EPPO investigates fraudulent sale of old mobile phones in Romania, 18 other EU states

Police forces in 19 European countries have carried out more than 160 searches since Saturday, September 26, in connection with an alleged fraud involving mobile phones sold online, according to prosecutors from the European Public Prosecutor’s Office (EPPO).

The investigation, carried out by the EPPO office in Cologne, led to arrests of members of the criminal organization that managed to sell more than one million mobile phones as if they were new, although in reality they were second-hand.

According to a statement published by EPPO on Tuesday, 1,770 police officers, customs officers and tax inspectors have carried out more than 160 searches and seizures in 19 countries (Austria, Belgium, Bulgaria, Croatia, Cyprus, Switzerland, Estonia, Finland, Germany, Italy, Latvia, Lithuania, Luxembourg, Poland, Portugal, Romania, Slovakia, Spain and the Netherlands). Seven suspects were arrested in Austria, Germany and Spain, including two leaders of the organization.

The group “assembled mobile phones from used components in Hong Kong and the United Arab Emirates and then shipped them, cleaned and packaged as new mobile phones, to the Netherlands. Afterwards, they were transported to warehouses in Germany and sold on online marketplaces to end customers all over the EU,” the EPPO said in a press release.

The evidence also suggests that shell companies based in several EU member states (Austria, Bulgaria, Germany, the Netherlands) and Switzerland fraudulently applied a reduced VAT regime to online sales of mobile phones starting in 2018, to illegally increase their profits.

This taxation scheme, under which the reseller only has to pay VAT on the profit margin they make (the difference between the price paid for the item and the price for which it is sold), is applicable only to resold goods on which VAT had been paid already.

“Having been sold as new goods, the VAT was due on the full price of the item. The scheme allegedly misled customers all around the EU; it also created a VAT damage in every country where these used mobile phones were sold as if they were new,” the same source added.

EPPO is the independent prosecution office of the European Union. It is responsible for investigating, prosecuting, and bringing to trial crimes against the EU’s financial interests,” the source said.