Carbon trading tax fraud arrests continue
21 Dec 2015

A 55-year-old man was arrested by police at Vienna airport on Monday, 21st December 2015 on suspicion of money laundering and tax evasion in connection with the trading of carbon emissions certificates.

The arrest is linked to investigations of ‘carousel trades’ in 2009 and 2010.

Carousel trades exploit the VAT system in the EU by allowing individuals to trade in multiple VAT-free jurisdictions and claim back VAT that should have been paid. These trades have a substantial impact on national tax revenues, with Europol estimating that overall EU governments have lost around €5 billion in revenue due to these scams over the past 10 years.

The methodology employed is simple: the fraudsters buy imported emissions permits in one European Union country without paying VAT and sell them to each other, adding the VAT to the price and receiving tax refunds when no tax had been paid.

The man arrested is suspected of being a member of a gang that has evaded tax payments of around €125 million, and is also thought to be in control of a network of bank accounts with several companies across multiple countries in order to evade tax.

Since the investigations began, ten people have been sentenced for their involvement in carbon trading scandals, and in August this year, seven employees and one former employee of Deutsche Bank were accused by prosecutors of being connected with the illegal trade.

Following the arrest, two suspects are being kept in police custody. A warrant for two Pakistani nationals has also been issued, but it is thought that they may have returned to Pakistan.

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