By Marine Strauss
BRUSSELS (Reuters) – Four suspects were arrested in a customs fraud ring involving Chinese exporters at Liege Airport, in eastern Belgium, the European Public Prosecutor’s Office (EPPO) said on Tuesday.
The investigation, code-named “Silk Road,” carried out 10 searches targeting Chinese exporters suspected of having put in place a system to evade value-added tax (VAT) payments on imported goods worth 303 million euros ($328 million) in estimated damages.
EPPO said in a statement it suspected the Chinese exporters of using three Belgian private customs agencies and fake companies in other member states in order to benefit from a VAT import exemption.
It said the Belgian companies, acting as representatives of the Chinese exporters, declared that the goods entering through Liege – electronic equipment, toys and a myriad of accessories – were destined for other European Union member states, in order to benefit from VAT import exemptions.
Under EU regulations, importers are exempt from paying VAT in the country of import if the goods are then transported to another EU state.
EPPO said the Chinese exporters used private customs agencies in Belgium, who would declare the final destination of the goods was shell companies in other member states.
Those shell companies would never receive the goods, which were then supplied to real companies or sold to consumers via online marketplaces. Consumers would pay full price for the products, including VAT, which was never declared or paid to tax authorities.
The crimes under investigation include forgery, customs and VAT fraud, money laundering and participation in a criminal organisation.
The Luxembourg-based EPPO – formed in 2017 and which started operations in 2019 – can investigate and bring to court individuals, organisations or companies suspected of misusing EU funds, large-scale VAT fraud, or other financial crimes within the 27-member bloc.
Liege airport, mainly focused on freight, is the site of European operations for Chinese e-commerce giant Alibaba and its logistics arm Cainiao Network.
($1 = 0.9226 euros)
(Reporting by Marine Strauss; Editing by GV De Clercq and Ed Osmond)
