Madrid, Porto, Milan, Palermo, Paris, Graz, Valletta, Bucharest, Rotterdam, Frankfurt and Vilnius. Europol and law-enforcement authorities in the countries involved supported the operation.

The participation of the EPPO office in Bucharest should not be confused with operational actions taking place in Romania on 7 October. The official list of the eight countries where the more than 300 searches took place does not include Romania, and EPPO does not mention any people detained in Romania. The statement also provides no information that would allow the identification of VAT losses specifically borne by the Romanian budget.

The 62 people are suspects in a criminal investigation, not convicted individuals. EPPO stresses that all of them benefit from the presumption of innocence until their guilt is established by the competent courts.

The scale of “Hermes” also highlights the importance of carousel fraud in Europe’s VAT losses. The European Commission considers that this form of fraud, also known as Missing Trader Intra-Community fraud, conservatively accounts for approximately one quarter of uncollected VAT revenue associated with the EU’s VAT gap.

The investigation is ongoing, and the announcement of 7 October describes an operational stage of the case. The final value of the loss, the assets that may ultimately be confiscated, the number of people brought to trial and individual criminal liability will depend on the evidence gathered and the judicial stages that follow.