Operation Hermes: 11 defendants remanded in custody over VAT fraud that caused EU €410 million loss
Lisbon Court has ordered preventive detention for 11 of the 25 defendants in Operation Hermes, a "VAT carousel" scheme in mobile phone commerce that is reported to have caused the EU a loss of €410 million.
Eleven Operation Hermes defendants held in preventive detention after multimillion-euro VAT fraud scheme
The Judicial Court of Lisbon district determined on Saturday the preventive detention of 11 defendants in the context of Operation Hermes, confirmed a source at that court to the Lusa agency. According to publico.pt, the 25 defendants involved in this case are suspected of harming the State through a VAT fraud scheme, with the case having been divided into two — one with 21 defendants and another with four.
Differentiated enforcement measures in the two cases
In the case with 21 defendants, 11 were remanded in preventive custody, the most serious enforcement measure. The remaining 10 await trial at liberty, subject to the payment of bail and periodic appearances before the authorities, according to Correio da Manhã.
In the second case, involving four defendants and focusing on a crime of qualified tax fraud — punishable with a sentence of two to eight years in prison — the court determined bail for three of them, staggered at €50,000, €75,000 and €100,000. For these three, the court considered the crimes "strongly substantiated" and also imposed weekly appearances before the authorities and a prohibition on contact between the defendants. The fourth defendant, whose acts are considered "merely substantiated", is only obliged to appear fortnightly at the police station in the area of his residence.
Major operation detained 39 suspects in Portugal
On 7 October, the Judicial Police (PJ) had detained 39 suspects in a major operation of national scope. In a statement, the PJ described Operation Hermes as an investigation carried out in the context of an inquiry headed by the European Public Prosecutor's Office, in conjunction with the Tax Administration and the National Republican Guard (GNR), and stated that those detained are suspects "of committing crimes of criminal association, tax fraud and money laundering, by harming the Portuguese State by more than €150 million".
The 39 detained persons are aged between 30 and 60 years and are of Portuguese and foreign nationality, linked to an organisation described as transnational.
The "VAT carousel" scheme
The investigation focuses on the so-called "VAT carousel", a mechanism that exploits weaknesses in the taxation regime applicable to intra-community transactions in goods. In practice, the scheme was based on the circulation of mobile phones and electronic devices through a fraudulent chain of companies, including so-called missing traders — companies created in different EU countries that disappear without fulfilling their tax obligations. Other companies integrated into the chain then requested reimbursement of VAT from the tax authorities, VAT that had never been paid, according to the PJ.
Operation coordinated across eight European countries
Operation Hermes mobilised in Portugal approximately 740 elements of the PJ, 212 from the Tax Administration and 151 military personnel from the GNR, with the participation of 13 judicial magistrates and seven Portuguese-delegated European prosecutors, and benefited from the collaboration of Europol.
The European Public Prosecutor's Office confirmed searches in eight countries — Portugal, Austria, France, Germany, Italy, Malta, the Netherlands and Spain — and a total of 62 arrests: 39 in Portugal, 20 in Spain and three in Italy. The scheme is reported to have caused the European Union a loss of €410 million in total.
Source: Google News PT — Crime (pt)