Investigations into CO2 Fraud Schemes Intensified

Public prosecutors in Frankfurt have intensified their investigations into the illegal trade with CO2 emission allowances and associated VAT fraud that already lead to a number of convictions last year. 500 civil servants of the Federal Criminal Police Office, the Federal Police and the criminal investigation department of the tax authorities were reported to have raided the headquarters of Deutsche Bank in Frankfurt and several other buildings all over Germany.

According to media reports, the office of the chief prosecutor in Frankfurt is investigating serious tax evasion, money laundering and attempted obstruction of justice. Arrest warrants were issued for five suspects.

The investigations relate to business activities worth millions of Euros of Deutsche Bank clients with CO2 emission allowances that were handled by a special department of Deutsche Bank that had been set up for this purpose.

In the so-called “VAT carousels”, emission allowances are bought from foreign companies VAT free. They are sold in Germany via a chain of corporations, often only set up for this purpose. The company at the end of the chain sells the emission rights to companies abroad and claims input VAT (Vorsteuer) with the competent tax and revenue office.

The fraud scheme had already lead to raids of 230 offices of 50 German companies in April 2010 and a trial that resulted in prison sentences for six men of different nationalities in December 2011. The men admitted to having evaded VAT in the amount of at least EUR 230 million. 

Source: FAZ; RP

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