A German court has issued the fourth conviction in a sweeping €195 million VAT fraud case known as the Midas investigation, a complex, multinational tax evasion scheme that exploited EU regulations during the COVID-19 pandemic.
On 15 July 2025, the court sentenced a man to 18 months’ suspended imprisonment for his role as a director of a missing trader company, which defrauded approximately €1 million in VAT. The conviction is part of a broader investigation coordinated by the European Public Prosecutor’s Office (EPPO) and spanning 17 countries.
The “Midas” Investigation: Massive EU VAT Carousel Fraud
The case centers on VAT carousel fraud, a tactic involving the movement of goods across EU borders without tax, followed by the disappearance of the companies responsible before VAT is paid back to the state. According to the EPPO, the Midas scheme leveraged shell companies, false identities, and fake invoices to trade goods such as smartphones, electronics, and personal protective equipment (PPE) during the COVID-19 pandemic.
One of the most striking episodes involved Germany’s Federal Ministry of Health, which in 2020 unknowingly purchased COVID-19 face masks from a fraudulent company posing as a Hong Kong-based supplier. In reality, the goods never left Germany. The fake firm failed to return VAT, resulting in direct losses to German taxpayers.
EU-Wide Operation and Seizures
The full scale of the operation was revealed in February 2024, when authorities carried out over 180 coordinated raids across Europe, resulting in:
- 14 arrests
- Seizure of €15+ million in smartphones
- A €3 million yacht, luxury watches, €1.2 million in cash, and cryptocurrency
- High-end vehicles, including a Rolls-Royce, a BMW, and a Range Rover
- 2.5 kg of gold and designer jewellery
Authorities uncovered a sophisticated network using encrypted communications, buffer companies, and straw men to conceal the fraud.
International Cooperation and Agencies Involved
The investigation showcases the EPPO’s ability to rapidly coordinate cross-border enforcement, with assistance from:
- Europol and Eurojust
- Tax and criminal investigation agencies from Germany, the UK, Italy, Austria, Cyprus, Czechia, Estonia, Malta, the Netherlands, Poland, Portugal, Sweden, Slovakia, Albania, Slovenia, Hungary, and Croatia
Despite the scale of the fraud and the involvement of a national government ministry, no investigations have yet been reported into regulatory failures or oversight lapses within the German health authorities.
Unanswered Questions Remain
While four individuals have been convicted so far, the breadth of the operation suggests that many suspects may still be at large, raising concerns about accountability, regulatory weakness, and the protection of EU taxpayer funds.
As the Midas investigation continues, European prosecutors are under pressure to bring more perpetrators to justice and close the loopholes that made the scheme possible.
