Operation Hermes: VAT fraud 450 mln, seizures 11 mln

Context

TL;DR

• Six precautionary measures and seizures worth approximately 11 million
• VAT fraud in electronics and IT
• 93 companies in the Italian part of the investigation
• Approximately 300 searches in eight European countries

Key facts

• Operation → “Hermes”
• Investigation → alleged VAT carousel fraud
• Sector → trade in electronic and IT products
• Precautionary measures → six people
• Seizures → approximately 11 million euros
• Invoices deemed false → more than 450 million euros
• Period → 2022-2025
• Searches → approximately 300 in eight European countries

The Guardia di Finanza of Varese carried out six personal precautionary measures and seized assets and sums of money worth approximately 11 million euros. The operation, conducted as part of “Hermes”, forms part of an investigation into an alleged criminal association aimed at committing tax fraud, aggravated by its transnational dimension.

At the heart of the investigation is the alleged VAT carousel fraud in the trade of electronic and IT products. The alleged scheme is believed to have developed across several European Union countries; the investigative activities were entrusted to the Economic and Financial Police Unit of Varese, with the cooperation of the Milan Pef Unit.

Coordination is entrusted to the Milan and Palermo offices of the European Public Prosecutor’s Office, known by the acronym EPPO. The judge for preliminary investigations at the Milan Court ordered precautionary measures against six people: two, reportedly domiciled in Rome, were taken to prison; one was placed under house arrest in the province of Bergamo; the other three were subjected to a residence requirement in the provinces of Salerno and Rome.

The measures and the seizure

A preventive seizure order, also on an equivalent-value basis, was added to the personal measures. The order concerned assets, valuables and financial resources attributable to eight suspects and three companies involved, for a total value of approximately 11 million euros.

The source therefore distinguishes between two aspects of the operation: on the one hand, the personal measures ordered by the Milan judge; on the other, the preventive order concerning assets, valuables and money traceable to the individuals and companies identified. Both measures were carried out as part of the same operation by the Guardia di Finanza of Varese, with the contribution of the Milan Pef Unit and under the coordination of the European Public Prosecutor’s Office.

The allegation described by investigators has a transnational dimension because the alleged VAT mechanism was reconstructed across several European Union countries. The source places the investigation in the electronics and IT trade and indicates the involvement of several European Union states. The measures carried out in Italy include the precautionary measures against individuals and the seizure of assets, valuables and money up to the stated threshold.

Operational details

According to the Guardia di Finanza's reconstruction, 93 companies operating in the provinces of Bergamo, Milan, Rome, Salerno, Como and Brescia are involved in the Italian part of the investigation. Between 2022 and 2025, the total value of the invoices deemed false exceeded 450 million euros. These figures refer to the Italian component of the investigation into the alleged VAT fraud scheme.

From the Italian part to the European network

The investigation is part of a broader operation, carried out simultaneously in several European countries and coordinated by EPPO's central office in Luxembourg. Overall, approximately 300 searches were carried out in eight European countries: Spain, Malta, Portugal, France, Austria, the Netherlands and Germany, in addition to Italy.

The international dimension concerns not only the number of countries involved. The Guardia di Finanza explains that the alleged mechanism relies on the VAT-exemption regime provided for trade between European Union countries. A fictitious company, called a «shell company» or a «missing trader», is inserted between companies from different countries.

The shell company sources its goods from an EU supplier without VAT being applied to the purchase, then resells the goods to an Italian company, charging VAT at the standard rate. However, the VAT collected would not be paid to the Treasury: the shell company would sell the goods below cost without paying the tax shown on the invoices.

Investigators generally describe these companies as lacking operational structures and employees, often registered in the names of nominees. Their operations would cease after a relatively short period, to be replaced by other companies with similar characteristics.

Steps in the carousel

The scheme may include additional stages through companies known as «filter» or «buffer» companies. These businesses are inserted into the commercial chain with the aim of making it more difficult to identify the mechanism and the ultimate beneficiaries.

At the final stage of the chain are the «broker» companies, genuinely operating businesses that purchase the products with VAT charged and consequently accrue a credit with the Treasury. The goods can then be placed on the Italian market at prices made artificially competitive by the mechanism or resold abroad, including to the companies from which the first transaction had originated. This is how the so-called «carousel» can restart.

According to investigators, the damage to public finances stems from the VAT shown on the shell companies' invoices: the tax is collected in subsequent commercial transactions, but is not paid to the Treasury.

Key points

The international coordination of the “Hermes” operation involved the offices of the European Public Prosecutor’s Office in Madrid, Porto, Milan, Palermo, Paris, Graz, Valletta, Bucharest, Rotterdam, Frankfurt and Vilnius. The operation therefore brought together EPPO structures located in several countries, alongside the work carried out in Italy by the Varese Guardia di Finanza and the Milan Pef Unit.

The operation benefited from the support of Europol, law enforcement agencies and tax authorities in the countries concerned. The activities extended to the homes, company premises and offices of natural and legal persons considered, for various reasons, to be linked to the alleged fraudulent scheme. During the action, precautionary measures, searches and seizures were carried out.

For the Italian part, funds held at Swiss banks were also seized. The reference to accounts in Switzerland therefore falls within the asset-related activities carried out as part of the investigation, together with the assets, valuables and money already traced back to the eight suspects and the three companies covered by the preventive seizure order.

The profile of the investigation

The Guardia di Finanza places the operation within the framework of actions against VAT fraud, tax evasion and economic and financial crime. Investigators explain that phenomena of this kind can undermine free competition and penalize businesses that operate in compliance with the rules.

The same account retains the alleged nature of the charges. The persons involved were subject to the measures as part of the investigation, while responsibility must be definitively established in court. This is the step indicated by the source for the judicial follow-up of the case.

The operation thus brings together an Italian investigative component, with operating companies identified in various provinces, and activity coordinated at European level. The searches, seizures and measures carried out in the various countries were conducted as part of the same operation against the alleged carousel VAT fraud scheme.

Source: varesenews.it