(Luxembourg, 06/03/2025) – The European Public Prosecutor’s Office (EPPO) in Rome (Italy) is leading an investigation –code-named ‘Dragone’- into a large-scale customs and VAT fraud scheme involving the import of goods from China into the EU.
Today, the Italian Financial Police (Guardia di Finanza) of Rome and Florence executed a freezing order of €71.05 million, issued by the judge for preliminary investigations of Florence.
The freezing order targets 17 suspects (4 Italians and 13 of Chinese origin) who are under investigation for participating in a criminal organisation committing multiple tax offences related to the import of goods, such as clothing, footwear, bags and various accessories. It is alleged that a criminal enterprise of Chinese entrepreneurs created a network of 29 companies operating in the provinces of Florence, Prato and Rome, to evade customs duties and VAT by exploiting Customs Procedure 42 (CP42).
CP42 exempts importers from paying VAT in the country of importation, if the imported goods are subsequently transported to another EU Member State. Under this procedure, created to simplify cross-border trade, VAT is exempted in the country of importation, when the goods are acquired in the final Member State of destination.
In this case, the Chinese goods were primarily cleared through customs in Bulgaria, Hungary and Greece and then transported to logistical hubs in Italy. On paper, the goods underwent multiple intra-community transactions between fictitious operators, accompanied by invoices for non-existent transactions. To avoid detection, the companies involved only existed for around two years before being replaced by new ones to allow the fraudulent scheme to continue.
The investigation also revealed that the criminal group provided clandestine money transfer services to the Chinese community living in Italy, bypassing regular financial intermediaries and charging a percentage for the transactions.
All persons concerned are presumed to be innocent until proven guilty in the competent Italian courts of law.
The European Public Prosecutor’s Office (EPPO) is the independent public prosecution office of the European Union. It is responsible for investigating, prosecuting and bringing to judgment crimes against the financial interests of the EU.