A major financial investigation is underway in Europe, as the European Public Prosecutor’s Office (EPPO) looks into a suspected fraud scheme worth over €137 million. The case involves nine companies based in Czechia that are believed to have played a role in avoiding taxes on goods imported from China.
The investigation, known as “Podlimit”, has triggered searches and enforcement actions in both Czechia and Slovakia. These actions were carried out on Friday following requests from EPPO offices located in Bratislava and Liberec.
Authorities are examining activities that took place between June 2017 and December 2018. During this time, thousands of shipments of goods entered the European Union. These goods mainly included textiles, footwear, and items sold through online platforms.
The investigation focuses on how these goods were brought into the EU and how taxes were handled during the process. Officials suspect that the system was manipulated to avoid paying large amounts of money owed to governments.
Misuse of EU Import Rules and False Documentation
At the center of the investigation is the alleged misuse of a rule known as “Customs Procedure 42″. This rule allows companies to delay paying Value Added Tax (VAT) when goods are imported into one EU country, as long as those goods are then transported to another EU country where VAT is supposed to be paid.
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This system is meant to make trade between EU countries easier. However, investigators believe it was used improperly in this case.
According to the findings so far, companies declared that goods entering the EU would be transported to Czechia. But instead of reaching their stated destination, many shipments were reportedly redirected to other locations.
Goods were said to enter the EU through ports in countries like Germany, Poland, and Slovenia. From there, they were transported by truck in sealed containers toward Slovakia for customs clearance. However, instead of continuing on to Czechia as declared, the shipments were allegedly diverted.
Officials also suspect that false paperwork played a key role in the scheme. Companies are believed to have used incorrect “Single Administrative Documents”, which are forms required for customs declarations. These documents may have contained wrong or misleading information about the goods, their value, and their final destination.
In addition, investigators believe that many of the declared business transactions may not have actually taken place. Some deals may have existed only on paper, allowing goods to enter the EU market without proper tax payments.
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Estimated Losses and Scope of the Fraud
The financial impact of the suspected fraud is significant. Authorities estimate that customs duties were reduced by at least €24.1 million due to undervaluation of imported goods. This means the goods may have been declared as cheaper than they really were, lowering the amount of tax owed.
Even more concerning is the estimated unpaid VAT, which is believed to exceed €113.3 million. VAT is an important source of income for governments, and failing to pay it affects public finances.
In total, the suspected losses from customs duties and VAT together reach more than €137 million.
The investigation covers nearly 4,000 consignments, showing the large scale of the operation. It also involves multiple countries, making it a complex cross-border case.
Authorities have also raised concerns that some of the goods may have entered the black market. This means they could have been sold without proper records or taxes, making it harder to trace their movement and impact.
Despite the seriousness of the case, it is important to note that all individuals and companies involved are presumed innocent until proven guilty. The investigation is still ongoing, and further details may emerge as authorities continue their work.