Luxury car fraud is the focus case which revealed AADEas well as a second-hand trading network vehicles set up a route Germany – Bulgaria – Greece, using “front” companies and false invoices to abuse the profit margin regime.
The damage to the State from the fraud in question with the luxury vehicles is estimated at more than 212,000 euros, with the AADE proceeding with calculations and transmission of the file to the Justice.
The method of the fraudster network is to have vehicles originating from Germany pass through intermediate entities in Bulgaria and end up in Greek businesses, where they were declared as subject to the margin regime, even though the conditions were not met. With artificially low declared purchase prices and fictitious intermediate invoices, the VAT due on the final sale was drastically reduced or zero.
At the core of the mechanism, the “front” companies showed little or no real activity, acting as “stops” in pricing chains, according to reports. Cars were changing hands on paper, so that their origin and tax status were altered. In the end, the Greek reseller was pricing based on the profit margin rather than the actual transaction value, shifting the tax burden out of the final price.
AADE auditors mapped the flows by comparing invoices, bank transactions and declared values, identifying inconsistencies between payments and documents. At the same time, they cross-referenced data on the origin of the vehicles and movements of intra-Community acquisitions, to document that the margin scheme was misused.
For the market, the mechanism creates unfair competition to the detriment of legitimate traders who correctly charge VAT on sales. For consumers, there is a risk of future charges if an audit finds that the transaction did not have the correct tax status. Transparency in documentation and clear reference to the pricing regime are critical.
In the next steps, AADE will expand targeted controls in the second-hand sector, with comparisons of purchase/sale prices and control of pricing chains, to recover lost revenue and prevent the recurrence of practices that deprive the budget of resources.