European prosecutors allege a cross-border trading network deprived Sweden and Germany of tax revenue, as authorities in four countries moved against suspects and assets.
Five Arrested in €114 Million Smartphone VAT Fraud Investigation
Authorities arrested five people in Cyprus, Germany and Italy in an investigation into an alleged smartphone trading scheme that cost Swedish and German tax authorities an estimated €114 million, according to the European Public Prosecutor’s Office (EPPO).
Three suspects were detained in Cyprus and one each in Germany and Italy. Prosecutors estimate losses of €80 million in Sweden and €34 million in Germany. Greece also participated in the coordinated operation, which included searches, property seizures and bank account freezes.
The case is part of Operation Midas, a wider investigation into suspected VAT fraud involving electronics and other goods. European prosecutors in Munich are handling the latest proceedings, with authorities across the participating countries assisting the investigation.
How cross-border trading rules were allegedly exploited
The suspected scheme centers on VAT carousel fraud, in which trading networks use cross-border transactions to collect tax without passing it to the authorities.
Under European Union rules, qualifying sales between businesses in different member states can take place without the seller charging VAT. The buyer accounts for the purchase under domestic rules and generally charges VAT when selling the goods onward within the country, paying the tax due after applicable deductions.
A company acting as a “missing trader” abuses that arrangement by collecting VAT from its domestic customer but failing to pay the authorities. Further layers of businesses and transactions can make it difficult to trace the goods, payments and people controlling the trade.
Prosecutors suspect the smartphone network used companies and missing traders based in Germany, Albania and Sweden. Albania is outside the EU, and prosecutors have not publicly explained the role of each company.
Searches and asset freezes across four countries
The operation included 12 searches. Cyprus Police said authorities carried out investigative measures in Cyprus, Germany, Greece and Italy. German prosecutors and investigators traveled to Cyprus, working alongside local police, the Tax Department and the financial intelligence unit, MOKAS.
Greek financial crime investigators and digital forensic specialists also assisted. European prosecutors reported that up to €80,000 had been frozen in bank accounts, while vehicles and real estate were seized in Cyprus, Greece and Italy.
Greek newspaper Proto Thema, citing an asset-freezing order, reported that the suspected network traded iPhones and used invoices for internet telephone services and gift vouchers to conceal the underlying smartphone business. The order targeted an apartment in Glyfada, two vehicles and other assets.
The newspaper alleged that four Cypriot businessmen played leading roles in financing purchases and controlling payments through companies and financial platforms.
A wider investigation across Europe
The latest arrests follow a major Midas operation announced in February 2024. The EPPO said more than 680 investigators took part in over 180 searches across 17 countries, resulting in 14 arrests.
Authorities seized smartphones worth more than €15.3 million, alongside cash, cryptocurrency, luxury vehicles and other assets. Prosecutors estimated losses from several suspected schemes at up to €195 million..
The wider inquiry covers suspected trading arrangements dating to 2017, involving electronic goods and, later, protective face masks during the COVID-19 pandemic. German courts had convicted four people in Midas-related cases in 2025.
The latest case is being handled by European prosecutors in Munich, Germany.
See all the latest news from Greece and the world at Greekreporter.com. Contact our newsroom to report an update or send your story, photos and videos. Follow GR on Google News and subscribe here to our daily email!
