Cypriot authorities join European probe into €15.7 million VAT fraud involving mobile phones
Cypriot authorities actively participated in a major VAT fraud investigation coordinated by the European Public Prosecutor’s Office (Eppo), targeting large-scale tax evasion linked to online mobile phone sales. The probe, spanning Austria, Bulgaria, Cyprus, and Germany, focused in Cyprus on five companies and one residence in Nicosia and Larnaca. Seized evidence and electronic data are key to the investigation.
Eppo announced that four suspects have been arrested—three in Bulgaria and one in Germany—and asset freezing orders worth about €20.5 million have been issued against two suspects and two companies. The scheme involved misapplying the VAT margin scheme, intended only for second-hand goods, to new mobile phones sold online in Germany. This tactic lowered VAT payments based on profit margins rather than full sales prices, causing an estimated loss exceeding €15.7 million in public revenue.
Investigations revealed a complex cross-border structure with companies in Bulgaria, Cyprus, and Germany controlled by two main suspects, a Bulgarian couple. The Cyprus tax department and police divisions collaborated closely with European counterparts to dismantle this fraudulent network, while investigations continue to determine the final scale of the financial damage.
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