Four arrested over alleged 8.5 million euro VAT fraud involving alcohol-free drinks

Four men aged 33, 39, 54, and 68 from Enschede, Hengelo, and Leeuwarden have been arrested by the Fiscal Intelligence and Investigation Service (FiOD) on tax evasion charges. They are connected to several companies that are allegedly guilty of VAT fraud in the trade of alcohol free drinks.

Researchers say the companies display characteristics associated with so-called “ploffers,” which collect VAT from customers when selling goods but fail to pass the tax on to the authorities. Such companies often subsequently disappear or declare bankruptcy, leaving the tax authorities unable to recover the unpaid VAT.

In the case under investigation, the companies bought goods from suppliers in other EU countries without paying VAT, as cross-border transactions are subject to a 0 percent rate.

They then allegedly resold the goods to a wholesaler while charging 9 percent VAT. The companies are suspected of failing to pay the VAT they collected, either in full or at all, to the Dutch Tax Administration. The wholesaler subsequently claimed the VAT it had paid back through its tax returns.

The FIOD said it has also identified four other companies suspected of operating as “ploffers.” The four companies are believed to have supplied more than 28 million euros worth of goods in total to the same wholesaler.

The FIOD estimates that the alleged scheme caused 8.5 million euros in tax losses for the Dutch state. Authorities have not ruled out further arrests.