Three People Arrested in Bulgaria During a European Public Prosecutor's Office Operation Targeting a €15.7 Million VAT Fraud Scheme

Three people have been arrested in Bulgaria as part of a major European Public Prosecutor's Office operation targeting an alleged €15.7 million VAT fraud scheme linked to the online sale of new mobile phones in Germany. A fourth suspect has been detained in Germany. The operation was carried out in Bulgaria, Germany, Austria and Cyprus.

According to the European Public Prosecutor's Office, the scheme was organised through a cross-border network of companies in Bulgaria, Cyprus and Germany.

The two main suspects are a Bulgarian couple who, according to the investigation, organised and controlled the companies used in the scheme and unlawfully applied the special VAT margin scheme.

The margin scheme allows VAT to be charged only on the seller's profit rather than on the full selling price. It is intended for certain transactions involving second-hand goods. According to the investigation, it was unlawfully applied to the sale of new mobile phones to German consumers.

The phones passed through a chain of companies controlled by the suspects before being sold by German online retailers. This created the impression that the goods met the conditions for applying the margin scheme, meaning VAT was calculated only on the profit. This allowed the phones to be sold at lower prices and generated substantial illicit profits.

In Bulgaria, the operation involved the National Investigation Service, the State Agency for National Security, the General Directorate for Combating Organised Crime and the National Revenue Agency.

The Frankfurt court issued orders to freeze assets worth around €20.5 million belonging to two suspects and two companies. Bank accounts, mobile phones and luxury watches have been seized, while one of the companies linked to the investigation has already repaid €3.3 million.