How it works?

Carousel fraud occurs when goods (usually ones with high volume trading) are passed round a group of trading firms, in and out of EU countries, with Value Added Tax reclaimed each time the goods cross a border:

carousel fraud schema by HMRC


The fraud has grown rapidly in the past few year after criminals developed “virtual” carousels, pushing money in and out of a banks to create the illusion of payments being made for goods.

Official figures are not available, but losses to the European taxpayer from the fraud could have exceeded €500bn annualy.

Tax Authority is about 15 days late with fraud investigation, which is quite enough time for criminals to disapear. Certification of invoicing system, with the use of SDC or VSDC to instantly link B2B transactions, can prevent this problem.

Following short documentary shows how regular “John Doe” can run a VAT carousel fraud scam for years and probably would’ve remained unnoticed if actors didn’t become too greedy and revealed their operation to the Authorities:

SOLUTION is here: external link – download research paper