European Public Prosecutor’s Office makes two arrests and conducts twenty searches after tracing fictitious invoices and cash flows to China and Türkiye
The European Public Prosecutor’s Office (EPPO) has revealed a cross-border investigation, codenamed “Operation Money Cat,” into a suspected value-added tax fraud scheme estimated at around €60 million, spanning business activity in Belgium, Germany and France. Two suspects were arrested and twenty residences and business premises were searched simultaneously in Germany and Belgium on 16 September 2026, as investigators moved to secure evidence and disrupt a network prosecutors say used missing-trader schemes, shell companies and fictitious invoices to siphon tax revenue out of at least three EU member states.
According to EPPO, the investigation centres on a criminal organisation of nine identified individuals accused of orchestrating what is known in VAT-fraud investigations as a “missing trader” or carousel scheme: goods or services are invoiced and moved between a chain of companies, at least one of which disappears without ever paying the VAT it owes, while other companies further along the chain reclaim that VAT as if it had genuinely been paid. Investigators allege the network went further than a conventional carousel scheme by issuing invoices for goods and services that were never actually supplied at all — invoices existing purely on paper to generate a paper trail of apparent legitimate trade.
Prosecutors estimate that fraudulent invoices issued by the network’s central suspect alone exceeded €11 million in value, a figure investigators describe as distinct from — and smaller than — the total estimated tax damage of roughly €60 million attributed to the network’s activities as a whole. That gap reflects how VAT carousel fraud typically works: a relatively modest volume of fabricated invoicing can be used to justify and legitimise VAT reclaims across a much larger web of transactions, multiplying the damage to national tax authorities far beyond the face value of any single fraudulent document.
Investigators say the network’s main suspect resides in Germany and is alleged to have used multiple companies registered in France and Belgium to carry out the scheme, taking advantage of cross-border trade rules within the EU single market — rules that are also precisely what make VAT carousel fraud both possible and, historically, difficult for individual national tax authorities to detect and prosecute on their own. That cross-border character is one of the central reasons EPPO, the EU’s independent prosecution body for crimes affecting the bloc’s financial interests, took on the case rather than leaving it to a single national authority.
Once VAT was fraudulently reclaimed, prosecutors allege the proceeds were laundered through a further, deliberately opaque process: money was moved via international bank transfers to accounts in China and Türkiye, then converted into cash and redistributed back within the criminal network. This laundering chain — routing funds through jurisdictions outside the EU before bringing value back to the organisers in cash form — is a pattern investigators say is intended to break the audit trail that would otherwise let authorities trace fraudulently reclaimed VAT back to its ultimate beneficiaries.
The 16 September searches, which targeted twenty residences and business premises across Germany and Belgium, were carried out with the involvement of Belgian federal police, including the federal unit for cybercrime, a canine brigade, and Belgium’s anti-corruption unit, working alongside German authorities in North Rhine-Westphalia. As part of the operation, investigators seized assets estimated at around €300,000, comprising cash, luxury watches, designer handbags and vehicles — the kinds of assets frequently used by organised fraud networks to convert illicit cash into more easily transportable or concealable forms of value.
Two of the nine identified suspects have been arrested as a direct result of the 16 September action; the remaining individuals linked to the network remain under investigation. EPPO has not disclosed further identifying details about the suspects, consistent with its normal practice while investigations remain ongoing and before any indictment is formally issued. The case adds to a growing list of large-scale VAT fraud investigations EPPO has pursued since it began operating, reflecting the scale of the problem EU VAT fraud is estimated to represent for member states’ public finances each year, with cross-border carousel schemes like the one uncovered in Operation Money Cat regarded as among the most damaging and hardest-to-detect forms of the fraud.
For Belgium specifically, the case is notable both for the direct involvement of Belgian-registered companies in the alleged fraud and for the range of specialised Belgian federal police units — from cybercrime investigators to the dedicated anti-corruption unit — mobilised to support the EPPO-led operation. It underscores how financial and economic crime investigations increasingly straddle several jurisdictions simultaneously, and how EU-level prosecution structures such as EPPO are being used to pursue networks that individual national authorities would otherwise struggle to dismantle acting alone.
The investigation remains open. EPPO has indicated that further searches, arrests or asset seizures cannot be ruled out as the inquiry into the full extent of the network’s activities across Belgium, Germany and France continues.
