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Bufete de abogados penalistas Alonso Sala
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VAT & Carousel Fraud

Specialized criminal defense in intracommunity schemes. The Kittel doctrine, the 'missing trader', and defense of the bona fide purchaser.

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The Involuntary Businessman in the Criminal Plot

Intra-community VAT fraud (Carousel Fraud) is one of the most complex areas of economic criminal law. The Tax Agency and the European Public Prosecutor's Office aggressively pursue these schemes, which cost public coffers billions. The problem arises when, in their zeal to prosecute, they entrap legitimate businessmen who, unknowingly, have traded with a fraudulent company ("missing trader") at some point in the supply chain.

If your company has bought goods from a supplier who later disappeared without paying VAT, the Treasury will try to deny you the deduction of that input VAT and accuse you of complicity, claiming that you "should have known" you were participating in fraud due to low prices or unusual operations.

Our Strategy: The Kittel Doctrine

The defense is based on the jurisprudence of the Court of Justice of the European Union (CJEU). To hold the buyer liable, the prosecution must prove knowledge of the fraud. Our defense is structured to demonstrate Objective Good Faith through a "Diligence Dossier":

1

KYC (Know Your Customer) Protocols

We provide evidence that your company requested deeds, certificates of being up to date with the Treasury, intra-community VAT number (VIES), and bank references from the supplier BEFORE operating. This demonstrates acting with the diligence of an orderly merchant.

2

Operational Reality

Fraud schemes often simulate transport. We prove the physical reality of the goods through consignment notes (CMR), signed delivery notes, weighings, transport insurance, and truck geolocation. If the goods actually moved, the simulation thesis is weakened.

3

Market Prices

We justify through economic expert reports that purchase prices, although competitive, were not "vilely low" nor outside commercial logic, dismantling the indication that the low price was only explained by tax fraud.

The European Public Prosecutor (EPPO)

Since 2021, serious cross-border VAT crimes (over €10M or involving two countries with over €10,000) fall under the jurisdiction of the European Public Prosecutor's Office. This body operates with its own rules and great agility to freeze accounts and order arrests across the EU.

At Alonso Sala, we have specific experience litigating before <strong>European Delegated Prosecutors</strong> in Spain, knowing their specific procedures and ensuring procedural defense adapted to this new supranational framework.

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Why Alonso & Sala for VAT Fraud?

We defend honest businessmen trapped in VAT schemes. Experience before European Prosecutor (EPPO) and mastery of CJEU Kittel doctrine.

  • starExperience litigating before European Delegated Prosecutors (EPPO).
  • starMastery of CJEU jurisprudence (Kittel, Optigen, Mecsek-Gabona).
  • starNetwork of forensic experts in goods traceability and transport.
  • star'Due Diligence' strategies to prove objective good faith.
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FAQs

What is VAT carousel fraud?expand_more
It is a sophisticated and massive tax fraud scheme. It involves circulating goods (mobiles, cars, computer components, drinks) between companies in different EU countries to take advantage of VAT exemption in intra-community operations. One company (missing trader) sells the goods with VAT but does not pay it to the Treasury and disappears. Another company at the end of the chain (broker) deducts that input VAT, causing multi-million losses to the tax authorities.
Can I be accused if I didn't know my supplier was a 'missing trader'?expand_more
Yes, this is the great danger for the honest businessman. The Treasury applies the European 'Kittel' doctrine. If you bought at a suspiciously low price, or from a company without structure, or without making minimal checks, they will say you 'should have known' it was a fraud. They will deny your VAT deduction and accuse you of being a necessary cooperator in the tax crime. Our defense is to prove your due diligence and commercial good faith.
Why is VAT so dangerous criminally?expand_more
Because it is a harmonized tax in the EU and finances the European budget. VAT schemes are considered serious crimes against the financial interests of the European Union. The European Public Prosecutor's Office often intervenes, having transnational resources and being extremely rigorous in prosecution.
What are the penalties for VAT fraud?expand_more
The same as for general tax fraud (1 to 5 years in prison), but since schemes usually exceed €600,000 and use organized structures, the aggravated type almost always applies: 2 to 6 years in prison, fine of double to six times the amount, and loss of the possibility of obtaining subsidies or contracting with the public sector.
Is it a crime to buy without VAT?expand_more
If the operation is subject to VAT and it is not charged, it is irregular. But the criminal offense is committed by whoever has the legal obligation to pay it and does not do so, or whoever improperly deducts VAT that they have not actually paid or knows has not been paid in the previous chain.
What is the reverse charge mechanism?expand_more
To combat fraud, in certain sectors (scrap, electronics, telephony), the law reverses the burden: it obliges the buyer (businessman) to pay the VAT, not the seller. If you don't do it correctly or simulate operations to avoid it, you can end up charged.
How does ONIF investigate these schemes?expand_more
The National Fraud Investigation Office (ONIF) uses powerful cross-referenced databases at the European level (VIES system) and Big Data tools to detect circular goods flows or anomalous billing. They usually carry out simultaneous raids on all companies in the chain to seize servers and emails.
Can I be liable with my personal assets?expand_more
Yes. If you are an administrator of a company involved in the scheme, they will derive joint and several civil liability to you (paying the company's debt) and seize your personal assets, house, and accounts, in addition to facing prison time.
What is a 'missing trader' company?expand_more
It is an instrumental company created to have a very short life. It issues invoices charging VAT, collects that VAT from its clients, and disappears before the Treasury can claim payment or file the return. They are usually in the name of insolvent front men.
What defense does the honest businessman trapped in the scheme have?expand_more
The key is proof of diligence and commercial reality. Demonstrating that operations were real (goods exist, were transported, stored), that the price was market (not suspicious 'bargains'), and that compliance checks (KYC) were performed on the supplier to verify apparent solvency.
Can they close my company?expand_more
Yes. A common accessory penalty in organized VAT schemes is the dissolution of the legal entity or the definitive prohibition of carrying out commercial activities in the future, which implies the civil death of the company.
Is the European Public Prosecutor tougher?expand_more
Yes. They have highly specialized European Delegated Prosecutors and a clear mandate of 'zero tolerance' with fraud to the EU budget. They have the capacity to coordinate investigations in several countries simultaneously, which complicates defense if one does not have an international vision.

Need Immediate and Expert Legal Assistance?

The judicial system is complex and can be relentless. Do not face it alone. We have the experience, technical knowledge, and human resources necessary to fight for you. Contact us today to schedule a confidential consultation and start building your defense.

Contact Alonso Sala

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