Luxury used cars from Germany “laundered” through Bulgaria and reaching Greece almost tax-free. A carousel-style network of shell companies, fake invoices, and a legal framework originally designed to prevent double taxation — but exploited by some to magically erase tens of thousands of euros in VAT.

The trick uncovered by the AADE (Independent Authority for Public Revenue) through an investigation at Thessaloniki’s First Customs Office reveals how the so-called “margin scheme” — the profit margin regime established by EU law for dealers in second-hand goods — turns into a machine for making taxes disappear.

This regime was created to avoid double taxation when a product — such as a car — has already been subject to VAT upon its initial sale. However, when used in transactions between companies rather than between a dealer and a private individual, it becomes a tool for tax evasion.

Specifically, the scam operates in three main steps:

1. The German seller transfers the car as an intra-community supply to a Bulgarian company. The German seller does not charge VAT when selling to a company in another EU member state with a valid VAT number (zero-rated intra-community supply).
2. The Bulgarian “company” receives the car VAT-free. To “launder” the transaction, it falsely declares that it bought the car with VAT — which, of course, was never paid.
3. The Bulgarian company then resells the car to Greece under an invoice marked as margin scheme. As a result, Greek authorities see only the “margin” and not the car’s full value — meaning import VAT is not collected as it should be.

Example:
A used luxury car with a net value of €50,000.
The German seller issues an intra-community invoice (zero-rated, no German VAT) and ships the car to Bulgaria.
The Bulgarian company, to make it look legitimate, records a “purchase” of €59,500 (€50,000 + 19% fictitious VAT) — but that €9,500 VAT is never paid to the German tax authorities.
Then, for export to Greece, the Bulgarian company issues a margin scheme invoice showing only a small profit margin, say €2,000.
In Greece, VAT (24%) is applied only to the margin — €2,000 × 24% = €480.
Thus, instead of collecting around €12,000 in VAT, the state receives just €480, meaning a loss of €11,520 per car.
The “19%” that appears on paper is a fictional figure for legitimacy, not an actual tax payment.

The margin scheme is legal under EU VAT law (Article 45 of Directive 2006/112/EC) and intended to prevent double taxation on second-hand goods sold by private individuals to dealers. However, when abused in chains of corporate transactions, it becomes a mechanism for tax disappearance.

According to AADE data:
19 vehicles, with a total value of about €885,000, resulted in VAT losses exceeding €212,000.
This is a pattern, not an isolated case — based on fake invoices, fictitious purchases from private individuals, bogus export documents, and temporary license plates — often enough to deceive superficial customs checks.

To uncover such networks, inspectors go beyond paperwork.
AADE employs digital cross-checks, including:

• verification through the VIES European VAT system,
• checks of customs registries (imports/exports),
• cross-referencing vehicle registry data (VIN numbers and ownership history),
• and bank transaction analysis.
  When these data points connect, the story of a “private purchase” collapses, paving the way for retroactive tax claims, fines, and criminal charges.

The case exposed by the AADE is part of a wider VAT fraud network now under the scrutiny of the European Public Prosecutor’s Office (EPPO).
Under the code name “Vortex”, European authorities uncovered an organized carousel fraud involving luxury cars — estimated to have caused over €100 million in losses across EU member states.

According to the EPPO, more than 400 police officers and tax inspectors took part in simultaneous operations in Germany, the Netherlands, Belgium, Hungary, and Slovakia, conducting dozens of searches, arrests, and seizures of luxury cars, documents, and bank accounts.

The network used the same method uncovered by Greek authorities:
shell companies allegedly buying cars VAT-free as intra-community supplies, reselling them within the EU without paying tax, and then recycling the same vehicles through new companies to complete the “carousel.”
In many cases, the same cars appeared to change ownership three or four times on paper, just to obscure VAT tracking.

At the center of Operation Vortex were high-value luxury vehicles repeatedly moved among the same companies, which issued fake intra-community invoices and erased VAT obligations.

Authorities found that these transactions followed a repetitive pattern, with each company in the network acting as a link in the chain — sometimes as an “exporter,” sometimes as a “buyer” or “reseller” — but never paying VAT.

Conclusion

The EPPO stressed that this case demonstrates how EU intra-community VAT rules can be turned into a tool of organized crime when combined with shell companies and fictitious goods transfers.

Operation Vortex is now considered one of the largest carousel fraud cases in the European Union, with total lost tax revenues exceeding €100 million.
Investigations continue in five countries, while the EPPO has already issued arrest warrants and asset-freezing orders, warning that such frauds cost EU member states’ public finances tens of billions of euros each year.