iPhones Used in EUR 13 Million Tax Scam

July 7, 2011 Taxation in Germany

Mobiles in German tax ScamGerman tax authorities have clamped down on a tax fraud scheme in which nearly EUR 13 million was evaded on the sale of mobile phones.

In a statement released on June 6th the Office of the Attorney General of Germany revealed that German tax authorities and police have successfully put an end to a tax fraud scheme which has so far cost the government EUR 13 million in lost sales tax revenues.

Throughout this week, German tax officials have conducted raids on 147 offices and private residence across the country, and investigations are being carried out on 13 different companies in connection with the tax fraud claims. Four individuals have already been arrested for their involvement in the scheme, and another 23 individuals are currently being investigated further.

According to German tax authorities, the scheme exploited pitfalls in EU tax laws, which allow for cross-border transactions to be exempt from Value Added Taxes. It is alleged that the German companies were buying large numbers of high-end mobile phones from other EU countries, without paying any VAT in the country of purchase. The goods would be delivered to Germany, and repurchased through series of local companies, in an attempt to obscure their origins. Eventually the phones were sold back to wholesalers in other EU countries, and a VAT refund would be claimed by the German company despite never having originally paid the tax.

The companies involved in the scheme have been stockpiling phones since the start of the year. Prosecutors said that the phones were the latest models of high-end brands, making them easier to sell. In particular, the Apple iPhone 4 was one of the most popular models involved in the scheme.

Photo by erin m