EPPO Arrests Five in €20 Million Cross-Border VAT Fraud Probe

The European Public Prosecutor’s Office (EPPO) said five suspected organisers of a cross-border VAT fraud scheme were arrested in Czechia on 26 August 2026 as part of Investigation “Echo”. Authorities also seized assets in Czechia, Germany and Lithuania, including real estate and frozen bank accounts.

According to the EPPO, the suspected organised crime group has operated a VAT fraud system involving wireless earbuds, including Apple AirPods, since at least 2019. The alleged scheme caused an estimated €20 million in tax losses between 2019 and 2023.

Shell companies used to simulate cross-border supply chains

Investigators allege that the network exploited EU rules under which qualifying cross-border transactions between Member States can be exempt from value-added tax. Shell companies were used to create fictitious supply chains, allowing participants to claim VAT reimbursements while the corresponding VAT was allegedly neither declared nor paid in Germany.

The five suspects are understood to have acted as managing directors or de facto directors of companies involved in the alleged supply chains. The companies were located across Bulgaria, Czechia, Germany, Hungary, Lithuania and Slovakia.

In addition to the arrests, authorities seized real estate in Czechia and froze bank accounts in Czechia, Germany and Lithuania. The action was supported by German and Czech authorities, including Germany’s Central Office for Combating Money Laundering and Asset Recovery Bavaria at the Munich General Prosecutor’s Office.

Eight suspects already convicted

The EPPO said eight other suspects had previously been convicted in the same investigation, including one main organiser. Investigations into additional suspects remain ongoing.

The latest action is an enforcement stage in an ongoing organised VAT fraud investigation. The five newly arrested individuals remain presumed innocent unless and until proven guilty by the competent courts.

For financial-crime teams, the case illustrates how shell companies, cross-border invoicing structures and multiple bank accounts can be used to move funds generated by large-scale tax fraud, while asset freezing can become an important part of preserving potentially recoverable proceeds.