- Lack of control over used car imports.
- A “front man” epidemic in the catering industry in Northern Greece.
- Multi-million-dollar deals… involving Bulgarian shepherds.
- Investigations by the European Public Prosecutor’s Office into VAT evasion by Greek companies.
- In 2023 alone, the European Public Prosecutor’s Office uncovered six cases of fraud that cost the EU budget 414.7 million euros!
by Vangelis Triantis
An endless “party” has been organized in our country by opportunists who have “invented” various ways to evade VAT to the state.
Today, Data Journalists open the “box” of fraud cases related to VAT, which causes the state to lose billions of euros annually in uncollected revenues. These anonymous reports have been brought to the attention of the tax authorities, the judiciary, and the Prime Minister’s Office.
The whistleblowers describe in detail how the “cash trick” was set up in cases of VAT fraud by catering companies or in the import and trade of used cars in northern Greece. It is not known where the Greek authorities are in their investigation of these specific cases. The only certainty is that the loss of revenue due to uncollected VAT in our country amounts to more than 3 billion euros annually, according to official figures from the Commission. In addition, in 2023 the European Public Prosecutor’s Office dismantled six cases of VAT fraud in Greece, causing damage to the EU budget amounting to 414.7 million euros.
Used car imports from Bulgaria
One of the reports published by Data Journalists on non-payment of VAT, which has been brought to the attention of the competent authorities, concerns companies importing used cars from Bulgaria. The complaint was sent to the Independent Authority for Public Revenue (IAPR), specifically to the office of its head, Giorgos Pitsilis, the Central Service of the General Directorate for Financial and Economic Crimes (SDOE), and the Investigation and Protection of Public Revenue Service (YEDDE) in Thessaloniki. The complainant presents himself as a “car dealer operating in Northern Greece”. As pointed out in the complaint, car dealers in Serres, Drama, and Thessaloniki “do not pay the corresponding VAT to the State” on car imports. According to the complainant, this practice has been known to the competent authorities for years, but “in recent years it has taken on significant proportions, creating unfair competition as well as a significant loss of state revenue”.
The complainant even describes the tactics used by certain car dealers to evade VAT. Specifically, they “receive a fake invoice from a Bulgarian dealer (knowledgeably) in which they have included VAT – the price sold from Europe to the Bulgarian was without VAT – which is not paid at customs as it should be”. The complainant names specific companies in northern Greece that use this tactic, resulting in a loss of revenue for the public sector.
The “front men” shepherds of Sandanski
Another complaint uncovered by Data Journalists took place at the end of 2022. The complainant is identified as a catering entrepreneur from Thessaloniki. The complaint was forwarded to the Economic Prosecutor’s Office, the General Directorate for Financial and Economic Crimes of Northern Greece, the Minister of Finance, the Chief of Police of Thessaloniki, and the Secretary-General to the Prime Minister, Kyriakos Mitsotakis.
As the complaint points out, many of the “catering establishments in Thessaloniki”, regardless of size or activity, “operate with front men”. These are “elderly citizens without real estate assets, often retired, with unseizable accounts, or even foreign citizens. These individuals “start as entrepreneurs in Greece, obtain a Tax Identification Number (TIN), and appear as owners of catering establishments where they have never set foot”.
According to the complaint, “There are cases of 70-year-old shepherds from Sandanski, Bulgaria, who instead of receiving a one-time payment of 3,000 euros, give their IDs and relevant authorizations to opportunists. With these, they apparently sign lease agreements, apply to the municipality for establishment and operating licenses, initiate tax and social security registration procedures, etc.
In this way, “the real owners of the restaurants, who are known and present in the establishments daily, are nowhere to be seen”. As emphasized, the companies “regularly issue receipts and invoices, declare all the employees they hire, and ring up the sales through the cash register”. In this way, “they appear to be fully compliant with all government inspections.” However, “when it comes time to pay VAT, income tax or contributions to the Single Social Security Fund (EFKA), they don’t pay a single euro. The result is that their debts to the state accumulate and “swell,” but “it is impossible to collect because the alleged owner – the “front man” – is completely unaccountable.
According to the complainant, “In this way, the interest groups have created serious business interest blocs in the city’s catering sector and throughout the country, as the amounts that escape taxation and end up in their pockets are enormous”. In fact, in many cases the opportunists “open new establishments” where they use the same method of tax evasion. What’s more, because they don’t pay what is legally due to the state, they have “more competitive prices and offers,” allowing them to invest in decoration, size, and personnel, thus distorting competition.
Another aspect highlighted in the complaint is that “the licenses issued in the name of the “front men” are very easily granted without examination, often before they’re even needed so that there’s a ready-to-use license in case the previous one is revoked for administrative violations (such as music, hours, etc.).
These are criminal organizations made up of groups of businessmen, economists, and legal advisors who cause enormous damage to the State and its revenues, while at the same time causing the closure of law-abiding and healthy businesses.
The complainant further notes that many of these obscure entrepreneurs “collect hundreds of thousands of euros from refundable advances.
European prosecutors: VAT fraud of 414.7 million euros in Greece
In addition to the Greek Tax Authorities, the European Public Prosecutor’s Office also investigates fraud related to the non-payment of VAT by Greek companies.
According to the annual report of the European Public Prosecutors, in 2023 the European Public Prosecutors solved six cases of VAT fraud in our country, causing a loss to the EU budget in the form of revenue loss amounting to 414.7 million euros. This represents more than 50% of the damage caused to the EU budget by all the crimes investigated by the European Prosecutors in Greece. It is noteworthy that in 2023, the total number of active investigations by the European Public Prosecutors for Greece was 53, with a total estimated loss of 708.7 million euros.
For the EU as a whole, the damage caused by VAT fraud cases amounts to several billion euros. Specifically, 1,927 cases were dealt with by the European Public Prosecutor’s Office, with an estimated loss of 19.27 billion euros. Of these, 339 were VAT fraud cases with an estimated loss of 11.5 billion euros. Put simply, 59% of the cases investigated by the European Prosecutors were VAT-related.
As highlighted in her report, European Public Prosecutor Laura Kovesi stresses that “organized criminal groups finance VAT fraud businesses with money derived from other criminal activities”. In addition, they have identified several “specialized companies” that “launder money from VAT fraud and other criminal activities”. Furthermore, these criminal groups “establish their activities in each country by recruiting individuals with specific knowledge of the local market, legislation, and business practices, as well as the necessary local connections.
The members of these criminal groups believe that VAT fraud is an easy target because you don’t risk anything, you just need to find an accountant, a good lawyer, and someone who knows how to talk, and you can make a lot of money,” the European Prosecutor stresses in the report.
VAT “gap” of 3.231 billion euros according to the Commission
The loss of revenue due to non-payment of VAT is not something that only the European Public Prosecutor has identified. Last November, the Commission published a report for 2021 showing the VAT shortfall in EU member states for 2021. This is the annual study on the “VAT gap”, which measures the difference between the theoretically expected VAT revenue and the amount collected. According to the study, Greece ranks third among EU countries with the largest VAT gap, followed by Romania with 36.7% and Malta with 25.7%. Specifically, the VAT gap in Greece amounted to €3.231 billion.
This was a slight decrease of 3.2% compared to 2020 when the VAT gap amounted to 3.426 billion euro. For the EU member states as a whole, the VAT losses amounted to €61 billion in 2021, compared to €99 billion in 2020.
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